LONDON — Britain’s FTSE 100 is having its worst day in two months on Tuesday, as investors return to work following the long Easter weekend.
Soon before 12.00 p.m. BST (7.00 a.m. ET) the FTSE is down by close to 1.6% to trade at 7,211, dragged lower by a stronger pound and the falling price of commodities, which is weighing on the mining-heavy index.
Sterling hit its highest level since early February on Tuesday after Prime Minister Theresa May called for the UK to hold a snap general election. That sent sterling strongly higher, trading up by close to 0.45% at 1.2620 against the dollar.
When sterling strengthens, the FTSE tends to weaken, largely because about 70% of the revenue earned by FTSE 100 companies is derived abroad, meaning they make more money when sterling is weak, and less when it is strong.
That is because the index is full of mining companies, oil firms, and pharmaceutical giants that use the UK as a base but tend to denominate their assets in dollars.
The FTSE is also suffering as a result of a big fall in the price of commodities overnight, with both iron ore and copper struggling on the day, despite better than expected Chinese GDP figures. The FTSE’s miners are the index’s worst performers so far, with BHP Billiton the biggest faller, down 4.02%. Anglo American, Glencore, and BP are among the commodity-focused firms to lose more than 3%.
Here’s the chart of the FTSE’s day so far:
Elsewhere in Europe, losses are similar, with the continent’s major bourses all witnessing substantial losses. Here is the scoreboard:
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