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Defensive Shares Hold FTSE Aloft

Wed, 15th Aug 2018

The FTSE 100 held its ground on Friday morning, successfully outperforming the European market, which had been broadly negative. Global trade uncertainty combined with political troubles closer to home, to spur demand for defensive stocks.

The FTSE 100 was up by 0.1 percent not long after the opening bell, on track for a second straight week of gains. Overall, the index is up by 0.5 percent on the week.

The UK’s leading index is dominated by companies that have a large percentage of foreign currency earnings, and as such it has found support in weakness from the pound, which has been struggling this week as Prime Minister Theresa May worked frantically to pull her party together on the issue of the Brexit deal.

The FTSE is exposed to cyclical and risky commodities, but it still has a large set of consumer staples, and non-cyclical business, which are showing strength at the moment. The index also has a significant amount of dollar exposure as well.

Tensions over global trade remain prominent, and the markets have kept the FTSE 100 trading in a narrow range since the end of May. Fears over tariffs have hit some European sectors, but the defensive makeup of the FTSE has shielded it from some of that impact. There are some strong consumer staples in the index, including British American Tobacco, Unliever, and Imperial Brands, which all made some significant gains over the course of the day, being up by between 1.1 and 2.7 percent.

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