Multinational firms suffer dollar’s drop

The London markets drifted into the red after the strong pound hit British multinational firms.

European markets showed respite after noon to lift on a strong opening in the US, but lost momentum to finish firmly lower as Uschina tensions heightened again.

US president Donald Trump’s decision to tighten restrictions on Huawei knocked sentiment that appeared to be recovering.

The FTSE 100 closed 50.82 points lower at 6,076.62.

Connor Campbell, financial analyst at Spreadex, said: “After mounting something of a recovery at lunchtime, the western markets lurched back into the red as Tuesday’s session went on.

“Things had been going so well that the S&P 500 had hit a fresh all-time intra-day high. And then, all of a sudden, investors got scared, with global indices quickly tumbling following that peak.”

Across the Atlantic, the S&P 500 leapt to the new intra-day record high after US house-building figures for July topped forecasts, showing shoots of recovery in the economy.

Meanwhile, sterling pushed confidently higher after the dollar weakened on concerns that US legislators are not close to reaching an agreement on the coronavirus relief package. The pound rose 0.91 per cent versus the US dollar at $1.322 and was up 0.41 per cent against the euro at €1.108.

Multinationals with significant US operations, such Glaxosmithkline, Bat and Unilever, were notable fallers as a result of unfavourable currency movements.

In company news, Marks & Spencer closed down 5.55p to 108.05p after revealing 7,000 jobs are being axed at the highstreet stalwart as it continues to overhaul operations. It said the bulk of the cuts, which will take place over the next three months, would be made across its stores, as well as a smaller number of support centre and regional management workers.

Elsewhere, Mike Ashley’s retail firm Frasers Group saw shares slide after informing the City its chairman David Daly accidentally breached rules by purchasing shares during the closed period.

Frasers shares fell by 6.2p to 282.8p at the close of play.