Oliver Haill Sharecast | 18 May, 2017 18:18 - Updated: 19:18 | | |
London stocks ended Thursday down near where they finished last week as a stronger pound and worries about the stability of the US administration knocked them back from the record highs earlier in the week.
Bouncing back slightly from the worse of mid-session losses, the FTSE 100 closed 67 points lower, down 0.9% at 7,436.42, while the second-tier FTSE 250 lost almost 82 points or 0.4% to finish at 19,691.64.
Early losses followed the overnight plunge on Wall Street as investors reported that Donald Trump's former national Security adviser Michael Flynn and other of the President's advisers sent at least 18 calls and e-mails to Russian officials or related people during the last seven months of the presidential elections.
Overnight, the US Department of Justice appointed former FBI director Robert Mueller as special counsel to lead the investigation into Russian interference into the 2016 presidential elections.
On a cautionary note, Craig Erlam, senior market analyst at Oanda, wrote: "While I don’t believe at this stage that these reports regarding Trump will jeopardise his agenda, markets must reflect the challenges he now faces which ultimately make it more difficult.
"At the very least, this distraction may delay the implementation of his plans which the markets won’t like."
Chris Beauchamp at IG added that the bounceback later in the London session came as further developments around Trump have not yet materialised.
"The rally is small, and in no way really changes the bearish picture that was created yesterday – once options expiry and the weekend is out of the way there is a high probability that the selling will resume.
"Longer-term, this is still a dip, and one that will be bought in due course, but there seems to be an awful lot more downside to come. The bottom line is that faith in the Trump rally has been shaken, if not yet quite destroyed, and it is unlikely to return any time soon," he said.
Adding to the headwinds for London's benchmark index, where around three quarter of earnings are generated overseas, the pound was pumped above the $1.30 level by much stronger than expected UK retail sales data.
The Office for National Statistics reported retail sales soared 2.3% month-on-month in April, speeding past analysts' forecasts for an increase of 1.1%.
Analysts at Barclays - who had penciled in a rise of just 0.8% - warned of distortions in the data due to the shift in the timing of Easter this year, as well as conspicuously strong sales in the 'other' component of non-store retail sales.
As if that were not enough, a drop of 1.8% for Brent to $51.27 saw investors book profits on the largest listed oil outfits, such as BP and Shell. Shell was the biggest faller as its shares also went ex-dividend.
Base metals prices were also weaker, with three-month LME copper trading lower from $5,624 a metric tonne on Wednesday to $5,540 a tonne, while the risk-on mood hit gold and therefore shares in Randgold.
Ashtead, which generates almost 90% of revenue in the US and so has been one of the biggest beneficiaries of Trump’s pledge to ramp up infrastructure spending, was a major faller.
Also on the downside, credit checking company Experian retreated as it said profit for the year to the end of March rose 11% and announced a $600m share buyback for full-year 2018.
Petrofac continued to fall following the news last week that it is being investigated for money laundering and other offences by the Serious Fraud Office. It announced that board member Jane Sadowsky had resigned with immediate effect, having only been with the company since November.
Energy network operator National Grid posted final results showing operating profit rising 14% to £4.67bn on an adjusted basis, though this was boosted by ‘over-recoveries’ that are above the regulated allowance and will need to be returned in future.
Among the mid-caps, pubco Mitchells & Butlers fell for a second day, as analysts gave their feedback following results on Wednesday. JP Morgan held its 'neutral' rating but cut its forecasts, while Deutsche Bank focused on new cost headwinds that will mean flat profits for coming years and the ongoing uncertainty around the future pension contribution.
Pub owner and brewer Marston’s was also on the back foot after it said it has agreed to buy the Charles Wells brewing business for a cash consideration of £55m plus seven managed pubs for another £13m, which will be financed by the placing of 9.9% of its issued share capital.
Burberry led the FSTE 100 risers as the fashion house reported annual profits at the upper end of expectations and promised investors a new £300m share buyback.
Shire shares rallied as the biopharmaceutical group said phase 3 results for its lanadelumab treatment for hereditary angioedema showed a significant reduction in the monthly attack rate.
Royal Mail was also stronger after it posted a 25.5% jump in full-year pre-tax profit as revenues nudged higher, although the group did caution that sales in the UK are likely to fall, which saw shares tail off later in the session.
Commercial laundry group Berendsen led the 250 top movers rocketed after rejecting a £2.05bn offer from French textile services firm Elis SA, while Euromoney was on the front foot following the release of its interim results, in which it said revenue rose 5% while adjusted pre-tax profit increased to £49.1m from £46.9m.
