FTSE 100 Bounces Back On No Confidence Vote

As predicted, with the Brexit vote postponed and now a 'no confidence' vote in Theresa May’s leadership of the Conservative Party and ultimately, potentially a new Prime Minister if she loses the leadership contest, the pound has fallen dramatically against major World currencies and FTSE 100 has risen.

FTSE 100 companies are the UK’s largest companies, many of which are currency sensitive as they earn their income and have many assets overseas in foreign currency.  The means that when they bring back those $, €, ¥ back to the UK, they convert at a weaker £ i.e. $, €, and ¥ buy more £.  This means profits in sterling terms are higher resulting in many FTSE 100 stocks rising.

The converse of a strong £ is also true, where FTSE 100 will fall.

The no confidence vote has weakened the £ and FTSE 100 has risen.  At the time of writing, 12 noon on 12 December 2018,  FTSE 100 stands at 6,898.  The is up 1.35% on the day and up 3% since we went green/positive and bought back in at 6,701 on 06 December 2018.

If Mrs May wins, the £ will strengthen and FTSE 100 will fall, if the Mrs May loses, the £ will weaken further and we could see FTSE 100 get back above the 7,000.

Our Market Sentiment

As you know, our short term target, when we makes moves in and out of markets is just a 5% gain.  So we are already close to our target after buying back in at 6,701.