By Carla Mozee, MarketWatch
Blue-chips index still on course for weekly fall
U.K. stocks on Friday were on track to break a losing streak,
helped by advances for oil and gas shares, but the benchmark FTSE
100 was still on course for a weekly decline.
The FTSE 100 rose 0.7% to 7,470,88, with all sectors rising. The
oil and gas, industrial and consumer goods groups were the best
performing.
The energy group, which has a roughly 14% weighting on the
benchmark, rose as oil prices gained ground, including a 1% rise
for Brent crude futures . Shares of oil companies BP PLC (BP.LN)
(BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) each picked
up 1.2%.
A win Friday would be the first for the FTSE 100 after four
sessions of declines. Still, the FTSE 100 was on track to fall 0.9%
for the week, which would be the largest since the week ended April
21.
Meanwhile, the more domestically focused FTSE 250 index moved up
0.9%.
"Traders have gotten to grips with the surprise that three
members of the Bank of England voted to hike interest rates.
Bargain hunting is in play today as dealers pick up cheap stocks,"
wrote David Madden, a CMC Markets analyst.
The FTSE 100 on Thursday closed 0.7% lower
(http://www.marketwatch.com/story/ftse-100-drops-as-skepticism-over-fed-outlook-hits-risk-assets-2017-06-15),
and the FTSE 250 dropped 2.1%, rattled as retail sales in May fell
1.2%, highlighting concerns about consumer spending as wages fall.
As well, stocks finished lower after the Bank of England
unexpectedly voted by 5-3 to hold its key interest rate at 0.25%.
Analysts had widely expected one policy maker -- at the most -- to
vote for a rate increase.
"Bank of England Governor Mark Carney previously articulated
that it would look through higher inflation readings in the
short-term as there were risks that the economy would weaken from
here, with particular threats to the U.K. consumer," wrote Dermot
O'Leary, chief economist at Goodbody on Friday.
"We believe those threats are very real and will manifest
themselves over the coming months, thus giving the Bank of England
reason to keep rates on hold at the current level for a prolonged
period," he said.
Retailers: Some uneasiness remained within retail shares Friday,
with Tesco PLC (TSCO.LN) turning lower after rising more than 4%
after trading opened. Britain's largest supermarket chain said
first-quarter same-store sales at its core U.K. unit grew by 2.3%,
(http://www.marketwatch.com/story/tescos-uk-sales-rise-23-on-food-boost-2017-06-16)
and that it's working with suppliers to offset the impact of
inflation.
"[I]nvestors do not appear to have found any strong reasons to
upgrade 2017/18 profit expectations from the current widely
forecast [around] GBP1.5 billion," said Ken Odeluga, market analyst
at City Index, in a note.
"Residual concerns about profit growth, quite fairly, remain.
Price remains the only game in town right now, and it's one Tesco
has lost before, when the ongoing battle between established
grocers and Aldi and Lidl contorted big grocers into deeply
unhealthy shapes."
Shares of rival supermarket chain J Sainsbury PLC (SBRY.LN) also
flipped lower, losing 0.2%. Wm. Morrison Supermarkets PLC (MRW.LN)
pared its rise to 0.8%.
This week, data from the Office for National Statistics showed
consumer-price inflation rising to a four-year high at 2.9%.
That helped push the pound above $1.27 this week. It was trading
slightly higher on Friday, buying $1.2769 compared with $1.2756
late Thursday in New York.
A stronger pound, however, can pressure shares of multinational
companies on the FTSE 100 as they make most of their revenue in
overseas markets.
Weekly wrap up: In other moves Friday, Rolls-Royce Holdings PLC
(RR.LN) was up 1.7% after the aircraft engine maker kept its
underlying outlook
(http://www.marketwatch.com/story/rolls-royce-holds-to-outlook-excluding-fx-effects-2017-06-16)
for its half-year and full-year revenue, profit and free cash flow
unchanged.
On the downside, telecom company BT Group PLC (BT.A.LN) fell
1.2% and miner Anglo American PLC (AAL.LN) lost 3%.
Meanwhile, U.K. Prime Minister Theresa May and her Conservative
Party were still reportedly discussing a deal for support from
Northern Ireland lawmakers after the Conservatives lost their
parliamentary majority in last week's general election.
"The political situation in the U.K. seems to be improving, as
the Queen's speech will take place on Wednesday, even if the
Conservatives don't have a deal in place with the Democratic
Unionist Party by then. This sign of political stability has added
to the boost in investor confidence," CMC's Madden said Friday.
Brexit talks are set to begin Monday between U.K. and European
Union officials.
(END) Dow Jones Newswires
June 16, 2017 08:41 ET (12:41 GMT)
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