FTSE 250 Posts Best Day Since May 2010 on Brexit Deal Hopes
(Bloomberg) -- The U.K.’s gauge of mid-cap stocks ended Friday with its best day since the wake of the May 2010 election, boosted by a rally across companies exposed to the domestic economy on hopes of a Brexit deal.
The FTSE 250 Index closed up 4.2% after Irish Premier Leo Varadkar said Thursday that he believed an agreement is possible by the Oct. 31 deadline, following two-and-a-half hours of “constructive” talks with Prime Minister Boris Johnson. Ireland’s ISEQ All-Share Index jumped 3.7%, its best day since June 2016.
“There’s still a huge amount of uncertainty as to whether they can finally agree a deal, but the will seems to be there at present,” Alastair George, chief investment strategist at Edison Group, said by phone.
“What that’s done is create a substantial turn from quite undervalued levels in sterling and also in U.K. equity markets,” said George, adding that while U.K. stocks aren’t cheap, they were trading below their long-term averages and they had underperformed other major markets.
Top gainers included investment management firm Rathbone Brothers Plc, homebuilder Countryside Properties Plc, bank CYBG Plc and builders merchant Travis Perkins Plc. The blue-chip FTSE 100 Index, which has a high proportion of exporters and dollar-earners, underperformed as the pound rallied.
Among large cap stocks, Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, two of the U.K. banks with most exposure to the domestic economy, both surged more than 11% to have their best day in years. Among decliners, big exporters GlaxoSmithKline Plc, British American Tobacco Plc and Diageo Plc all fell.
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