HONG KONG – The pound briefly and mysteriously plummeted to a fresh 31-year low Friday amid persistent concerns about Britain’s exit from the European Union, rattling world markets but sending British stocks higher.
KEEPING SCORE: Britain’s benchmark FTSE 100 index rose 0.6 per cent to 7,040.97 in early trading thanks to the plummeting pound, which means fatter profits for the index’s many global companies after they bring home their international earnings. Other European stocks sank, with France’s CAC 40 sliding 0.4 per cent to 4,462.52 and Germany’s DAX shedding 0.4 per cent to 10,522.79. U.S. shares were poised to open lower. Dow futures dipped 0.2 per cent to 18,166.00 and broader S&P 500 futures eased 0.2 per cent to 2,152.10.
CURRENCY CHAOS: The pound tumbled sharply, slumping as much as 6 per cent to its lowest level in more than three decades, before rebounding somewhat, although the reasons for the “flash crash” were unclear. The British currency, which was trading at around $1.26 on Thursday, plunged to around $1.18 early Friday before recovering minutes later and was later trading around $1.24. Possible triggers cited by market watchers included a trader’s “fat finger” mistake, a rogue automated trading algorithm or comments to British media by French President Francois Hollande, who insisted the European Union must take a tough stance in negotiating Britain’s exit from the bloc’s tariff-free single market. In other currencies, the dollar eased to 103.83 yen from 103.96 yen and the euro slipped to $1.1117 from $1.1139.
JOB REPORT: Investors were awaiting a U.S. report later Friday that economists expect to show employers added a solid number of jobs in September while the unemployment rate stayed low. A strong result would boost the chances that Fed policymakers will soon move to raise short-term interest rates from ultralow levels that have supported a multiyear stock market boom.
MARKET INSIGHT: “While we still have some reservations that the Fed will move this year, the underlying economic data is getting the Street all hot and sweaty” about the prospect of a rate hike, said Gavin Parry, managing director of Parry International Trading. “Tonight’s payroll data will be key for this sentiment continuing.”
ENERGY: Oil hovered at a three-month high. U.S. benchmark crude oil futures rose 23 cents to $50.67 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 61 cents to close at $50.44 a barrel on Thursday, its first close above $50 a barrel since June 23. Brent crude, the international standard, added 23 cents to $52.74 a barrel in London.