London open: Shares rise as pound continues to slide lower

A shockingly large drop in the value of the pound overnight gave shares a boost at the start of trading, although some traders were left scratching their heads regarding the implications of the sudden moves in foreign exchange markets.

At 0830 BST the Footsie was up by 0.41% or 28.57 points to 7.028.01, alongside a 1.23% fall in cable to 1.2458.

At one point in overnight trading, the pound lost 6.1% of its value against the US dollar to hit 1.1841, mimicking the volatility seen in the South African rand and New Zealand dollar at the start of the year.

One transaction was reportedly crossed at 1.1378.

Initial market commentary appeared to focus on thin liquidity conditions, together with increased activity from algorithmic traders, as the chief triggers behind the move.

The suspicion was that recent large, sudden and unexpected moves in one of the world´s most heavily traded currency crosses might have 'snow-balled' as automatic trading systems were forced to undo some of their trading positions in order to limit their losses, thus accelerating the slide.

Acting as a backdrop, some traders referenced newspaper reports regarding hawkish remarks from France's President in the run-up to the start of the Brexit negotiations, mirroring perhaps the initial negotiation stance taken by Westminster.

"What traders are expecting is that the BOE will come out and support the currency by their jawboning. A fall of this magnitude is clearly spooking investors from the equity market [...]

"In terms of volume, today could turn out to be extremely heavy day. At the same time what speculators will also be looking at will be the news for any casualties due to the flash crash event of last night. It is very common to hear such news, especially when the market is not prepared for any such move," said Naeem Aslam at Think Markets.

"The post-mortem on GBP’s alarming overnight slide indicates that the move was on high volume so it’s hard to justify this as a fat-finger move, more a one-way market where selling was exacerbated by a cascade of stop-loss activity, including from option market makers," one analyst at JP Morgan said to clients.

On the data front, UK industrial production is at 0930 BST, but the main focus will be on the US nonfarm payrolls and the unemployment rate are at 1330 BST as investors try to gauge when the Federal Reserve might hike interest rates.

In corporate news, pharmaceutical giant AstraZeneca agreed to divest rights outside the US of its nasal spray to Johnson & Johnson affiliate CilagGmbH International for $330m.

AstraZeneca will not maintain an ongoing interest in the Rhinocort Aqua nasal spray as part of the deal, which is subject to closing conditions, and is expected to be completed in the final quarter of the year.

Vodafone announced on Friday that its subsidiary, Vodafone India, has acquired spectrum in all its key telecom circles in the latest spectrum auction for a total cost of INR 202.8bn.

The FTSE 100 firm said the new spectrum “significantly enhances” the coverage, capacity and speed of Vodafone India's 4G data services in its key circles, complementing existing high-quality 2G and 3G voice and data capabilities.

It now has 17 circles with 4G capability in the country, covering 91% of the subsidiary's total revenues and 94% of mobile data revenues.

Electra Partners said its portfolio company AXIO Group has received a binding offer from M3 Inc. to purchase Vidal Group, a European provider of reference drug information for healthcare professionals, for €100m.

The proposed transaction, which remains subject to certain conditions, would be the fourth major realisation from AXIO's portfolio.

Market Movers

FTSE 100 (UKX) 7,027.82 0.40%
FTSE 250 (MCX) 18,160.02 0.24%
techMARK (TASX) 3,552.93 0.40%

FTSE 100 - Risers

Anglo American (AAL) 1,029.50p 3.11%
BHP Billiton (BLT) 1,236.00p 2.83%
Ashtead Group (AHT) 1,341.00p 2.52%
Antofagasta (ANTO) 546.00p 1.77%
Rio Tinto (RIO) 2,663.50p 1.68%
Rolls-Royce Holdings (RR.) 772.50p 1.64%
Glencore (GLEN) 217.90p 1.61%
Hikma Pharmaceuticals (HIK) 2,026.00p 1.40%
Pearson (PSON) 804.50p 1.32%
Burberry Group (BRBY) 1,442.00p 1.19%

FTSE 100 - Fallers

easyJet (EZJ) 904.00p -3.16%
Marks & Spencer Group (MKS) 322.20p -2.54%
Barratt Developments (BDEV) 494.90p -2.00%
International Consolidated Airlines Group SA (CDI) (IAG) 374.00p -1.91%
ITV (ITV) 180.60p -1.85%
Sainsbury (J) (SBRY) 240.60p -1.76%
Persimmon (PSN) 1,791.00p -1.76%
Next (NXT) 4,671.00p -1.60%
Taylor Wimpey (TW.) 151.10p -1.50%
Whitbread (WTB) 3,837.00p -1.18%

FTSE 250 - Risers

Smith (DS) (SMDS) 416.30p 4.55%
Halma (HLMA) 1,129.00p 3.96%
BTG (BTG) 703.00p 2.78%
Evraz (EVR) 190.00p 2.70%
Acacia Mining (ACA) 470.50p 2.30%
Renishaw (RSW) 2,937.00p 2.30%
JPMorgan Indian Investment Trust (JII) 670.00p 2.29%
JPMorgan American Inv Trust (JAM) 346.10p 1.97%
Vedanta Resources (VED) 626.50p 1.95%
Petrofac Ltd. (PFC) 927.50p 1.81%

FTSE 250 - Fallers

Fidessa Group (FDSA) 2,395.00p -2.80%
William Hill (WMH) 299.60p -2.63%
McCarthy & Stone (MCS) 166.20p -2.46%
Ladbrokes (LAD) 138.40p -2.40%
Greene King (GNK) 756.50p -2.01%
Grafton Group Units (GFTU) 496.40p -1.90%
Countrywide (CWD) 206.30p -1.72%
Pets at Home Group (PETS) 234.00p -1.64%
DFS Furniture (DFS) 269.00p -1.57%
Sophos Group (SOPH) 262.90p -1.54%