LONDON MARKETS: U.K. Stocks Rise For 2nd Straight Day As Pound Falters On Softer-than-expected Inflation
16 August 2017 - 2:14AM
Dow Jones News
By Sara Sjolin, MarketWatch
North Korea fears continue to recede, spurring investors to take
on more risk
London-listed stocks rose for a second straight session on
Tuesday, as the pound tanked after data showed U.K. inflation
unexpectedly stayed unchanged in July.
The FTSE 100 index climbed 0.4% to close at 7,383.85, adding to
a 0.6% advance from Monday.
The index was already trading higher from the open as fears of a
nuclear war between the U.S. and North Korea continued to recede.
North Korean leader Kim Jong Un decided not to launch a threatened
missile attack on U.S. territory Guam
(http://www.marketwatch.com/story/north-korea-steps-back-from-plan-to-launch-missiles-at-guam-2017-08-14),
according to state media on Tuesday. The isolated nation's leader,
however, warned that he could change his mind "if the Yankees
persist in their extremely dangerous reckless actions."
Inflation: The London benchmark then moved a leg higher in
mid-morning after the Office for National Statistics said U.K.
inflation remained unchanged at 2.6%
(http://www.marketwatch.com/story/uk-consumer-inflation-remains-at-26-in-july-2017-08-15)
in July. Analysts had expected a 2.7% reading.
The miss sent the pound sharply lower to trade at $1.2861,
compared with as high as $1.2971 earlier in the day and $1.2964
late Monday in New York. A weaker sterling tends to boost the U.K.
blue-chip index as its components make most of their money
overseas.
"The data reduces the need for the Bank of England to tighten
monetary policy in response to above target inflation, which peaked
a couple of months ago just below 3%," said Craig Erlam, senior
market analyst at Oanda, in a note.
"With price pressures appearing to have cooled and the economy
still facing a couple of years of uncertainty and slower growth,
markets appear to once again be pricing out a rate hike this year
and possibly next," he added.
Unemployment data out on Wednesday will also be scrutinized for
how they may impact BOE monetary policy.
Stock movers: Shares of Next PLC (NXT.LN) fell 2.8% after
Berenberg cut its rating on the high-street retailer to sell from
hold.
Shares of Hargreaves Lansdown PLC (HL.LN) fell 0.8% after a
volatile trading day even after the financial services company
reported a 20% jump in full-year profit
(http://www.marketwatch.com/story/hargreaves-lansdown-full-year-profit-jumps-20-2017-08-15).
Shire PLC (SHPG) (SHPG) gained 1.3% after the drugmaker said it
has applied for approval to sell its new dry-eye drug Lifitegrast
in Europe.
Rio Tinto PLC (RIO) (RIO) (RIO) lost 1.1% after RBC Capital
Markets downgraded the miner from top pick to outperform.
"We continue to like Rio, especially for its specific commodity
leverage to Chinese supply-side reforms," the RBC analysts
said.
"However, we do expect a slowing Chinese property market and
concerns on growth to increase following the Communist Party
leadership conference in November," they added.
(END) Dow Jones Newswires
August 15, 2017 11:59 ET (15:59 GMT)
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