Political turmoil forces pound and Footsie lower

LONDON

POLITICAL uncertainty continued to weigh on top-flight stocks and the pound yesterday, amid further tensions over Brexit and global trade.

MPS found the government to be in contempt of parliament for refusing to publish its legal advice on a draft Brexit deal in full. It will now publish the advice in full.

The pound responded by dropping 0.35 per cent to $1.268 – an 18-month low. Against the euro, it was trading 0.2% lower at 1.119.

Meanwhile the FTSE 100 index shed 39.65 points, or 0.56%, to close at 7,022.76.

It joined other global markets in the red after losses in the US.

Traders were concerned by confusion over the trade truce agreed by President Donald Trump and Chinese leader Xi Jinping over the weekend.

“The lack of firm detail regarding what was actually agreed between Trump and Xi in Argentina meant the markets were also going to have a hard time holding on to the gains that opened the month,” said Connor Campbell of Spreadex.

Mr Trump released details of the plans in tweets, but also spooked investors by proclaiming himself to be a “Tariff Man”.

In Europe, the French Cac was 0.82% lower and the German Dax closed down 1.14%.

In London, Ted Baker shares were down for a second day running following the allegations of harassment against chief executive Ray Kelvin. The stock fell 130p to 1,420p.

Shares in Thomas Cook also continued their descent as fears grow over the travel firm’s long term prospects. The company’s stock took another battering, shedding 0.92p to close at 22.7p after the value of its bonds fell and the cost of insuring its debt against default hit a record high.

Shares in Go-ahead Group dropped 30p to 1,612p after Southern Railway and Thameslink network GTR was hit with sanctions that will see it make no profit this year and fork out £15 million for service improvements.

Plumbing supplier Ferguson was 223.5p lower at 4,975.5p after it reported a rise in first-quarter revenue and profit, but difficulties in the UK.

Revenue in the UK was down 9.5% to £607m due to closed branches, the exit of low-margin business, and weak repair and improvement markets.

Meanwhile Wickes owner Travis Perkins is to offload its plumbing and heating division and extend a cost-cutting programme as it targets savings of up to £30m amid a challenging DIY market. The firm’s shares were 6.5p lower at 1,093p.

Oil prices were stable, after earlier rising ahead of expected output cuts by producing countries. A barrel of Brent crude oil was trading flat at $61.87.

The biggest risers on the FTSE 100 were Fresnillo, up 28.8p to 800.4p, Randgold up 192p to 6,452p, Smith & Nephew up 25.5p to 1,460.5p, and BT Group up 4.3p to 260.9p.

The biggest fallers on the FTSE 100 were GVC Holdings down 48p to 729p, BAE Systems down 27.7p to 473.3p, Smurfit Kappa down 112p to 2,108p and ITV 6.9p to 136.7p.

NEW YORK

WALL Street tumbled more than three per cent yesterday, led lower by bank and industrial shares, as the US bond market sent unsettling signs about economic growth and investors worried anew about global trade.

A prominent Federal Reserve official’s comments about the path of interest rate hikes added to the uncertainty for investors, as did setbacks for Britain’s plans to leave the European Union.

The S&P 500 posted its biggest single-day percentage drop in about two months, giving back some gains from Monday and a week earlier.

The small-cap Russell 2000 dropped 4.4%, its biggest one-day plunge in more than seven years.

Investors were focused on US Treasury yields, where the benchmark 10-year yield fell to its lowest point since mid-september. The spread between the 10-year yield over its two-year counterpart also shrank to the smallest in over a decade, a closely watched signal.

“It’s fears about the inverted yield curve and what that means for the economy and is it a precursor to a recession,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

The Dow Jones fell 799.36 points to 25,027.07, the S&P 500 lost 90.31 points, to 2,700.06 and the Nasdaq Composite dropped 283.09 points to 7,158.43.