Britain’s FTSE 100 flirted with a record high on Wednesday and was poised for its best month of the year after a poll showing the ruling Conservatives falling short of a majority in next week’s election further dented sterling, Reuters reports.
The UK bluechip index, dominated by dividend-paying exporters whose profits benefit from a weak local currency, rose 0.3 percent by mid-morning and was just short of its all-time hit earlier in May.
Wednesday’s gains put the FTSE 100 on track to post a 4.8 percent rise for the month of May, the best monthly performance of the year.
Strength in shares of big multinational companies such as British American Tobacco, Diageo and HSBC, which generate the majority of their revenue outside the UK, was enough to offset weakness in mining companies that suffered from a slump in prices of metals.
Emerging market-focused bank Standard Chartered rose 2 percent and was the top performer on the FTSE 100.
“Sterling weakness has offered a helpful translational boost for the FTSE’s army of foreign earning stocks as the index brushes off weakness in commodities overnight,” said Henry Croft, a research analyst at Accendo Markets in London.
A poll from YouGov published overnight on the distribution of seats after the June 8 vote pointed to a loss of 20 seats for Prime Minister Theresa May’s party that would leave her short of an overall majority in a parliament where she lacks potential coalition partners.
Other projections still show May would win soundly though the YouGov poll was the latest hit to markets which just two weeks ago were pricing in a Conservative landslide.
The sharpest hit, as has been the case since last year’s Brexit referendum, was on sterling which hit an almost six-week low in morning trade. Option market bets on weakness in Britain’s pound reached their highest in more than three months.
Among equities, commodity-related stocks, usually also beneficiaries from a weak pound, suffered as a supply glut and selling by Chinese speculators spurred the sharpest rout in iron prices this year.
Glencore and Rio Tinto fell about 2 percent. BHP Billiton fell 1.7 percent. Shares of payment processor Worldpay fell 1.6 percent after Barclays downgraded the stock to “neutral,” adding it expected the company was likely to miss certain growth targets.
Among mid-caps, online food delivery service Just Eat rose 1.6 percent to a record high as local broker Peel Hunt started coverage on the stock with a “buy” rating. Just Eat shares are now up more than 150 percent since their listing.