Pound slides but FTSE reports a slight rise
LONDON
THE pound slumped against the US dollar as higher US inflation raised expectations about a coming interest rate hike in the world’s biggest economy.
Sterling shed two cents versus the dollar to just under 1.55 while in shares the FTSE 100 Index had another uneventful session, climbing 18.2 points to 7,031.7.
The pound gave up all its gains from the previous session when it had been boosted by better-thanexpected UK retail sales.
In equities, the FTSE 100 completed a week in which it had made small gains every day but still finished only about 70 points higher than the close last Friday.
Sentiment was underpinned by hopes over stimulus in China amid signs of a slowdown in the world’s second-biggest economy. But France’s Cac 40 was flat and Germany’s Dax lower.
In the US, core inflation excluding food and energy posted its highest rate in more than a year in April, suggesting that an improving U.S. economy is lifting prices. It could prompt the Federal Reserve to start raising interest rates this year. In New York, the Dow Jones Industrial Average fell. In London, mobile phone giant
Vodafone led the risers’ board as it continued to be boosted by persistent takeover talk suggesting it could be a target for America’s
Liberty Global, as well as positive broker comments.
Liberty boss John Malone was recently reported as saying the two firms would be a “great fit”. Shares rose nearly five per cent, or 11.2p, to 253.8p.
Meanwhile, building materials firm Travis Perkins was higher after Jefferies upgraded its rating on the stock from underperform to buy as the broker took a more positive view of the sector.
Travis improved 32p to 2,208p. FTSE 250-listed kitchen supplier
Howden Joinery also received an upgrade from Jefferies, helping it add 7.5p to 508p.
In banking, HSBC was ahead after confirming that it was exploring options, including sale, for its operations in Brazil. The stock added 6.1p to 620.6p.
Elsewhere, Whitbread’s deci- sion to appoint Lloyds Banking
Group retail chief Alison Brittain as its next chief executive after the retirement of Andy Harrison failed to impress investors.
Richard Baker, chairman of the Premier Inn to Costa coffee group, said it had become “bigger and better” under Mr Harrison and that the new boss’s arrival “will ensure Whitbread continues to get even better still”. But shares fell by one per cent, or 50p, to 5,210p.
The biggest FTSE 100 risers were Vodafone up 11.25p at 253.75p, Travis Perkins up 32p at 2,208p, Dixons Carphone up 6.5p at 468p and Randgold
Resources up 66p at 4,779p. The biggest FTSE 100 fallers were International Airlines Group down 11.5p at 542.5p, TUI down 24p at 1,180p, BT down 8.1p at 451.05p and Antofagasta down 11p at 774p.
NEW YORK
US stocks ended weaker yesterday after Federal Reserve Chair Janet Yellen indicated that the central bank was poised to raise interest rates this year, in line with Wall Street’s expectations.
Lackadaisical trading volume during the session ended a week of slow activity that has left many investors unconvinced that recent record-high levels are likely to last.
In a speech, Yellen said a rate hike would be warranted this year if the economy keeps improving as expected. She also said it would take several years to return to normal interest rates.
Investors have enjoyed an extended period of low volatility and steady gains, but with the Fed on track to raise rates this year and major indexes near records, the market could get a bit choppier.
The Dow Jones industrial average fell 53.72 points, or 0.29 percent, to end at 18,232.02 points.
After trading near flat for most of Friday, the S&P 500 lost 4.76 points, or 0.22 percent, to close the week at 2,126.06. The Nasdaq Composite dropped 1.43 points, or 0.03 percent, to 5,089.36.
Both the Dow and the S&P hit new records this week but Friday’s dip left the Dow in the red. For the week, the Dow ended 0.2 percent lower and the S&P rose 0.20 percent.
The Nasdaq added 0.8 percent for the week.
Volume on US stock markets has been below the month-to-date average for several sessions. On Friday, ahead of the Memorial Day long weekend, about 4.9 billion shares changed hands on U.S. exchanges, below the 6.2 billion average this month.