Weakness in the British pound, which fell below 1.23 to the US dollar on Tuesday, has helped send UK stocks higher. Gains in the rest of Europe were not as widespread as oil prices pulled back from the highest in a year, dragging on energy company shares.
Exporters including fashion retailers Burberry and Ted Baker (LON:TED), which reported a rise in H1 sales, continue to benefit from the weaker pound for the impact on foreign earnings. There were some new big risers on the FTSE 100 on Tuesday.
The prospect of a tourism boom sent investors toward the domestic firms set to benefit from more tourists spending. Tourism agency VisitBritain has reported the UK saw its biggest ever month for tourist visits in July. Tourists buying hotel rooms and coffee will benefit IHG and Whitbread (LON:WTB) whilst more Brits holidaying at home could help theme-park operator Merlin Entertainments.
Russian state-controlled bank VTB Bank plans to move its European HQ out of London to somewhere else in Europe because of Brexit. VTB’s decision has contributed to weakness in the pound but done little to change the short-term desire for gilts or UK stocks, both of which were higher. Taking the costly decision of moving headquarters appears a little premature given that London could still retain near-full access to European financial markets. It smacks a little of headline-grabbing and may just reflect the relatively small expense for VTB, which has a relatively small presence in the City.
US stocks look set for a lower start as third-quarter earnings season gets its traditional kick-off with earnings from Alcoa (NYSE:AA). An improvement in aluminium prices is expected to see Alcoa post its first annual rise in earnings per share in five quarters.
Shares of Verizon and Yahoo are expected to open higher after Verizon CEO Lowell McAdam addressed some concern including the Yahoo data breach at an internet conference on Monday evening.
USA pre-opening levels
S&P 500: 5 points lower at 2,158
Dow Jones: 35 points lower at 18,294
Nasdaq 100: 9 points lower at 4,884
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