LONDON MARKETS: FTSE 100 Suffers 4th Straight Loss As Pound Rises, Primark Owner Falls
January 18 2018 - 12:23PM
Dow Jones News
By Carla Mozee and Sara Sjolin, MarketWatch
Pound inches closer to $1.40
U.K. stocks dropped for a fourth straight session on 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 ended down 0.3% at
7,700.96, moving further away from its an all-time closing high of
7,778.64 hit last week.
The pound traded at $1.3893, up from $1.3830 late Wednesday in
New York.
What's driving markets:The FTSE 100 lagged behind other European
equity benchmarks in Thursday's session in part as the pound
continued to scale at levels against the U.S. dollar not seen since
the 2016 Brexit referendum. Sterling rose for a fifth day in six
sessions and has picked up roughly 1.2% 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.
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)
What strategists are saying: "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.
"Alongside a strengthening pound, the FTSE has also been
struggling to overcome a raft of disappointing earnings reports,
with yesterday's Burberry figures continuing to play a role while
Associated British Foods led the index lower after a weakened
outlook for its sugar department," said Joshua Mahony, market
analyst at IG, in a note.
Stock movers: Associated British Foods PLC shares (ABF.LN) fell
3.6% 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.
Whitbread PLC (WTB.LN) pushed up 3.5% as the company, which runs
the Costa Coffee and Premier Inn brands, said it's on track to meet
its full-year expectations.
Off the FTSE 100, shares of Countrywide PLC (CWD.LN) fell 19%
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).
Online real estate listings firm Rightmove PLC (RMV.LN) tracked
Countrywide lower, falling 3.7%.
Economic news:U.K. house prices bounced back in December
(http://www.marketwatch.com/story/uk-house-prices-bounce-back-rics-survey-2018-01-18),
with the Royal Institution of Chartered Surveyors saying its
monthly reading came in at a plus 8. Analysts polled by The Wall
Street Journal expected, on average, the index to slip further, to
minus 2.
Read:U.K. retail stocks could get a boost if Britons splashed
out cash during Christmas
(http://www.marketwatch.com/story/uk-retail-stocks-could-get-a-boost-if-britons-splashed-out-cash-during-christmas-2018-01-18)
(END) Dow Jones Newswires
January 18, 2018 12:08 ET (17:08 GMT)
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