Defence firms drag FTSE to month low
STOCKS across Europe spent a third session in the red as the turn in sentiment on the markets dragged equities further off their recent highs.
The MSCI World Index climbed to its highest ever level last Wednesday but a shock sell-off in Tokyo the following day sparked a slide in stocks that continues to plague equities in Europe, according to CMC Markets analyst David Madden.
Analysts have also pinned market jitters on the delays faced by Donald Trump’s tax reform plans and unease over whether recent earnings justify frothy stock valuations.
The Euro STOXX 50, the eurozone’s blue-chip index, fell another 0.5pc, bringing its three-day retreat to 2.2pc, while the CAC 40 in Paris and DAX in Frankfurt have lost 2.4pc and 2.3pc respectively, over the same period.
The FTSE 100 escaped the very worst of the downward turn in sentiment, however, aided by the pound slipping as sharpening knives at Tory HQ threatened to plunge the UK back into another pound-battering period of political instability.
Sterling shed as much as 1pc against the dollar during intraday trade before settling at a 0.7pc loss, just above $1.31, as reports suggested that 40 Tory MPs are ready to sign a letter of no confidence in Prime Minister Theresa May.
The UK blue-chip index’s 17.81-point retreat to 7,415.18 pulled it down to a fresh one-month low with defence giants BAE Systems and Babcock
International weighing heavily. Ultra Electronics’ grim diagnosis of the UK’s defence sector in its profit warning weakened the entire sector with the FTSE 350 Aerospace and Defence Index tumbling 3.3pc. Blue chips BAE and Babcock International plunged 19p to 537p and 59.5p to 753p respectively, while among mid caps
QinetiQ, which updates the market later this week, slipped 14.6p to 214.2p.
Ground engineer Van Elle dived 12.5p, or 13.3pc, to 81.5p after The
Sunday Telegraph revealed that the firm is engulfed in a boardroom battle. The company’s founder and former chairman Michael Ellis is attempting to wrest back control from chief executive Jon Fenton, after becoming concerned about the running of the company with key members of staff jumping ship and financial forecasts appearing to mismatch with internal performance figures.
Shares in Coca-Cola HBC, one of the largest bottlers of the fizzy drinks giant’s products, fell 115p to £24.70 after JP Morgan said that a deal to snap up a stake in Coca-Cola Beverages Africa might have lost its fizz. CocaCola is expected to dispose its 54.5pc stake in CCBA in 2018 and CCHBC has been mooted as the most obvious buyer. However, the recent decline in profitability at the African bottler means an acquisition will bump up earnings by less than expected.