Investors seem to be warming to the idea of an eleventh-hour Brexit deal if the performance of domestically focused stocks and a strong pound prove to be a good guide to future events.
Shares in Housebuilders Vistry (VTY) and Redrow (RDW) and Crest Nicholson (CRST) gained 4.5%, 3.5% and 5% respectively while home improvements company Travis Perkins (TPK) was also perky on Wednesday, gaining 3.5% to £32.75.
Investment director at AJ Bell, Russ Mould commented, ‘investors also seem to think a Brexit deal is in the offing, with news of an extended House of Commons sitting (presumably to pass any prospective deal) speaking louder than Boris Johnson’s apparent caution in public statements over the prospects for an agreement.
Since the last deadline passed on Sunday after both sides committed to extending talks and reaching agreement before the 31 December automatic ‘no deal’ point, the mid-cap FTSE 250 index has swiftly gained 2.3% compared with a more lacklustre 0.6% for the export focused FTSE 100 index.
STRONG POUND HITS KEY LEVEL
That’s mainly because of the stronger pound which has gained just over 2% against the US dollar this week to $1.35, a key resistance level which has repelled the pound for the last three years. Sterling has also gained 1.4% against the euro to trade at €1.10.
Investors appear happy to buy the pound on any possible news of a deal and sell it when the all too frequent disappointment appears. Sterling even shrugged-off weaker than expected inflation data today.
