LONDON MARKETS: FTSE 100 Slips As Gains For Lloyds, Glencore Fail To Spread
21 February 2018 - 11:01PM
Dow Jones News
By Carla Mozee, MarketWatch
U.K. jobless rate unexpectedly rises; BOE's Carney to speak
U.K. stocks stepped lower Wednesday, as gains for Lloyds Banking
Group PLC and miner Glencore PLC after earnings updates failed to
offset wider losses.
The action in London echoed the losing tone set by U.S. stocks,
which snapped a win streak on Tuesday.
Stocks remained lower after an unexpected rise in Britain's
jobless rate, and parliamentary testimony is on the schedule for
Bank of England policy makers.
How markets are moving
The FTSE 100 index shed 0.3% to trade at 7,228.52, led by falls
for health-care and technology stocks. The basic materials and
financial sectors were the only ones gaining ground. On Tuesday,
the index closed down less than 1 point
(http://www.marketwatch.com/story/ftse-100-sags-as-investors-hesitate-after-hsbc-bhp-results-2018-02-20).
The poundtraded at $1.3918, down from $1.3997 late Tuesday in
New York.
The yield on the 10-year gilt fell 3 basis point to 1.54%,
according to Tradeweb. Yields fall when prices rise.
Check out: More investors looking to cut U.K. assets as Brexit
uncertainty persists
(http://www.marketwatch.com/story/more-investors-looking-to-cut-uk-assets-as-brexit-uncertainty-persists-2018-02-16)
What's driving markets
London-listed stocks were following the track laid down by Wall
Street, which was at the fore of a selloff in global equities
earlier this month. U.S. stocks snapped a six-day winning streak
(http://www.marketwatch.com/story/dow-futures-fall-more-than-100-points-signaling-jittery-return-to-trading-2018-02-20)
on the market's return from holiday Tuesday, as a slide in shares
of retailer Walmart Inc. (WMT) weighed on the S&P 500 Index
.
U.K. equities remained under pressure, and the pound hit
intraday lows, after data showed the country's unemployment rate
rose for the first time in nearly two years, to 4.4% from 4.3% in
the final quarter of 2017. The labor-market data is seen as playing
a part in the Bank of England's decision-making on the path of
interest rates. In November, the central bank raised rates for the
first time in a decade, in the face of hotter inflation that
currently stands at 3%.
Further hints on monetary policy may come in BOE Governor Mark
Carney's comments on U.K inflation to a parliamentary
committee.
What strategists are saying
"Though U.K. wage figures came in as expected, the pound dropped
... following a surprise jump in unemployment," said OFX currency
analyst Hamish Muress in a note. "It is now the third consecutive
month that wages have grown by 2.5%. Today's unemployment figures
show that there is still some slack in the labor market, and until
that is resolved, wages could struggle to increase beyond their
current levels."
Economic data
As well as the jobless rate, the Office for National Statistics
said wages in the three months to December grew by an average 2.5%
(http://www.marketwatch.com/story/uk-jobless-rate-unexpectedly-increases-2018-02-21),
compared with a 2.4% FactSet consensus estimate. But with inflation
at 3%, but wage growth is still outpaced by inflation which is
running at 3%.
"Wages are heading in the right direction, though the rate of
growth is hardly jaw-dropping, and significantly still lags behind
the rate of inflation," wrote Laith Khalaf, senior analyst at
Hargreaves Lansdown. "That means the consumer squeeze is still
alive and well, and the pick-up in wage growth anticipated by the
Bank of England is yet to materialize."
Carney will appear alongside other BOE policy makers to discuss
the February Inflation Report with the Treasury Select Committee,
at 2:15 p.m. London time, or 9 a.m. Eastern Time.
The release of minutes from the Federal Reserve's January policy
meeting, the last chaired by Janet Yellen, comes at 2 p.m. Eastern
Time, or 7 p.m. London time. These will be combed for clues to the
central bank's thinking on interest rates, which can have a
knock-on effect on global financial markets.
Read:Five things to watch in the Fed minutes
(http://www.marketwatch.com/story/five-things-to-watch-in-the-fed-minutes-2018-02-20)
Stock movers
Lloyds Banking Group PLC shares (LLOY.LN) climbed 2% after the
lender said it's launching a share buyback of up to GBP1 billion
($1.40 billion)
(http://www.marketwatch.com/story/lloyds-launches-1-billion-buyback-2017-profit-up-2018-02-21).
In the bank's first full-year results since returning to full
private ownership, pretax profit of GBP5.28 billion for 2017 missed
expectations of GBP5.89 billion.
Glencore PLC shares (GLEN.LN) leapt 4.1%. The miner and
commodities trader posted a more than fourfold rise in 2017 net
profit for 2017
(http://www.marketwatch.com/story/glencore-profit-up-fourfold-for-2017-beats-views-2018-02-21),
of $5.78 billion, and said it was considering acquisitions.
Barratt Developments PLC shares (BDEV.LN) fell 0.9%, turning
lower during the session. The shares had been higher after the home
buidler raised both its regular and special dividends
(http://www.marketwatch.com/story/barratt-lifts-dividends-after-profit-rises-2018-02-21).
It also said first-half pretax profit rose as it sold more plots at
higher prices.
AA PLC shares (AA.LN) on the mid-cap FTSE 250 index plunged 22%
as the roadside assistance slashed its dividend and issued a profit
warning.
(END) Dow Jones Newswires
February 21, 2018 06:46 ET (11:46 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Apr 2024 to May 2024
FTSE 100
Index Chart
From May 2023 to May 2024