Surging ster­ling sends FTSE to fresh low

The Daily Star (Lebanon) - - BUSINESS - By Kit Rees

LONDON: The U.K.’s top share in­dex closed at a four-month low Fri­day, as a surging pound hit its largely dol­lar-earn­ing con­stituents, with fi­nan­cials shares tak­ing strong losses and only a hand­ful of stocks end­ing the day in pos­i­tive ter­ri­tory.

Bri­tain’s blue chip FTSE 100 in­dex ended the day down 1.1 per­cent, post­ing a sec­ond weekly loss in a row and clos­ing at 7,215.47 points, a level last seen early in May.

The FTSE 100 has strug­gled as ster­ling jumped after the Bank of Eng­land sig­naled Thurs­day that it was likely to raise in­ter­est rates in the com­ing months.

Fri­day, ster­ling hit its high­est level against the U.S. dol­lar since the Brexit vote as Gert­jan Vlieghe, a Bank of Eng­land pol­i­cy­maker who had been its strong­est ad­vo­cate of ul­tralow bor­row­ing costs, said rates might need to rise in the com­ing months.

The rise in the pound put pres­sure on Bri­tain’s dol­lar-earn­ing firms, which have en­joyed an ac­count­ing boost as their rev­enues were con­verted back to the Bri­tish cur­rency fol­low­ing its plunge after the Brexit vote last year.

The FTSE 100 ended 2016 with a gain of more than 14 per­cent, but hasn’t fared as well in 2017, up just about 1 per­cent so far this year.

“It’s look­ing a bit omi­nous for the FTSE,” said Jasper Lawler, head of re­search at London Cap­i­tal Group. “Given the ve­loc­ity in the move in the pound, the FTSE can only re­ally go one way and that’s down,” he added.

Fi­nan­cials took the most points off the in­dex, with HSBC, Lloyds, Bar­clays, Pru­den­tial and Stan­dard Char­tered down be­tween 1.3 per­cent and 2.3 per­cent.

Min­ers and en­ergy stocks also came un­der pres­sure after the price of cop­per edged lower and oil prices slid. Min­ers Glen­core, Rio Tinto and BHP Bil­li­ton fell be­tween 1.4 per­cent and 2.3 per­cent, while heavy­weight oil ma­jors BP and Royal Dutch Shell lost 0.8 per­cent and 1.9 per­cent re­spec­tively.

Cruise op­er­a­tor Car­ni­val was the big­gest faller, dropping 6.2 per­cent fol­low­ing a down­grade from Credit Suisse to “neu­tral.” The bro­ker cited an un­cer­tain out­look for Car­ni­val due to the im­pact of Hur­ri­cane Irma on the key Caribbean cruise mar­ket as well as fur­ther threats to de­mand in the Mediter­ranean and China.

Out­side of the blue chips, pub group JD Wether­spoon jumped 13.9 per­cent to a record high after re­port­ing a near-28 per­cent jump in profit.

JD Wether­spoon’s shares have shrugged off any hit from a Brex­itin­duced slow­down, gain­ing around 29 per­cent so far this year and out­per­form­ing its peers.

“The re­sults show con­tin­ued ben­e­fit from price in­creases and con­sol­i­dat­ing its loyal cus­tomer base into fewer sites by dis­pos­ing of sec­ondary/ter­tiary lo­ca­tions – the im­pact of which will fade into 2018,” an­a­lysts at Liberum said in a note. –

Fri­day, ster­ling hit its high­est level against the U.S. dol­lar since the Brexit vote.

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