LONDON MARKETS: FTSE 100 Closes Lower As RBS, IAG Tank After Results
24 February 2018 - 5:05AM
Dow Jones News
By Carla Mozee and Sara Sjolin, MarketWatch
A stronger pound is also weighing on stocks in London
U.K. stocks declined on Friday and suffered a weekly loss, with
shares of Royal Bank of Scotland PLC and International Consolidated
Airlines Group SA leading the charge south after results.
The pound rose on renewed hopes for a post-Brexit U.K.-EU trade
deal, adding further pressure on the London index.
How markets are moving
The FTSE 100 index shed 0.1% to close at 7,244.41, logging a
second day in the red. For the week, the benchmark ended with a
0.7% loss, marking its fifth losing week in six.
U.K. stocks underperformed the other major European indexes,
with the Stoxx Europe 600 ending up 0.2% at 381.16.
The pound fetched $1.3973, up from $1.3957 late Thursday in New
York.
What's driving markets
Sterling rose in the afternoon after reports that the 11-member
Brexit cabinet committee has agreed on a proposal for post-Brexit
trade with the EU
(https://www.ft.com/content/1292ab54-1827-11e8-9e9c-25c814761640).
The framework is reportedly dubbed "Canada plus plus plus" by David
Davis, the Brexit secretary, as it aims to establish a similar
trade deal that Canada achieved, but with better access to the EU's
single market.
A stronger pound can weigh on the FTSE 100 as about 75% of the
benchmark's revenues are made overseas and therefore shrinks when
translated back into sterling.
Investors also appeared to focus on the pile of earnings reports
and corporate updates coming in on the last day of the week.
Stock movers
RBS shares (RBS.LN) (RBS.LN) dropped 4.8% as the lender said it
swung to its first full-year profit in 10 years in 2017. However,
the bank said it still has to resolve a settlement
(http://www.marketwatch.com/story/rbs-posts-first-full-year-profit-in-a-decade-as-litigation-costs-drop-2018-02-23)
with the U.S. Department of Justice over alleged mis-selling of
mortgage-backed securities.
International Consolidated Airlines Group SA shares (IAG.LN)
(IAG.LN) fell 5.7%. The British Airways parent said it was engaging
a EUR500 million euros share-buyback program
(http://www.marketwatch.com/story/iag-profit-rises-to-launch-500-million-buyback-2018-02-23),
and that pretax profit rose in 2017. The results were "mixed," said
Accendo Markets, with revenues in line while adjusted per-share
earnings of EUR1.02 fell short of a EUR1.06 consensus estimate.
Pearson shares (PSON.LN) fell 0.7% as the company said it's
talking with potential buyers for its U.S. K-12 curriculum
business, which Pearson said last year it was considering
disposing. Pearson swung to a pretax profit in 2017
(http://www.marketwatch.com/story/pearson-returns-to-profit-in-2017-cuts-dividend-2018-02-23-3485241),
but cut its dividend for the year.
BT Group PLC (BT.A.LN) (BT.A.LN) gained 5% after the U.K.
communications regulator, Ofcom, lifted the planned price cap
(http://www.marketwatch.com/story/bt-shares-rise-after-ofcom-ups-planned-price-cap-2018-02-23)
on how much the company can charge rival providers for using its
physical infrastructure. In an additional boost to the stock,
Berenberg lift BT to buy from hold.
What strategists are saying
"While there hasn't been much upside, we have also successfully
navigated another week without a major selloff, an encouraging
development that clearly bodes well for the week ahead," said Chris
Beauchamp, chief market analyst at IG, in a note.
"RBS has worked its socks off to highlight the rare sight that
is a profit from the state-backed institution, but with so many
litigation issues hanging over it the shares remain a tough sell
among investors. The impending US fine means this year's profit
will be a one-off for the time being, and you can't blame those
looking to sell off the back of today's figures," he added.
(END) Dow Jones Newswires
February 23, 2018 12:50 ET (17:50 GMT)
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