LONDON MARKETS: FTSE 100 Under Pressure As Banks Fall, Pound Rises Against The Euro
September 25 2017 - 8:00AM
Dow Jones News
By Carla Mozee, MarketWatch
Consumer-credit growth represents 'pocket of risk', says Bank of
England committee
U.K. stocks slipped Monday, struggling as sterling climbed
against the euro in the wake of Germany's general election, and as
bank stocks sagged as the Bank of England reiterated a warning
about risks from credit growth.
The FTSE 100 index fell 0.2% to 7,299, led by financial and
telecommunications shares. But utility and consumer-related shares
were among advanced. On Friday, the London benchmark rose 0.6%
(http://www.marketwatch.com/story/ftse-100-sags-as-north-korea-us-tensions-flare-up-2017-09-22)
and logged a weekly rise of 1.3%, the best week since early August,
according to FactSet data.
But Monday's session began with investors watching the pound
scale higher against the euro and the dollar. A strong value of the
pound can eat into earnings overseas by multinational companies,
and, in turn, hurt shares of those companies that combined weigh
heavily on the FTSE 100.
Among such names, cruise operator Carnival PLC (CCL.LN) (CCL)
fell 0.5%, engine producer Rolls-Royce Holdings PLC (RR.LN) (RR.LN)
shed 0.8% and building materials supplier CRH dropped 1.1%.
Against the euro, sterling bought EUR1.1358, more than EUR1.1295
late Friday in New York. But in dollar dealings, the pound backed
off intraday highs and traded at $1.3489 compared with $1.3495.
A "less than convincing Federal election win for German
Chancellor Angela Merkel and French President Macron struggling in
senate elections," dented the euro on Monday
(http://www.marketwatch.com/story/euro-weakens-after-german-election-results-2017-09-25),
said analysts at Accendo Markets.
The victory of Merkel's center-right bloc
(http://www.marketwatch.com/story/germanys-anti-immigrant-party-set-to-be-first-in-more-than-50-years-to-enter-parliament-2017-09-24)
over the center-left Social Democrats all but assures a fourth term
for the Chancellor. But Merkel's Christian Democrats and its
Bavarian sister party logged their worst result since 1949.
Meanwhile, the anti-immigrant Alternative for Germany (AfD) party
won around 13% of the vote, becoming the first far-right party to
win seats in Parliament in more than 50 years.
Read:How Merkel's choice of partner could set the tone for the
euro
(http://www.marketwatch.com/story/dont-call-the-german-election-boring-it-could-mean-a-huge-shift-for-the-eurozone-2017-09-18)
Also read:Once German risk passes, China and the EU are waiting
in the wings
(http://www.marketwatch.com/story/once-german-risk-passes-china-and-the-eu-are-waiting-in-the-wings-2017-09-22)
In France, President Emmanuel Macron's centrist party La
République en Marche won fewer seats than had been anticipated in
Sunday's senate election.
More political developments may emerge Monday from Brussels
where the fourth round of Brexit talks between the U.K. and the EU
were set to take place.
The "FTSE could see more resistance into its 200-day moving
average (7337p) due to the strong pound," said LCG's senior market
analyst Ipek Ozkardeskaya in a note.
Banks: Shares of lenders were lower as the Bank of England
ramped up its warning about growth in household debt. The central
bank's Financial Policy Committee in a quarterly statement said
banks may be left with GBP30 billion ($40.5 billion) in losses if
borrowers were to default on 20% of the loans taken out. The
warning raised concerns that banks will have to set aside another
GBP10 billion in capital to safeguard against such risks.
Shares of Barclays PLC (BCS) (BCS) fell 1% and Lloyds Banking
Group PLC (LLOY.LN) (LLOY.LN) lost 0.7%. Standard Chartered PLC
(STAN.LN) fell 1.5% and HSBC PLC (HSBA.LN) (HSBA.LN) was down 0.3%.
Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) was fractionally
lower.
Read:BOE warns about growth of U.K. consumer credit
(http://www.marketwatch.com/story/boe-warns-about-growth-of-uk-consumer-credit-2017-09-25)
Stock movers: Unilever PLC (ULVR.LN) (ULVR.LN) turned higher by
0.2%. The consumer products heavyweight reached a deal to buy
skincare business Carver Korea for 2.27 billion euros
(http://www.marketwatch.com/story/unilever-agrees-to-buy-carver-korea-for-227-bln-2017-09-25)
($2.7 billion), a move Unilever said will strengthen its position
in northern Asia.
Among decliners on the FTSE 100, Mediclinic International PLC
(MDC.LN) fell 3.4%, Standard Life Aberdeen PLC (SLA.LN) lost 1.3%
and miners were mostly lower, with copper producer Antofagasta PLC
(ANTO.LN) down 1.1%.
Advancers were led by a 1.8% rise in broadcaster ITV PLC
(ITV.LN) .
On the mid-cap FTSE 250, packing company Essentra PLC (ESNT.LN)
gave up 2.7% after saying Hurricane Maria has disrupted activity at
two of its facilities in Puerto Rico and said profit will be hurt
due to other storms.
(END) Dow Jones Newswires
September 25, 2017 07:45 ET (11:45 GMT)
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