By Carla Mozee, MarketWatch
April retail sales crush forecasts; Shire rallies on test
results
U.K. blue-chips dropped sharply Thursday, with a pop in the
pound above $1.30 for the first time in seven months accelerating
an ongoing selloff prompted by troubles surrounding U.S. President
Donald Trump's administration.
The FTSE 100 index fell 1% to 7,426.12, with only the utility
and health care sectors posting modest gains. The index was facing
its deepest percentage loss since April 18.
The FTSE 100 lost as much as 1.5% as the pound climbed to
$1.3048 after U.K. retail sales for April blew past expectations. A
stronger pound puts pressure on foreign-denominated earnings made
by multinational companies listed on the London benchmark.
The FTSE 100 on Wednesday fell 0.3%
(http://www.marketwatch.com/story/ftse-100-steady-ahead-of-jobs-data-but-trump-worries-limit-gains-2017-05-17),
the first loss in 10 sessions and a retreat from its record close
of 7,522.03 logged Tuesday
(http://www.marketwatch.com/story/ftse-100-clings-onto-record-high-ahead-of-inflation-report-2017-05-16).
Trump's tribulations: European stocks slumped 1% on Thursday,
and U.S. stock futures flipped lower
(http://www.marketwatch.com/story/fragile-start-ahead-for-us-stocks-as-political-concerns-weigh-heavy-2017-05-18),
with futures for the Dow Jones Industrial Average down nearly about
100 points. The Dow industrials on Wednesday
(http://www.marketwatch.com/story/us-stock-futures-slide-as-concerns-over-trump-grow-2017-05-17)
tumbled 372.82 points.
The tumble in equities followed a New York Times report
(https://www.nytimes.com/2017/05/16/us/politics/james-comey-trump-flynn-russia-investigation.html?_r=0)
that Trump in February asked then-director of the Federal Bureau of
Investigation, James Comey, to stop his investigation into links
between Trump's associates and Russian officials.
Read:Trump campaign had at least 18 undisclosed contacts with
Russia: report
(http://www.marketwatch.com/story/trump-campaign-had-at-least-18-undisclosed-contacts-with-russia-report-2017-05-18)
"Realistic discussions of impeachment are now being had and
markets are rightly concerned that this is another significant
spanner in the works for Trump's legislative plans," said Richard
Perry, market analyst at Hantec Markets, in a not. "If he struggled
with health care reform how is he going to get through
controversial plans over huge fiscal stimulus, banking reform and
deregulation?"
Banks shares worldwide had booked gains on the prospect of
looser regulatory rules for the financial industry. A slide in
shares of financial companies on Wednesday led Wall Street's
decline, leaving Bank of America Corp. (BAC) slumping 6%.
In London, shares of Barclays PLC (BCS) stumbled 1.9% and HSBC
Holdings PLC (HSBA.LN) (HSBA.LN) drooped 1.4%.
Questions also arose about the feasibility of infrastructure
plans touted by Trump and the continuation of an accompanying
reflation trade. That hurt shares of metals producers, with
Antofagasta PLC (ANTO.LN) off 3.7% and Anglo American PLC (AAL.LN)
down 2.9%.
But there's "a potential calming impact with the appointment of
former FBI Director Robert Mueller as a special counsel for the
Russia investigation," said Perry. "Global equities are still under
pressure, but are they set for a bounce too as the bargain hunters
move in?"
See: Robert Mueller, ex-FBI director, named special counsel for
Russia probe
(http://www.marketwatch.com/story/robert-mueller-ex-fbi-director-named-special-counsel-for-russia-probe-2017-05-17)
Pound and data: The pound leapt above the $1.30 level for the
first time since early October, according to FactSet data. It
fetched $1.2971 late Wednesday in New York.
The advance came after the Office for National Statistics said
April retail sales rose 2.3%
(http://www.marketwatch.com/story/uk-retail-sales-rebound-overshoot-expectations-2017-05-18),
well above the FactSet consensus estimate of 1.2%. "Anecdotal
evidence from retailers suggests that good weather contributed to
growth," the ONS said.
Year-over-year, sales climbed 4%, outstripping expectations of
2% increase.
The report "will surely give some respite to the Bank of England
and its policy makers. Although the U.K.consumers have started to
feel the effects of high Inflation and a slower wage growth over
the first quarter of 2017, consumer confidence looks to have turned
a corner for April," wrote Anthony Kurukgy, sales trader at Foenix
Partners.
"The question of how sustainable these figures will look in the
months to come in the face of accelerated Inflation should keep
policy makers grounded," he added.
The Bank of England last week held the key interest rate at
0.25%. This week, data has shown regular wages rose 2.1% in the
three months to March. But adjusted for inflation, they fell 0.2%.
Meanwhile, headline inflation has climbed to 2.7%.
Stock movers: Shire PLC (SHPG) (SHPG) surged 5.5% after the
company reported positive results from a late-stage trial
(http://www.marketwatch.com/story/shire-adrs-jump-almost-7-premarket-after-positive-trial-of-angioedema-treatment-2017-05-18)
of a treatment for hereditary angioedema, a rare genetic disease
that causes swelling of the extremities, gastrointestinal tract and
upper airways.
Burberry Group PLC (BRBY.LN) rose 2.2% as the luxury-goods
retailer said it was on target with its cost-savings program
(http://www.marketwatch.com/story/burberry-pretax-profit-below-forecasts-2017-05-18)
and backed its current-year forecasts. Full-year profit fell 5%,
below its previous guidance. Burberry also said it'll buy back an
additional GBP300 million
(http://www.marketwatch.com/story/burberry-to-buy-back-up-to-gbp300-mln-of-shares-2017-05-18)
($388.2 million) of shares.
Royal Mail PLC (RMG.LN) climbed 1.8% as the company posted a 25%
rise in fiscal 2017 pretax profit.
(http://www.marketwatch.com/story/royal-mail-pretax-profit-rises-25-2017-05-18)
Experian PLC shares (EXPN.LN) fell 3.1% even as the financial
data and services provider posted an 11% rise in 2017 pretax profit
(http://www.marketwatch.com/story/experian-plans-600-million-share-buyback-2017-05-18).
Experian said it's planning to buy back $600 million worth of
shares. UBS said that is below its estimate of a $700 million
buyback plan.
(END) Dow Jones Newswires
May 18, 2017 07:49 ET (11:49 GMT)
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