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British pound rises as Johnson takes office

British pound rises as Johnson takes office

A picture illustration of US dollar, Swiss franc, British pound and Euro bank notes. (REUTERS/Kacper Pempel/Illustration/File Photo)

LONDON: The British pound gained ground on Wednesday (Jul 24) as Boris Johnson took over as prime minister, while European stocks were mixed amid weakness in the mining sector.

Sterling climbed versus the euro and dollar as traders watched Johnson - a leading Leave campaigner in Britain's shock Brexit referendum three years ago - issued an exuberant call to arms from in front of the premier's residence at 10 Downing Street.

Investors are keen to see whether he pushes ahead and takes Britain out of the European Union at the end of October, which he has repeatedly pledged to do, "no ifs or buts".

BREXIT SCEPTICISM 'PRICED IN'

"The pound is beginning to stabilise, proving that a lot of the scepticism about Boris Johnson's Brexit policy was already built into the price," said City Index analyst Fiona Cincotta.

Europe's major stock markets were mixed at the close meanwhile, with London miners weighed down by sliding iron ore prices, dealers said.

"A sell-off in iron ore prices in China has prompted a decline in major mining stocks like Rio Tinto, BHP Billiton and Glencore," noted CMC Markets analyst David Madden.

"Brazil's Vale won approval to restart iron ore production, and that triggered the drop in iron ore prices."

Gloomy data on eurozone business activity dampened sentiment as well.

"The manufacturing sector has become an increasing cause for concern," commented Chris Williamson, an IHS Markit economist after the group said its composite eurozone PMI (purchasing managers index) fell to 51.5 points in July from 52.2 in June.

A reading above 50 points indicates an expansion, but the long-term trend appears to be heading towards stagnation.

Worse still, a sub index for manufacturing fell to 46.4 points - a 79-month low.

TECH UNDER THREAT

Most Asian markets had enjoyed another day of gains, with support coming from healthy earnings results and renewed hopes for a resolution of the China-US trade war.

Reports said US President Donald Trump's Trade Representative Robert Lighthizer would lead a delegation to China next week to resume trade talks.

The meeting would be the first head-to-head since negotiations were cut short in May by Trump's surprise decision to hit China with more tariffs for what he called Beijing's backsliding.

But US markets were lower in midday trading on Thursday as investors turned their attention to a US government investigation into top tech firms, with the Dow off 0.5 percent.

The Justice Department said it would begin an antitrust review of major online platforms to determine if they have "stifled" innovation or reduced competition, and while it did not name specific firms, it appears Google, Facebook, Amazon and Apple are in the crosshairs.

"In other words, it will focus on some of the biggest, most successful, and widely-held, stocks in the land," said market analyst Patrick O'Hare at Briefing.com.

Separately, US regulators on Wednesday slapped a record US$5 billion fine on Facebook for privacy violations in a wide-ranging settlement that also called for revamping privacy controls and oversight.

Key figures around 1600 GMT:

 

Pound/dollar: UP at US$1.2496 from US$1.2440 at 2050 GMT

Euro/pound: DOWN at 89.18 pence from 89.64 pence

Euro/dollar: DOWN at US$1.1142 from US$1.1152

Dollar/yen: DOWN at 108.10 yen from 108.23 yen

 

London - FTSE 100: DOWN 0.7 per cent at 7,501.46 points (close)

Paris - CAC 40: DOWN 0.2 per cent at 5,605.87 (close)

Frankfurt - DAX 30: UP 0.3 per cent at 12,522.89 (close)

EURO STOXX 50: UNCHANGED at 3,532.90

 

Tokyo - Nikkei 225: UP 0.4 per cent at 21,709.57 (close)

Hong Kong - Hang Seng: UP 0.2 per cent at 28,524.04 (close)

Shanghai - Composite: UP 0.8 per cent at 2,923.28 (close)

 

Brent North Sea crude: UP 0.1 per cent at US$63.91 per barrel

West Texas Intermediate: DOWN 0.4 per cent at US$56.55 per barrel

Source: AFP/de

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