LONDON MARKETS: FTSE 100 Edges Lower As Brexit Hopes Buoy Pound
November 21 2017 - 4:58AM
Dow Jones News
By Carla Mozee, MarketWatch
EasyJet shares climb after financial report
British blue-chip stocks slipped Tuesday, as the pound gained on
hopes a higher divorce payment from the U.K. will unclog the Brexit
process, and as investors assessed a round of corporate financial
updates.
The lackluster action came after the major U.S. stock gauges
closed with wins and Asian equity markets closed mainly higher.
Shares of EasyJet PLC flew up to the top of the London benchmark
after the budget airline said passenger traffic rose in the fiscal
year.
What markets are doing: The FTSE 100 index shed 0.1% to
7,379.32, as the industrial, consumer services and consumer goods
groups fell. Utilities, and oil and gas were among the sectors
advancing. On Monday, the benchmark rose 0.1%
(http://www.marketwatch.com/story/ftse-100-slips-to-around-2-week-low-as-pound-rises-2017-11-20)
. A lower finish on Tuesday would be its seventh in nine
sessions.
The pound traded at $1.3265, up from $1.3233 late Monday in New
York and higher against most major rivals. But against the euro,
sterling fetched EUR1.1279, on par with late Monday.
A stronger pound acts as a drag on shares of exporters, as it
hurts the sterling value of earnings made overseas.
What's moving markets: Sterling broadly held to higher ground
after media reports that U.K. Prime Minister Theresa May's cabinet
has agreed to increase the amount the U.K. is willing to pay the EU
(https://www.theguardian.com/politics/2017/nov/20/theresa-mays-cabinet-agrees-to-pay-more-to-break-brexit-deadlock)
on its exit from the bloc. The new "divorce bill" offer could be
GBP40 billion ($53 billion) -- twice as much as previously
suggested, some reports said.
While the higher offer would require more EU concessions in
return, it was being cheered as having the potential to spur the
languishing Brexit talks back to life.
Economic docket: U.K. public sector borrowing rose
(http://www.marketwatch.com/story/uk-public-borrowing-increases-in-october-2017-11-21)
to GBP8.0 billion in October, up GBP0.5 billion from year ago, the
Office for National Statistics said.
Investors will assess that reading as they wait for Chancellor
Philip Hammond to present his budget for the U.K. on Wednesday.
Members of the Bank of England -- Jon Cunliffe, Ian McCafferty,
Michael Saunders and Gertjan Vlieghe -- will appear before the
Treasury Select Committee to discuss the central bank's November
Inflation Report at 10 a.m. London time, or 5 a.m. Eastern
Time.
What strategists are saying: For the FTSE 100, the "near-term
outlook remains somewhat unclear although it seems reasonable to
assert that a close below 7,350 will represent a significant
technical development that would likely be followed by further
weakness," wrote Bill McNamara, who runs The Technical Trader daily
newsletter.
"The U.K. budget is due tomorrow. Chancellor Philip Hammond is
expected to remain cautious on the budget, especially if the U.K.
prepares to loosen its purse string to quit the EU in a friendly
manner," said Ipek Ozkardeskaya, senior market analyst at London
Capital Group.
"Of course, the UK's offer may fall short of the EU's demand.
The downside risks prevail, and [pound] resistance could be found
at 1.3280-1.3300 area," Ozkardeskaya said in a note.
Stock movers: EasyJet (EZJ.LN) shares bounced up 6.6% after the
low-cost airline said passenger traffic rose 10% in fiscal 2017
(http://www.marketwatch.com/story/easyjet-net-profit-down-24-passenger-traffic-up-2017-11-21)
and that forward bookings for the first quarter of 2018 are ahead
of last year. Net profit for the full year fell 24% to GBP325
million ($430 million).
Kingfisher PLC (KGF.LN) shares lost 1.4% after the DIY retailer
said like-for-like group sales fell 0.5%
(http://www.marketwatch.com/story/kingfisher-sales-fall-but-sticks-with-profit-view-2017-11-21)
in the third quarter, reflecting continued weak sales in
France.
Compass Group PLC (CPG.LN) shares dropped 3.5%. The move came
after the catering-services provider said pretax full-year profit
rose 18%
(http://www.marketwatch.com/story/compass-profit-up-buoyed-by-n-america-business-2017-11-21),
bolstered by its North America business and the pound's slump.
(END) Dow Jones Newswires
November 21, 2017 04:43 ET (09:43 GMT)
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