London close: Stocks jump as pound plunges to 31-year low on Brexit

London stocks jumped on Tuesday as sterling fell to a 31-year low against the dollar after Prime Minister Theresa May said in the previous session she would trigger Article 50 by March 2017.

The FTSE 100 rose above 7,100 for the first time since April, closing up 1.30% to 7,074.34 points.

The pound fell 0.79% against the dollar to $1.2741at 1648 BST.

May at the weekend revealed the timing of the formal Brexit negotiation progress, which means Britain will leave the EU by the summer of 2019.

Adding downward pressure on the pound, Chancellor Philip Hammond on Monday warned Brexit may cause "turbulence" and business confidence would be on a "bit of a rollercoaster".

IG market analyst Joshua Mahony said the potential for another rate cut by the Bank of England to cushion the blow of Brexit has weighed on sterling but given equities a boost.

“Fears over the economic implications of a Brexit have been brushed aside in favour of a focus on the benefits a weak pound and loose monetary policy would bring to stocks,” he said.

“As Phillip Hammond said, we are in for a roller coaster, yet on initial evidence, markets like the idea.”

Meanwhile, the market seemed to shrug off the International Monetary Fund’s downgrade on UK economic growth forecasts for 2017.

While the IMF raised its estimate for UK gross domestic product in 2016 to 1.8% from its July forecast of 1.7%, it now expects 2017 GDP to slow to 1.1% from a previous prediction of 1.3%. The cut to 2017 GDP estimates comes in the wake of May’s announcement that formal Brexit negotiations will begin by March.

The IMF predicts "subpar" global growth this year of 3.1%, rising slightly in 2017.

In company news, Pearson got a boost as Morgan Stanley reiterated its ‘overweight’ rating on the stock and 1,050p price target, saying the market’s expectations of another profit warning are unlikely to materialise.

Intertek was lifted by a double upgrade from Jefferies, which raised its stance on the stock to ‘buy’ from ‘underperform’ and lifted the price target to 4,300p from 3,000p.

On the downside, pharmaceutical giant Astrazeneca was on the back foot after it said its Brilinta drug did not meet the end point of a clinical trial.

Market Movers

FTSE 100 (UKX) 7,074.34 1.30%
FTSE 250 (MCX) 18,342.07 0.87%
techMARK (TASX) 3,579.15 1.19%

FTSE 100 - Risers

Provident Financial (PFG) 3,320.00p 6.68%
Intertek Group (ITRK) 3,727.00p 5.22%
Pearson (PSON) 802.50p 5.18%
Standard Life (SL.) 358.50p 3.22%
Rolls-Royce Holdings (RR.) 760.50p 3.12%
CRH (CRH) 2,659.00p 3.02%
Micro Focus International (MCRO) 2,267.00p 2.86%
3i Group (III) 670.00p 2.76%
GKN (GKN) 332.50p 2.66%
Johnson Matthey (JMAT) 3,461.00p 2.64%

FTSE 100 - Fallers

Randgold Resources Ltd. (RRS) 7,330.00p -5.91%
Fresnillo (FRES) 1,729.00p -5.36%
Polymetal International (POLY) 928.00p -4.48%
easyJet (EZJ) 990.00p -1.59%
Anglo American (AAL) 986.30p -0.91%
Mediclinic International (MDC) 916.50p -0.81%
International Consolidated Airlines Group SA (CDI) (IAG) 393.70p -0.81%
Antofagasta (ANTO) 532.00p -0.65%
United Utilities Group (UU.) 994.50p -0.55%
AstraZeneca (AZN) 5,025.00p -0.32%

FTSE 250 - Risers

Allied Minds (ALM) 359.90p 7.27%
OneSavings Bank (OSB) 284.80p 5.99%
DFS Furniture (DFS) 278.00p 5.90%
Diploma (DPLM) 954.00p 4.95%
Renishaw (RSW) 2,870.00p 4.29%
International Personal Finance (IPF) 282.90p 4.20%
PayPoint (PAY) 1,113.00p 4.12%
Aberforth Smaller Companies Trust (ASL) 1,108.00p 4.04%
Meggitt (MGGT) 473.60p 3.88%
Bankers Inv Trust (BNKR) 692.00p 3.52%

FTSE 250 - Fallers

Acacia Mining (ACA) 476.00p -6.30%
Hochschild Mining (HOC) 277.00p -5.46%
Centamin (DI) (CEY) 145.20p -4.60%
Henderson Group (HGG) 261.20p -3.51%
NCC Group (NCC) 358.60p -2.50%
Kaz Minerals (KAZ) 231.90p -1.74%
Greencore Group (GNC) 330.90p -1.72%
Phoenix Group Holdings (DI) (PHNX) 869.50p -1.64%
Marshalls (MSLH) 288.80p -1.63%
Metro Bank (MTRO) 2,773.00p -1.53%