UK stocks slide on Brexit worry as pound lifts FTSE

Bloomberg

Domestic UK stocks declined on growing anticipation of a no-deal Brexit after the British government sought to suspend parliament, while a weaker pound boosted the exporter-heavy FTSE 100 Index.
The FTSE 100, which has moved inversely to the currency in recent years, climbed 0.3 percent in London, while the more UK focussed FTSE 250 Index lost 0.7 percent.
Sterling slumped after the Queen approved UK prime minister Boris Johnson’s plan to suspend parliament from mid-September to mid-October, increasing the risk of a no-deal Brexit, a move that could hinder lawmakers’ efforts to block a no-deal Brexit.
As the pound fell as much as 1.1 percent, the biggest contributors to the FTSE 100’s gains included drugmaker AstraZeneca Plc, Reckitt Benckiser Group Plc and GlaxoSmithKline Plc, which get a significant portion of revenue outside the UK.
The gauge also got a boost from oil stocks amid higher crude prices. Housebuilders such as Taylor Wimpey Plc and Barratt Developments Plc declined.
“Beyond the knee-jerk GBP-induced bounce of the FTSE 100, we would rather see it as a case of raising risk premia on just any UK assets, really,” said Stephane Barbier de la Serre, macro strategist at Makor Capital Markets. “We are not quite sure what the next steps could be, both from the executive and parliamentary side, but the sure thing is that this considerably raises the level of uncertainty, the thing that markets dislike the most.”
News of plans to suspend parliament further clouds the outlook for Brexit ahead of the October 31 deadline to leave the EU, with strategists earlier this month recommending steering clear of UK equities until there’s more political clarity.