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Sterling helps FTSE to eight-week high

The UK’s top share index rose for a fourth day yesterday, helped by strong financials and exporters bolstered by a weaker pound, while a lowered outlook hit bookmaker Paddy Power Betfair.

The FTSE 100 ended the session up 0.8 per cent at 7,776.65 points, touching an eight-week high earlier in the session and outperforming its peers in Europe, as a fall in the pound gave a lift to the exporter-heavy index.

“It’s more to do with an extension of sterling weakness as fears over a disorderly Brexit grow, offering a perverse benefit to the FTSE’s significant global exposure, especially defensives,” explained Artjom Hatsaturjants at Accendo Markets.

The mid cap FTSE 250 index, which is more domestically focused, rose 0.5 per cent.

Financials were the biggest boost to the FTSE, with shares in HSBC, Prudential and Barclays  all rising from 1.3 to 3.7 per cent.

Shares in Paddy Power Betfair, however, fell more than seven per cent to their lowest level in nearly three months.

Earnings and revenue grew at a much faster rate in the second quarter, but the bookmaker cut its full-year outlook due to the introduction of additional taxes and losses from its growing American business.

Among mid-caps, Hill & Smith  was a big faller, down 25 per cent, after the infrastructure products maker posted a double-digit drop in half-year core earnings due to delays in the UK’s roads programme and utilities market.

Bellway fell 1.3 per cent after the builder said it expected home price growth to slow in the year ahead, hitting margins that have buoyed results over recent years.

The sector has been hit this year by worries over rising costs and cooling house prices, though some brokers are upbeat about their prospects, given attractive valuations.

Liberum analysts affirmed their buy rating on Bellway, saying: “Trading remains robust, but management is acknowledging that selling price inflation has moderated, unsurprisingly. The shares look cheap.”

Elsewhere, miner Glencore reversed earlier losses to end 0.1 per cent higher after its results slightly lagged analyst expectations. It posted a 23 per cent rise in first-half earnings and a 12 per cent increase from its trading division, while noting higher production costs for copper and zinc and a still-volatile market.

Investec, which kept the stock at buy, said that results were “on the soft side” of consensus expectations, also noting that despite net debt falling below targeted levels, the company did not announce any additional shareholder returns.

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