Reuters | Jan 11, 2019 17:42
By Muvija M
(Reuters) - British blue-chip shares retreated on Friday, singed by a sterling rally on a newspaper report of cabinet ministers saying that Britain would have to delay its European Union exit.
The report in the Evening Standard pushed sterling up against the dollar and euro, dragging the exporter-heavy FTSE 100 (FTSE) off earlier highs and down 0.4 percent. But the currency fell back after a spokeswoman for British Prime Minister Theresa May ruled out any delay.
Companies that earn mainly U.S. dollars are hit by a stronger pound and were the among the biggest drags on the index. AstraZeneca (L:AZN) fell 3.6 percent, while HSBC (L:HSBA) and GlaxoSmithKline (L:GSK) also fell.
The Evening Standard cited unnamed cabinet ministers as saying Brexit looks increasingly likely to be delayed beyond March 29 because of the backlog of legislation that needs to be passed.
Stocks had been boosted earlier by reassurance from U.S. Federal Reserve Chairman Jerome Powell on the pace of further increases to interest rates, with progress in U.S.-China trade talks also providing support.
Mid-caps, which make half of their income at home, rose 0.6 percent to their highest in more than a month.
David Madden, CMC Markets analyst, said any Brexit delay might provide a short-term bounce for the pound but emphasised that the outlook remains highly uncertain.
"All the various options, be it Theresa May’s plan, a second referendum, or leaving the EU without a deal – they all seem to be almost equally unpopular,” he said.
British homebuilders (FTNMX3720) sensitive to Brexit news, extended early gains to trade up 2.1 percent as the sector index (FTNMX3720) registered its biggest weekly gain in nearly three years, helped by Bank of America (NYSE:BAC) Merrill Lynch upgrading the UK housebuilding sector to neutral.
Adding to worries at home, however, official data showed that Britain's economic growth hit a six-month low in the three months to November as factories suffered from tough global trade conditions ahead of Brexit.
Stobart jumped 7.2 percent after the news to top the mid-cap winners.
Retailers continued to upset the markets, with AIM-listed fast-fashion retailer Quiz (L:QUIZ) tanking 32.5 percent to a record low after a revenue warning following disappointing Christmas sales.
Suits specialist Moss Bros (L:MOSB) also said the period ahead would be "extremely challenging", but its shares firmed as analysts took comfort from strong e-commerce sales.
Debenhams (L:DEB) plunged 18.8 percent in high-volume trading. Investors had forced the department store group's CEO off the board and the chairman out of the company on Thursday after another plunge in sales.
UDG Healthcare (L:UDG) slumped 7.7 percent to be the biggest mid-cap faller after Jefferies downgraded the stock and said the healthcare services provider's preliminary expectation for the year "does not sound attractive".
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.