FTSE 100 and sterling recover after choppy end to a turbulent week

Political uncertainty has weighed heavy on markets as the contest for Liz Truss’s replacement commenced.

Sterling slid back down to its lowest level this week on Friday amid increased nervousness about who will lead the UK next week.

It fell by 1.16% to 1.11 against the US dollar on Friday morning and was down 0.64% against the euro.

But by the time markets closed, sterling had rebounded and was up 0.56% against the dollar to 1.1298, while it had dipped 0.26% to 1.1448 against the euro.

Interest on Government bonds – known as gilt yields – shot back up again after official figures early on Friday showed that Government borrowing struck £20 billion last month, £2 billion more than economists had expected.

Long-dated gilt yields surged in the afternoon with 30-year yields hitting 4.15%, having eased back on Thursday after Ms Truss confirmed her resignation.

On top of the political chaos, fresh data showing that retail sales fell last month put a dampener on the London Stock Exchange, with shares in big retailers like JD Sports, Frasers Group and Next all slipping to the bottom of the FTSE 100.

But the FTSE 100 managed to claw back its losses from earlier in the day and closed in the green.

It was up 25.82 points, or 0.37%, at 6,969.73.

Joshua Mahony, senior market analyst at online trading platform IG, said: “The pound finds itself back under pressure today as traders are faced with yet another bout of political uncertainty and economic concerns.

“This morning’s retail sales data highlighted the struggles facing consumers and businesses alike, with people spending 3.9% more for 6.9% less goods.

“Meanwhile, traders are faced with yet another bout of political uncertainty, with Penny Mordaunt officially throwing her hat into the ring for a potentially doomed two-year stint that will likely be dominated by inflation and recession.”

Elsewhere in Europe, its top indices slipped into the red, ending the week on a sour note after earlier gains. The German Dax was down 0.29% and the French Cac was 0.85% lower.

In the US, trading got off to a strong start and the S&P 500 had jumped up 1.45% and Dow Jones was 1.63% higher when European markets closed.

In company news, takeaway giant Deliveroo upped its profit guidance and saw its shares jump as a result.

But the firm sandwiched the news with a warning that its sales growth will be at the bottom end of targets after seeing its order numbers fall.

Its share price was up 3.51% at the end of the day.

Holiday Inn owner Intercontinental Hotels Group (IHG) shared good news about its revenue growth which it said has overtaken pre-pandemic levels thanks to a rebound in leisure, business and group travel.

But IHG said it still has outstanding debts of £2.1 billion.

Shares in IHG were 2.1% lower.

Meanwhile, DIY retailer Wickes warned shareholders that its energy costs could be a hefty £7.5 million higher next year, or 75%.

But it managed to somewhat placate investors with the news that its sales had increased in the latest quarter.

Its share price was down 2.17%.

The biggest risers on the FTSE 100 were Glencore, up 17.4p to 502.1p, Anglo American, up 81p to 2,734p, Antofagasta, up 30p to 1,148p, GSK, up 27.4p to 1,392.4, and Endeavor Mining, up 27p to 1,539p.

The biggest fallers on the FTSE 100 were Auto Trader Group, down 32p to 486.2p, JD Sports, down 6.12p to 94.18p, Frasers Group, down 26p to 621p, Rightmove, down 14p to 459.1p, and Next, down 139p to 4,738p.