ON MONDAY, the FTSE 100 was gaining and outperforming European indices with greater exposure to the Turkish economy.
“A weekend of sunshine appears to have put investors in a better mood, with the main UK market indices doing their best to start the new week on the front foot,” said Russ Mould, investment director at AJ Bell.
The good start for UK stocks was an outlier compared to European stocks showing signs of stress due to Turkey’s elections.
A run-off in Turkish elections posed a fresh geopolitical risk to European equities and mainland European stocks suffered early Monday. There is little direct exposure to Turkey among London’s leading indices, and the FTSE 100 rose 0.2%, performing materially better than European indices.
The Turkish Lira sunk on the prospect Erdogan would be re-elected.
“The scattergun of political uncertainty is keeping the Turkish lira on a volatile path, as the country heads for a run-off in the Presidential race,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Erdogan has led highly controversial monetary policies aimed at increasing exports, rather than tackling painful inflation, and the prospect of Turkey’s ‘strongman’ winning another term has weakened the currency further. There are expectations of a rollercoaster ride in the days ahead, as sentiment waxes and wanes about the prospects for the opposition coalition, which has pledged to pull more conventional levers to restore financial stability.”
FTSE 100 movers
HSBC was among the FTSE 100’s top riser after delivering an upbeat assessment of their Asian business.
“All parts of HSBC Asia are now motoring. In mainland China, we are ideally positioned to facilitate business with the rest of the world; in South and Southeast Asia, we have invested heavily in Singapore, and we have significantly bolstered our growing business in India,” said HSBC Group Chief Executive Noel Quinn.
HSBC shares were 1.6% higher at the time of writing.
British American Tobacco shares were taking the surprise departure of their CEO in their stride with a 0.7% gain.
“It’s never a good look when a company says its chief executive is leaving with immediate effect, and after only four years in the job. This suggests something is not right in the business,” said Russ Mould, investment director at AJ Bell.
“The fact British American Tobacco has promoted its finance director to the CEO role provides some comfort that the new leader already knows the business inside out. However, it raises a lot of questions as to why the change has happened.
“Unlike many companies in this situation, we haven’t had any major clues for problems behind closed doors for British American Tobacco. There have been no profit warnings or activist investors calling for change. The only high-profile calls from shareholders have been a request by GQG Partners to move its stock listing from London to the US in the hope of getting a higher valuation.”