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Stocks in London were bucking a weaker trend across global markets on Friday, boosted by a sagging pound, after comments by Federal Reserve Chair Jerome Powell sent the dollar higher.
The FTSE 100 index UKX, +0.63% was up 0.3% to 6,66.39, for a weekly gain of 2.8%, which makes it an outperformer versus its European peers. The pound GBPUSD, -0.37% was down 0.5% against the dollar, and is down around 0.8% for the week. Multinationals listed in London tend to benefit in these circumstances, as much of their revenue is earned overseas.
The ICE Dollar Index DXY, +0.36% was hovering at a three-month high of 92 on Friday. The dollar climbed as pressure stayed on bonds, with the yield on the U.S. 10-year government bond TMUBMUSD10Y, 1.603% last trading at 1.56%, hovering at its highest levels in a year. The dollar and yields rose following comments from Powell on Thursday.
“While Fed Chair Powell reiterated that the central bank wouldn’t be tightening policy anytime soon, he steered well clear of suggesting any form of intervention, dashing hopes that the Fed will step in to calm the bond market rout,” said Sophie Griffiths, market analyst at Oanda, in a note to clients.
The yield on the 10-year gilt TMBMKGB-10Y, 0.766% also moved higher, last up 3 basis points to 0.768%.
Supporting the FTSE 100 were shares of banks, with HSBC HSBC, -1.13% HUKX, +0.59% and Barclays BARC, +4.07% BCS, -2.54% up 3% and Lloyds Banking Group LLOY, +1.80% LYG, -0.90% up 1%.
The oil sector also got a boost, as U.S. crude CL00, +2.99% and Brent futures BRN00, +3.13% surged over 2%. That left shares of Royal Dutch Shell RDSA, +2.65% RDS.A, +0.88% and BP BP, +1.76% BP, +3.08% with similar gains. U.S. prices posted their highest finish since 2019 on Thursday, after the Organization of the Petroleum Exporting Countries and its allies said they would rollover current production cuts to end-April.
Shares of the London Stock Exchange LSEG, -12.35% fell 5%. The exchange operator said 2020 pretax profit rose 5.2% on the back of higher revenue, and declared an increased dividend. Disappointment over results came as net profit was 5% below consensus on a heavier tax charge, noted Citi analyst Andrew Coombs.
