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  • Theresa May’s heavy Brexit defeat and Britain’s blue chip stocks

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    Theresa May’s heavy Brexit defeat and Britain’s blue chip stocks File Photo

    Britain’s blue chip stocks fell on Wednesday as a stronger pound lured investors toward cheap domestic companies and away from exporters after Prime Minister Theresa May’s heavy Brexit defeat, while weak results weighed on Pearson.

    The top share index ended down 0.5 per cent at 6,862 points, lagging European peers as sterling hit its highest since November, a day after British lawmakers overwhelmingly voted against May’s divorce deal with the European Union.

    A loss had largely been priced in already, though its magnitude - a margin of 230 - came as a surprise.

    The prime minister’s historic defeat was seen as reducing the chance of a hard Brexit even as uncertainty ahead of a no confidence vote in May’s government on Wednesday evening kept volumes muted.

    “Uncertainty continues to reign. This is the harsh reality of progress during these unprecedented Brexit negotiations,” said Richard Flax, Chief Investment Officer at Moneyfarm.

    “We do still believe that the most likely outcome is that a deal is done before the UK leaves the bloc - whether thats on Mar 29, or after an eleventh hour plea to delay the day Britain leaves the EU, remains to be seen. But it’s tough to have too much conviction about that.”

    Investors shunned consumer staples, which earn a big portion of their revenue abroad in foreign currency, with Unilever and Diageo dragging on the index. Heavyweight oil and gas stocks were down 1.5pc.

    The domestically focused midcaps, which make half of their income at home, gained 0.3pc. Ireland’s top share index, one of the barometers for Brexit sentiment, advanced 1pc.