LONDON MARKETS: FTSE 100 Closes In The Red As Stronger Pound Weighs
January 22 2018 - 12:25PM
Dow Jones News
By Carla Mozee and Victor Reklaitis, MarketWatch
Bookmakers drop on regulatory worries
U.K. stocks closed with losses on Monday, feeling the weight of
strength in the pound against the U.S. dollar, but the London
benchmark was aided by gains for energy companies and Barclays
PLC.
Meanwhile, shares of bookmakers were slammed lower on fears that
a possible regulatory move by the British government will cut into
their revenue.
How markets are moving: The FTSE 100 index closed down by 0.2%
at 7,715.44.
On Friday, the benchmark gained by 0.4%
(http://www.marketwatch.com/story/ftse-100-slips-as-oil-retail-stocks-struggle-2018-01-19),
the first win in five sessions. But it fell 0.6% last week, the
first weekly loss in seven.
The pound traded at $1.3954, up from $1.3853 on Friday in New
York.
Read:Why one contrarian investor says the British pound could
rally to $1.40 in 2018
(http://www.marketwatch.com/story/why-one-contrarian-investor-says-the-british-pound-could-rally-to-140-in-2018-2018-01-17)
What's driving markets: The pound was back in focus, pushing
well beyond $1.39 against the greenback. Sterling rose roughly 1%
last week, logging a fifth consecutive weekly rise.
The negative start to trading came "as the U.S. government
shutdown moves into a third day, with lawmakers failing to reach an
accord over the weekend amid a contentious immigration debate.
Subsequent sterling strength is hindering the U.K.'s blue chip
index, holding back its army of foreign-exposed constituents," said
Accendo Markets analysts Mike van Dulken and Henry Croft in a
note.
A stronger pound can reduce profit made overseas by
multinational companies when it's converted back into sterling.
Among such international companies, Ashtead Group PLC (AHT.LN) ,
which rents heavy equipment, fell 0.3%, and Smirnoff vodka and
Johnnie Walker whisky Diageo PLC (DEO) shed 1.1%.
Lawmakers in the Republican-led Senate are expected to hold a
procedural vote Monday
(http://www.marketwatch.com/story/compromise-seems-far-off-on-second-day-of-government-shutdown-2018-01-21)
at 5 p.m. London time, or 12 p.m. Eastern Time, to keep the
government funded through Feb. 8. The government shut down after
lawmakers couldn't reach an agreement over immigration issues.
This week, markets will the U.K. jobs report and the first look
at British gross domestic product in the fourth quarter.
Read:What happens with stocks when the government shuts down
(http://www.marketwatch.com/story/heres-how-the-stock-market-has-handled-past-government-shutdowns-2018-01-16)
Stock movers: Paddy Power Betfair PLC fell 2.1%, falling
alongside other bookmakers, after a Sunday Times report
(https://www.thetimes.co.uk/article/2-limit-to-curb-crack-cocaine-of-gambling-ftc6v37hr)
that the U.K. government will set a limit the stake on betting shop
terminals to GBP2, down from GBP100, in an effort to curb gambling
problems.
Hit hard on the mid-cap FTSE 250 index , shares of William Hill
PLC (WMH.LN) tumbled 12%, Ladbrokes Coral Group PLC (LCL.LN) sank
7.9% and GVC Holdings PLC (GVC.LN) , which is purchasing Ladbrokes,
dropped 1.2%.
"Gambling companies have made hundreds of millions of pounds a
year from fixed odds betting terminals and were hoping that the
minimum stake would be towards the middle of the GBP2 and GBP50
consultation range," said Rebecca O'Keeffe, head of investment at
Interactive Investor, in a note.
"Although the consultation does not end until tomorrow, the
suggestion that the response to the survey has been overwhelmingly
in support of a cut to the minimum GBP2 means that this is indeed a
significant threat to bookmakers," she wrote.
Also on the FTSE 250, Ocado Group PLC shares (OCDO.LN) rallied
28%, with the company saying it will develop an online-grocery
business for Canadian food retailer Sobeys Inc
(http://www.marketwatch.com/story/ocado-to-create-online-grocery-business-for-sobeys-2018-01-22).
Barclays PLC (BCS) rose 4.3% following a Financial Times report
(https://www.ft.com/content/e768ce1e-fd54-11e7-9b32-d7d59aace167)
that U.S. hedge fund Tiger Global has invested more than GBP1
billion in the London-based lender.
Shares of oil producers BP PLC (BP.LN) (BP.LN) and Royal Dutch
Shell PLC (RDSB.LN) (RDSB.LN) rose 1.2% and 0.4%, respectively, as
oil prices
(http://www.marketwatch.com/story/oil-prices-edge-up-after-saudi-urges-producers-to-cooperate-into-2019-2018-01-22)headed
higher.
(END) Dow Jones Newswires
January 22, 2018 12:10 ET (17:10 GMT)
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