FTSE 100 index tracks European bourses lower as pound surges
AN ELEVEN-SESSION run of gains on the FTSE 100 came to a halt yesterday, as European shares sank on 2019’s last full day of trading.
A sell-off spread across the Continent, with Wall Street joining in the falls when US trading opened in the early afternoon.
London’s blue-chip index dropped 0.8pc to 7,587.1, amid widespread losses for Britain’s biggest listed firms.
Extremely thin trading volumes and a lack of major movers continued a trend of limited movement that has persisted through the holiday period. It was a muted end to the year for the FTSE 100, which is set to have registered its biggest annual rise since 2016. It was given no favours by a rising pound, which compounded Friday’s gains, remaining solidly over $1.31. London’s markets will close early at 12.30pm today.
Sterling was helped by a fall in the dollar, which looked set for a downbeat end to the year as risk appetite grew among investors amid continued bullish talk from the White House over the prospects of a trade deal with China.
The pound climbed during the recent election period, and was set to finish 2019 as the second-best performer among G10 currencies, according to MUFG currency analyst Lee Hardman. He added progress on the UK’S withdrawal from the European Union, and a resistance to easings from Britain’s central bankers had been beneficial to sterling.
“Market participants have clearly welcomed the
breakthrough in Brexit proceedings with the UK set to leave the EU at the end of January, while at the same time the pound has benefited from the Boe’s reluctance to follow the ECB and Fed by easing monetary policy this year,” said Mr Hardman.
The FTSE 250 suffered a similar daily fall, off 0.6pc at 21,936.3 – but remains on track for its biggest annual gain since 2013.
Individual movers were once again few and far between, with many likely affected by end-of-year profit-taking and adjustments in fund positions.
NMC Health was the biggest riser on the bluechip index, recovering some of its losses from Friday. The Abu Dhabi-based hospital operator plummeted to the bottom of the FTSE 100 earlier this month after a Us-based short-seller criticised it over alleged failings in its financial disclosures. It ended the day up 80.5p at £18.17.
Despite widespread losses that left more than four fifths of London’s blue chips in the red, the biggest faller – defence firm BAE Systems
– dropped by a mere 2.1pc, falling 12.8p to 566.8p.
Retailer Next dropped ahead of its statement on Christmas trading, which is due to be released on Friday.
Analysts at Jefferies said they expected the group to reaffirm its full-year guidance, saying improved recent consumer confidence should be supportive despite the year ending on a low ebb for Britain’s retailers.
They said early analysis showing a 10pc fall in Boxing Day footfall was likely to be “misleading” due to poor weather, and Christmas landing relatively late in the week. Next ended the day down 142p at £71.28.