FTSE 100: 7364.56 ▼ -60.84 (-0.82%)
The pound's heavy fall this week has delivered a further boost to investors' portfolios this week, in a year in which sterling's slide has been a major factor behind bumper returns for UK investors in overseas markets.
Even before last night's 'flash crash', the pound had been enduring a difficult week. Prime minister Theresa May's confirmation over the weekend that she would trigger the process to leave the European Union by March next year gave sterling a difficult start to the week from which it did not recover.
Traders alert to the news flowing from the Conservative party conference in Birmingham found plenty of reasons to sell the pound. If it wasn't May seemingly putting single market access at the back of the queue of her demands in the upcoming Brexit negotiations, it was chancellor Philip Hammond confirmation he would abandon predecessor George Osborne's fiscal rules, with the UK's budget deficit likely to suffer.
It all came to a head last night, when a 'flash crash' in sterling blamed on either a 'fat finger' trade or the machinations of computer algorithms saw the pound fall as low as $1.149, according to Reuters.
While it has recovered from those new 31-year lows, the pound remains 1.9% lower against the dollar today and on course for a weekly loss of more than 5%.
Our exclusive Accumulator data table, which covers the week to yesterday, shows some of the damage to the currency. Over the fives days to Thursday, the US dollar raced 2.6% higher against the pound, while the euro wasn't far behind, up 2.1%. And that's before the impact of today's plunge.
But the flipside of the pound's troubles can be seen in the sea of black encompassing our table of major global stock market returns. Only China has delivered losses for UK investors this year, with investors in all other markets enjoying returns at least in the mid teens.
Our Accumulator table shows returns in pound terms, and currency has been a huge factor in those strong performances. In the US, for example, domestic investors have seen the S&P 500 rise 5.7% this year, but UK investors have enjoyed a 25.3% return, thanks to the pound's fall against the dollar.
German investors in the DAX 30 are meanwhile sitting on a 2016 loss of 2.1%, transformed into a 17.9% gain in pound terms thanks to the euro's 19.8% rally against sterling this year. The disparity is even more pronounced in Japan, where domestic investors have lost 12.7%, but UK investors have made 20.5%.
It means that UK investors could be on course for the best returns from global markets since 1999. The FTSE World is up 24.2% so far this year in pound terms according to our table, just a smidgen below the 24.5% return delivered in 2005. But that milestone looks like it has been passed with today's 0.6% rise in the index.
That leaves 1999's 30.1% rally at the height of the dotcom bubble as the last time global markets were this buoyant for UK investors.
Turning to the few blotches of red on our table and the pound's heavy fall hit UK government bonds, or gilts, while elsewhere, currency movements again had a big role to play. The week's rally in the dollar was bad news for gold and silver, both priced in the currency, which fell 2.2% and 7.1% respectively.
That would normally also weigh on the oil market, but Brent crude continued to bask in bullishness after the Opec cartel of oil-producing nations' agreement to cut production announced last week.
Property slumped too, coming under pressure from all angles. In the UK, real estate investment trusts fell 2.4% on fears of a hard Brexit. Hawkish noises from the Federal Reserve meanwhile did for their US peers, down 3.4%, while in the eurozone, reports the European Central Bank could start tapering quantitative easing took their toll, sending European Reits 3.2% lower.
Against this backdrop of broadly buoyant markets in pound terms, mixed asset fund managers continued to lag, as Micawber highlighted in our Forums this week. The average manager in each of the five strategies we feature is delivering returns this year well below those hit by the stock market but also lagging commodities, bonds, and even some forms of property. One to keep an eye on!