By Mark Cobley
U.K. markets looked set to close the week out on a gain of almost 1% after a week of extraordinary political turmoil in London. But British stocks continue to trail their counterparts around the world.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.34% was flat on Friday morning at around 7,270, as investors digested the fallout from a hectic few days in parliament. Since Monday, the U.K.’s new Prime Minister Boris Johnson has lost a series of crunch votes on Brexit, collapsed his own parliamentary majority by sacking rebellious lawmakers, failed to win backing for a new election, and suffered the resignation of his own brother as a minister.
Against that backdrop, the U.K. benchmark has undershot most others. The U.S.’s S&P 500 /zigman2/quotes/210599714/realtime SPX +1.60% is up 1.7% for the week, while Europe’s Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.10% is up 1.8%.
British shares’ underperformance continues a trend seen for much of 2019, according to stockbroker AJ Bell. “Only the key benchmarks in India, Hong Kong and Japan have fared worse than the FTSE 100, 250 and All-Share [in 2019],” the firm said in a note this morning.
Meanwhile, the British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0157% has rallied by almost 2.5% throughout the week to $1.2302, as the defeats inflicted on the strongly pro-Brexit Johnson government have made a quick, disorderly exit from the EU less likely.
U.K. stock investors have also had their eyes at least as much on the prospects for the global economy, with this week’s Brexit chaos balanced by hopes the U.S. and China might soon sit down to strike a trade deal. Markets are also awaiting the U.S. jobs report later today, a key indicator for the health of the world’s biggest economy.
Shares in U.K.-listed security group G4S /zigman2/quotes/202248409/delayed UK:GFS +0.56% soared almost 9% on a report that the U.S.-listed Brinks Company is planning a £1bn bid for part of the business. British network Sky News said the two firms are in talks but other bidders might yet emerge.
Car-seller Motorpoint /zigman2/quotes/205386350/delayed UK:MOTR +0.37% was the largest faller in the FTSE All Share index, dropping almost 15% after the company announced its co-founder had sold the majority of his stake . Among blue-chip firms, utilities Centrica /zigman2/quotes/205228367/delayed UK:CNA +2.98% , United Utilities /zigman2/quotes/203908003/delayed UK:UU +2.30% and Severn Trent /zigman2/quotes/207458310/delayed UK:SVT +0.94% were all off by more than 3%, after analysts at RBC Capital Markets downgraded United Utilities , according to Morningstar.