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London markets: FTSE 100 faces 4th loss as pound rises

London markets: FTSE 100 faces 4th loss as pound rises

LONDON: U.K. stocks slipped Thursday, with pressure on London’s blue-chips benchmark coming from continued strength in the pound and a decline in shares of Primark chain operator Associated British Foods following a trading update.

How markets are moving: The FTSE 100 index was down 0.1% at 7,717.69, led by losses for telecom and utility shares. But the basic materials and consumer-services sectors gained ground. The index was on course for a fourth straight losing session. Last week, it hit an all-time closing high of 7,778.64.

The pound traded at $1.3842, up from $1.3830 late Wednesday in New York.

What’s driving markets:The FTSE 100 lagged behind other European equity benchmarks in early Thursday trade in part as the pound continued to scale at levels against the U.S. dollar not seen since the 2016 Brexit referendum. Sterling is on track for its fifth gain in six sessions and has picked up roughly 0.9% this week.

Sterling strength can hurt shares of multinational companies on the FTSE 100 as a stronger pound can dent earnings made overseas. About 75% of revenue generated by FTSE 100 companies comes from international markets.

“Whilst we should see GBP/USD break through 1.40 this year it has to be driven and buoyed by either a pick up in the U.K. economy and an interest rate hike, or major developments towards a favorable Brexit with Single Market access,” said Hamish Muress, currency analyst at OFX, in a note.

Read:Why one contrarian investor says the British pound could rally to $1.40 in 2018 (http://www.marketwatch.com/story/why-one-contrarian-investor-says-the-british-pound-could-rally-to-140-in-2018-2018-01-17)

Meanwhile, mining shares were modestly higher after better-than-expected growth and industrial output figures from China (http://www.marketwatch.com/story/china-industrial-output-rises-62-beating-views-2018-01-18), a major buyer of industrial and precious metals. But Chinese retail sales growth of 9.4% missed expectations.

Stock movers: Associated British Foods PLC shares (ABF.LN) fell 1% as the company posted a drop in revenue from its sugar business (http://www.marketwatch.com/story/ab-foods-revenue-up-as-primark-offsets-sugar-fall-2018-01-18) during the 16-week period to Jan. 6. The company said, however, that fall was countered by a sales increase at its Primark fashion arm. AB Foods left its full-year outlook unchanged.

“Sales at the budget clothing chain improved 9% year-on-year, a record for the Christmas period, however, accounting for constant FX, the numbers were a little less impressive 7%,” said Henry Croft, research analyst at Accendo Markets, in a note.

Whitbread PLC (WTB.LN) pushed up 1.4% as the company, which runs the Costa Coffee and Premier Inn brands, said it’s on track to meet its full-year expectations.

In the mining group, Glencore PLC (GLEN.LN) rose 0.5% and Rio Tinto PLC (RIO) (RIO) (RIO) picked up 0.4% but Randgold Resources PLC (RRS.LN) (RRS.LN) was off 0.8%.

Among other decliners, mobile services provider Vodafone Group PLC (VOD.LN) (VOD.LN) and telecom services company BT Group (BT.A.LN) (BT.A.LN) fell 1.9% and 1.1%, respectively.

Off the FTSE 100, shares of Countrywide PLC (CWD.LN) fell 17% after the real-estate agent forecast a 9% drop in 2017 profit (http://www.marketwatch.com/story/countrywide-slumps-17-after-disappointing-q4-performance-2018-01-18).