FTSE 100 - Risers
Burberry Group (BRBY) 1,718.00p 4.69%
Centrica (CNA) 200.90p 3.88%
Merlin Entertainments (MERL) 516.50p 1.97%
Marks & Spencer Group (MKS) 382.60p 1.89%
Royal Bank of Scotland Group (RBS) 263.40p 1.86%
DCC (DCC) 7,535.00p 1.76%
Shire Plc (SHP) 4,814.50p 1.75%
SSE (SSE) 1,492.00p 1.63%
Sainsbury (J) (SBRY) 273.20p 1.52%
Mediclinic International (MDC) 871.00p 1.46%
FTSE 100 - Fallers
Royal Dutch Shell 'B' (RDSB) 2,161.00p -3.98%
Royal Dutch Shell 'A' (RDSA) 2,108.50p -3.50%
Randgold Resources Ltd. (RRS) 7,275.00p -2.61%
Provident Financial (PFG) 3,078.00p -2.47%
Mondi (MNDI) 1,978.00p -2.27%
Land Securities Group (LAND) 1,092.00p -2.24%
AstraZeneca (AZN) 5,140.00p -2.19%
Old Mutual (OML) 191.90p -2.14%
HSBC Holdings (HSBA) 664.20p -2.08%
Experian (EXPN) 1,660.00p -2.01%
FTSE 250 - Risers
Berendsen (BRSN) 1,048.00p 21.13%
Euromoney Institutional Investor (ERM) 1,216.00p 8.67%
Cairn Energy (CNE) 209.10p 5.71%
JRP Group (JRP) 134.40p 4.51%
Dunelm Group (DNLM) 615.00p 3.97%
SSP Group (SSPG) 472.50p 3.21%
Paysafe Group (PAYS) 480.90p 3.04%
TalkTalk Telecom Group (TALK) 179.50p 2.81%
Nex Group (NXG) 627.00p 2.79%
Allied Minds (ALM) 146.10p 2.53%
FTSE 250 - Fallers
Mitchells & Butlers (MAB) 241.00p -6.59%
Keller Group (KLR) 863.50p -5.78%
Petrofac Ltd. (PFC) 661.50p -5.70%
Ferrexpo (FXPO) 158.60p -4.88%
Marston's (MARS) 137.00p -4.86%
Renishaw (RSW) 3,387.00p -4.48%
Dairy Crest Group (DCG) 590.00p -4.22%
BTG (BTG) 644.00p -4.10%
Clarkson (CKN) 2,757.00p -3.84%
Petra Diamonds Ltd.(DI) (PDL) 129.70p -3.57%
Stocks started the week higher on Monday, on the back of a stronger-than-expected reading on the Empire State factory index and amid somewhat hawkish Fedpseak.
Stocks on the Continent were little changed at the start of the week, save in Spain where the ongoing political standoff between the central government in Madrid and regional officials in Catalonia weighed on sentiment.
German multinational automotive group Daimler, the parent company of Mercedes-Benz, announced on Monday that they would recall nearly 400,000 vehicles that were potentially fitted with a faulty airbag.
London stocks slipped on Monday as miners rallied on the back of Chinese inflation data, but Convatec slid after a profit warning.
Tom Enders, chief executive of French aeronautical giant Airbus, said on Sunday that he would be willing to step down from the role he had held since 2012 in an effort to safely guide the firm through ongoing corruption investigations.
Stocks have started the week higher on the back of a stronger-than-expected reading on the Empire State factory index and amid somewhat hawkish Fedpseak.
AIM-quoted machine-to-machine (M2M) communications provider Telit Communications confirmed it was in "very early stage" talks to sell its automotive division.
UK and eurozone inflation will be the big focus of the day, while the new reporting season kicks in with Asos, Bellway, London Stocks Exchange, Merlin Entertainment, Pearson and Virgin Money.
West Africa-focussed diamond development company Stellar Diamonds announced on Monday that it has signed conditional share purchase agreements with Gold Knight - a wholly-owned subsidiary company of BDG Capital - in relation to the proposed sale of Stellar's assets in the Republic of Guinea, as it had previously announced on 5 June and 14 August.
Near-patient molecular diagnostics company Genedrive announced on Monday that it has signed a distribution agreement with Sysmex Europe, a subsidiary of Sysmex Corporation, for the Genedrive HCV ID Kit and Genedrive platform in the Europe-Middle East-Africa region, with an initial focus on Africa.