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FTSE Hurt By Pound’s Reaction To BoE Statement, ITV And Glencore Updates

Published 06/08/2020, 08:56
Updated 21/10/2020, 09:15

It was a tough morning for the FTSE 100, dealt blows from the Bank of England and some of Thursday’s reporting companies.

Keeping interest rates at a record low 0.1%, the Andrew Bailey-led central bank warned that the UK economy shrank by 20% in the second quarter – lower than the 28% initially forecast – and that the unemployment rate will rise to 7.5% by the end of the year. As for any full recovery, that’ll have to wait until late 2021.

Under current circumstances, that makes August’s update a positive one from the Bank of England, allowing the pound to climb 0.4% against the dollar and euro alike. Cable is now trading above $1.317 for the first time in 6-months.

Maintaining its combative relationship with its currency, the FTSE moved in the opposite direction, dropping 0.7% to 6050.

It wasn’t just sterling and the Bank of England weighing on the UK index, however. After rising on Wednesday in tandem with gold’s record highs, the FTSE’s miners went into retreat. This back-tracking was led by Glencore (LON:GLEN), which slumped more than 4% on a half year net loss of $2.6 billion after taking $3.2 billion in covid-19-related impairments. BP (LON:BP) and Shell (LON:RDSa) were also down, as Brent Crude’s gains stalled out around the $45.30 mark.

ITV (LON:ITV) was another mark against the FTSE on Thursday, its stock slipping 3.5% following its half year results. With many advertisers – especially summer specialists like the holiday sector – vastly reducing, or completely pulling, their spend, total advertising revenue plunged a record 43% in Q2, putting the half year figure at £671 million. This left the broadcaster with a pre-tax profit of just £15 million – a 93% reduction on the £222 million it posted the same time last year. All this meant a 4% rise in viewing figures was for nought.

Elsewhere the Eurozone indices woke up feeling perky, with the DAX climbing 1.1% and the CAC up 0.5%. The Dow Jones, meanwhile, is set to approach 27300 with a 95 point increase later today.

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