Tough week for blue chips as investors seek defensive stocks

LONDON’S benchmark index recorded its biggest weekly loss in two months after a week of tumult prompted investors to pile into defensive stocks.

Rattled by political uncertainties, fears around the squeezed British consumer and the Bank of England’s shock split vote on interest rates, the FTSE

100 surrendered 63.79 points, or 0.85pc, to close at 7,463.54, marking its steepest weekly fall since the week that ended on April 21. Just two weeks ago, the benchmark index set an all-time peak of 7,598.99.

However, on the day, the blue-chip index managed to eke out gains of 44.18 points, or 0.6pc, as investors sought safe plays, shifting away from the sectors most geared to economic growth. British American Tobacco added 59p to £54.99, Unilever rose 26.5p to £42.77 and Reckitt

Benckiser climbed 65p to £79.25.

But Jasper Lawler, of London Capital Group, cautioned: “Further gains could be tough since higher rates would naturally make UK equities less attractive.”

Meanwhile, budget airlines were flying higher after Goldman Sachs said it preferred low-cost carriers over flag carriers as it sees potential for market share gains. It upgraded easyjet’s price target to £13 from 970p, sending shares 21p higher to £13.62. Its peer

Ryanair advanced 28p to £16.45, Wizz Air climbed 20p to £22.97, and British Airways owner IAG nudged up 4.5p to 588.5p.

A rating upgrade lifted plumbing and heating supplier Wolseley 6p to £47.65. Liberum upgraded its rating to “buy” from “hold”, citing improving growth from its US business. Analyst Charlie Campbell said: “US growth is likely to be renewed as headwinds are fading and underlying fundamentals are healthy.”

Elsewhere, Amazon’s deal to buy upmarket grocer Whole Foods Market crushed retail stocks, raising fears about competition for the sector. Jefferies analyst È James Grzinc said the deal was likely to have farreaching È consequences for the global grocery industry. È He also said the share price plunge suggested investors È were concluding that Amazon will use the deal as a platform “for a frontal assault on the category and strongly pressurise legacy players in the process”.

Tesco plummeted 8.9p to 171.1p, Sainsbury’s dropped 10.1p to 252.3p and Marks & Spencer tumbled 6.6p to

345.2p. Ocado and Morrisons, who fell sharply immediately after the announcement, managed modest gains of 1.5p to 275.8p and 2.7p to 242.6p respectively. The sectorwide sell-off rounded off a two-day rout for retailers, with the FTSE 350 food and drug retailers index

suffering its worst week this year, down by almost 4pc.

Away from the blue chips, event organiser UBM bounced 18p higher to 724.5p on a bullish broker note. Credit Suisse upgraded its rating to “outperform” from “neutral”, citing its commitment to organic growth. JP Morgan lifted

Paypoint’s price target to £11.83, propelling shares 20p higher to 985.5p. Although the bank believes the payments group’s profits are likely to be flat in the short term, it thinks they should begin to “rise strongly” from 2020.

Finally, activist investor Christopher Mills took a 10.63pc stake in Satellite Solutions Worldwide

through Harwood Capital and Oryx International Growth Fund Limited. Shares jumped 3.6pc to 7.3p.