Sacking hits markets as interest rate fears return

LONDON

STERLING rose and the FTSE 100 was left nursing heavy losses as political developments on both sides of the Atlantic played their part in yesterday’s markets.

News that Donald Trump had sacked his secretary of state Rex Tillerson, along with US inflation data, sent the dollar down sharply against the pound, leaving sterling at 1.398 US dollars, up 0.5 per cent on the day.

Turmoil in the White House, which has increased markedly since Mr Trump came to power, has tended to have a negative impact on the greenback.

Connor Campbell, financial analyst at Spreadex, said: “Both the dollar and the Dow Jones seemed a tad shaken by the firing of Tillerson, the latest in a string of high-profile departures from the White House.”

Providing further momentum to the pound were figures from the Office for Budget Responsibility, which upgraded growth projections and forecast a fall in Government borrowing and national debt over the coming years. It came alongside Philip Hammond’s Spring Statement, in which the Chancellor hinted he will turn on the spending tap following years of austerity.

Against the euro, the pound was also in positive territory, up marginally to 1.127 euro.

But sterling’s gain led to pain for the FTSE 100, which went in the opposite direction, tumbling 1.05%, or 75.98 points, to 7138.78.

“Informing the UK index’s decline was Hammond’s limp Spring Statement; the promise that real wage growth would turn positive in the first quarter of 2018-19 reignited fears of a Bank of England rate hike, dragging the FTSE lower,” Mr Campbell added.

The FTSE 250 also ended down 1.26%, or 254.30 points, at 19863.23, with Greencore by far the biggest faller. Shares in the Irish food-to-go supplier plunged 30% to 127.25p after it warned that problems at its US division would dent profits.

The sandwich maker flagged the weak performance of “underutilised” US sites, the timing of new business contributions and the sterling/dollar exchange rate all lowering expectation in profit growth.

Shares in fashion retailer French Connection ended 24.6% up at 42p after it revealed it received an unwanted takeover approach last year as it insisted it was “very close” to returning to profit after six years in the red.

The firm said the approach came from an unnamed US suitor and led to months of talks, although no formal offer was made.

Across Europe, the French Cac 40 closed down 0.6% while the German Dax ended the day 1.6% in the red.

The price of Brent crude nudged down 0.45% to 64.66 US dollars a barrel.

The biggest risers on the FTSE 100 were Antofagasta up 26.8p to 914.6p, Glencore up 7.65p to 376.7p, GKN up 5.9p to 430p, Easyjet up 22p to 1,629.5p and Ferguson up 56p to 5,308p.

The biggest fallers on the FTSE 100 were BT Group down 7.85p to 2.27.15p, St James’s down 37p to 1,113p, WPP down 36p to 1,159p, Johnson Matthey down 93p to 3,157p and 3i Group down 25p to 898p.

NEW YORK

WALL Street’s major indexes fell yesterday as the dismissal of US Secretary of State Rex Tillerson and the possibility of additional US import tariffs against China dragged down stocks across sectors.

President Donald Trump fired Tillerson after a series of public rifts over issues including North Korea and Russia. Trump has appointed CIA Director Mike Pompeo, seen as loyal to the president, to replace Tillerson. To lead the CIA, the president has tapped Gina Haspel, the agency’s deputy director.

“Any time there’s change, investors get nervous,” said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. “They have to go back to the drawing board to figure out what the implications might be.”

US stocks added to losses after reports that a package of tariffs targeting $30 billion a year in Chinese imports could be rolled out next week.

“This may be upsetting the apple cart,” said Bryan Novak, senior managing director at Astor Investment Management in Chicago. “When you look at tariffs, you don’t just look in a vacuum. You look at what follows on top of them.”

The Dow Jones Industrial Average fell 171.58 points to 25,007.03, the S&P 500 lost 17.71 points to 2,765.31 and the Nasdaq Composite dropped 77.31 points to 7,511.01.

Shares of Microsoft, Facebook Inc and Alphabet fell between 1.5% and 2.4%.