Footsie dips into red as stronger pound compounds pain

LONDON

THE FTSE-100 dipped into the red yesterday, as a stronger pound compounded pain from a drop in retail stocks following a string of store closures and profit warnings at some of the UK’S biggest chains.

London’s blue chip index ended the day down 0.3% or 22.3 points at 7,038.97 points, with Kingfisher taking the bottom spot.

The B&Q owner, which slipped 36.1p to 301.6p, was among a series of retailers to release a dismal earnings report, as it detailed a 10% drop in profits and warned the outlook for its UK business was uncertain following a recent hit to sales.

Away from the top tier, Moss Bros plunged more than 23% or 13.6p to 45p after warning profits would be “materially lower” than previously forecast, after suffering stock shortages, low footfall and sluggish demand for suit hire.

Moss Bros chief executive Brian Brick said: “The beginning of the year has been hampered by short-term stock delivery issues caused by the consolidation of our supplier base.”

Fiona Cincotta, a senior market analyst at City Index, said: “Retailers dominated the lower reaches of the FTSE as harsh winds continue to blow down the UK high street.”

But Miss Cincotta said data released by the Office for National Statistics (ONS) – which showed a further rise in employment and a 2.8% rise in nominal average earnings in the year to January – gave hope for some relief on the UK high street.”

The wage growth data supported the pound, which was up 0.5% against the US dollar at 1.407, and 0.3% versus the euro at 1.147.

Across Europe, with the French Cac 40 down more than 0.2% while the German Dax was flat.

Brent crude prices surged 2.3% to around $69.12 per barrel as investors reacted to data from the Energy Information Administration data showing a drop in US oil inventories, which were expected to rise.

In UK stocks, GVC Holdings rose 11p to 945p and Ladbrokes Coral Group edged higher by 0.25p to 173.25p after the Competition and Markets Authority (CMA) gave the all-clear for a £4 billion tie-up between the two firms.

Carpetright shares edged higher by 0.4p to 41p after the embattled firm drew up sweeping restructuring plans which will see it close poorly performing stores and push through an equity issue of between £40 million and £60m to fund plans to reboot the business and drive down debt.

Shares in Interserve soared nearly 26% or 18p to 87.9p after the outsourcer received a lifeline from its lenders that will put the troubled firm on a more secure financial footing.

The biggest risers on the FTSE100 were Evraz up 14p at 432.3p, Antofagasta up 27.2p at 971.8p, London Stock Exchange Group up 114p at 4,150p, and Anglo American up 34.4p at 1,740p.

The biggest fallers on the FTSE-100 were Kingfisher down 36.1p at 301.6p, WPP down 36p at 1,110p, Associated British Foods down 77p at 2,417p, and Whitbread down 114p at 3,697p.

NEW YORK

US stocks ended slightly lower yesterday, with major indexes giving up gains in choppy trade after the Federal Reserve raised US interest rates, while a strong gain in the energy space helped limit losses.

The hike was widely expected, and new Fed Chairman Jerome Powell said in a news conference after the rate-hike announcement that the U.S. central bank was trying to take the “middle ground” in raising rates.

“That’s a Fed that really feels good about the economy, not only this year but into next year,” said Jim Paulsen, Chief Investment Strategist at The Leuthold Group in Minneapolis. “The initial response by equities was to go up because of the confidence the Fed seems to have in the economy. But with bond yields going up in anticipation of more hikes, that kind of scared the stock market again.”

Financials which benefit from a higher rate environment, briefly extended gains in the wake of the announcement but lost ground to close down 0.03%.

Names sensitive to higher rates such as utilities, down 0.39%, and real estate, off 0.93%, were under pressure.

The Dow Jones fell 44.96 points, to end at 24,682.31, the S&P 500 lost 5.01 points to 2,711.93 and the Nasdaq Composite dropped 19.02 points to 7,345.29.

Facebook shares gained 0.74% to stem its recent sell-off over the past two days.