FTSE 100 poised for best week since 2011 as post-Brexit Britain recovers from early hit at start of the week
Britain’s top 100 companies are at their best level since last August
THE FTSE 100 is heading for its best weekly performance since December 2011 as Britain’s post-Brexit recovery continues.
After a two day slump following the Out campaign’s historic victory Britain’s top 100 companies are at their best level since last August and are on the rise.
The FTSE 100 index of blue chip firms soared 7.2 per cent this week, rising 442.59 points to 6,581.28 at the close of play today.
Some £120 billion was added to the value of the top 100 companies.
Even housebuilders and banks, among the hardest hit companies in the days following the Brexit result, have seen their share prices recover, although they are still valued lower than they were before the poll.
US stocks are also on track to end the week higher.
The remarkable rebound has confounded analysts and will hush Remain doom-mongers.
Chris Beauchamp, a senior market analyst at the , said: “Of all the post-Brexit outcomes discussed across the City over the past few months, ‘buying frenzy’ was not one that was viewed as very likely.”
A possible reason for the growth is the delay to triggering Article 50, Britain's legal launch pad out of the EU.
Declines in the immediate aftermath of Brexit gave investors some sudden bargains in the markets.
Also, while the value of the pound plunges that’s good news for FTSE 100 firms with large overseas incomes.
Goods have become cheaper to export which boosts sales and profits.
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The FTSE surge comes a day after Bank of England governor Mark Carney hinted at an interest rate cut this summer, sending the stock market soaring to a 10-month high.
A drop from the already historic low of 0.5 per cent will be a big boost for millions of mortgage holders – and make it cheaper for businesses to borrow money.
The FTSE 100 responded positively immediately after Mr Carney’s comments, although the pound plummeted.
He warned the country’s financial health will remain volatile in the coming months with the weakening pound making the UK less attractive to investors.
But he did stress “the UK can handle change” and would recover from any financial adversity it faces.
Laith Khalaf, senior analyst at investment giant Hargreaves Lansdown, said: "It’s been a tumultuous week in the markets, full of price swings and contrasting fortunes.
"As we head into July we can expect more of the same, as the knock-on impact of the Brexit vote continues to ripple through financial markets."
He told the : "It’s easy to overlook the positive effects a lower pound will have on the stock market.
"Exporters will become more competitive, and UK companies with international revenues are likely to see a boost to their earnings when translated back into pounds and pence."
However, experts warned that in dollar and euros terms the FTSE 100 is still underperforming following the fall in sterling.
The FTSE 250 is still 7 per cent below the level it reached on the day of the referendum.
Gold was headed for a fifth weekly gain in a row, while silver hit a 22-month high.
The pound was at a three-year low against the Euro.
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