LONDON – The FTSE is rallying due to a weak pound on Friday morning as Thursday’s election ended in a hung parliament.
Here’s what it looks like at 8.20 a.m. BST (3.20 a.m. ET):
Though a weaker pound might seem like bad news for UK stocks, about 70% of the revenue of the companies that make up the FTSE 100 is derived from abroad, meaning they make more money when sterling is weak.
The FTSE 250, which contains a higher quota of domestic companies, was down around 0.5% at the same time.
An emailed note to clients from analysts Mike van Dulken and Henry Croft this morning said: “A very positive opening call comes as FTSE investors embrace fresh GBP weakness following a hung parliament result from the UK election.
“Whilst this means uncertainty about the UK economy and of course Brexit negotiations, the index’s international exposure means it benefits from a FX translational standpoint. The prospect of a softer Brexit stance due to a coalition is also helping. Stocks in focus today will be financials, miners and housebuilders.”