The British pound shot higher on Monday, after Brexit Party leader Nigel Farage said his party won’t contest seats captured by the ruling Conservative Party in the last election, a boost for Prime Minister Boris Johnson’s party in coming elections.
The British pound GBPUSD, +0.7593% was up 0.8% to $1.28810. That strength weighed on an already weak FTSE 100 index UKX, -1.00% , which fell 1.2% to 7,268.59, after a 0.8% gain last week. Suffering much less was the FTSE 250 index MCX, -0.03%, flat at 20,340.68.
Stocks in London tracked a down day across global equity markets on Monday, with worries about increasing violence in Hong Kong and spotty progress for U.S.-China trade talks weighing on investors.
Sterling immediately shot up after the early afternoon announcement from Farage, as his Brexit Party has discussed fielding 600 candidates for the general election next month. “The pound is stronger since a clear, decisive election win for the Conservatives will provide clarity on Brexit – anything else becomes messy,” said Neil Wilson, chief market analyst for Markets.com.
Still, Wilson said, Johnson may still struggle to pick up seats from opposition parties such as Labour and the Liberal Democrats.
Meanwhile, data showed the U.K. economy returned to growth in the third quarter, up 0.3% though it was subdued with the slowest year-over-year expansion in nearly a decade.
As for stocks, mining names and oil companies weighed on the FTSE 100. Shares of miner Evraz PLC EVR, -5.83% sank over 6%, while Antofagasta PLC ANTO, -3.58% dropped 4% and Polymetal International Inc. POLY, -3.10% dropped 3.3%. BP PLC BP, -0.33% BP, -1.32% fell 1.8% and Royal Dutch Shell PLC RDS.A, -0.20% RDSA, -1.17% dropped 1.7%.
Among smaller companies, shares of Greggs PLC GRG, +14.51% jumped 15% after the bakery chain lifted its 2019 profit guidance, after reporting total sales rose 12.4% in the six weeks to Nov. 9 and rose 8.3% on a like-for-like basis among company-managed shops.