LONDON MARKETS: FTSE 100 Extends Winning Streak As Financials Ride Up Alongside Bond Yields
April 23 2018 - 2:32PM
Dow Jones News
By Sara Sjolin and Carla Mozee, MarketWatch
Pound struggles to reclaim $1.40 handle
U.K. stocks stretched a winning streak Monday, as gains for
financial shares helped leave the London benchmark for blue chips
at its highest since early February.
How did markets perform?
The FTSE 100 index claimed a 0.4% rise to end at 7,398.87.
That's the strongest closing level since Feb. 2, according to
FactSet data. The index has risen for five straight sessions, the
longest run of wins since early March. Telecom, oil and gas and
financial shares moved up, but utility stocks put in the worst
performance, clipped as bond yields rose.
The benchmark last week rose 1.4% as the pound crumbled.
Sterling slid after disappointing economic data and after Bank of
England Governor Mark Carney cast doubt on a May interest rate
hike.
Read:Here's why the pound got whipped this week -- and why it
may bounce back to $1.44
(http://www.marketwatch.com/story/heres-why-the-pound-got-whipped-this-week-and-why-it-may-bounce-back-to-144-2018-04-20)
On Monday, the pound continued to fall, buying $1.3946 compared
with $1.3999 late Friday in New York. In the fixed-income market,
the yield on the U.K.'s 10-year gilt rose 3 basis points to 1.526%,
according to Tradweb.
Read: Stock investors are freaking out about bonds ending a bull
run--but should they be?
(http://www.marketwatch.com/story/the-stock-market-is-freaking-out-up-about-the-bond-marketbut-should-it-be-2018-04-21)
What was driving the market?
Advances for bank and insurance stocks helped the FTSE 100
overcome choppy action. Those gains came as bond yields in the U.K.
and throughout Europe followed a rise in the U.S. 10-year Treasury
yield toward the 3% level
(http://www.marketwatch.com/story/us-10-year-yield-rises-to-within-sniffing-distance-of-3-2018-04-23).
Analysts have said rising bond yields, and lower bond prices,
are reflecting speculation that higher prices for commodities could
prompt the U.S. Federal Reserve to speed up its pace in raising
interest rates. While higher interest rates can bolster shares of
banks and insurers world-wide, they can weigh on broader equity
markets, as borrowing costs for companies go up and investors may
ditch equities in search of higher returns.
What are strategists saying?
"The talk of the town continues to be the benchmark U.S.
10-year, whose move towards a 3% yield seemingly has everyone
captivated. While some fear that a move through this level will
trigger a cataclysm, the reality is probably a tad more prosaic,"
said IG's chief market analyst Chris Beauchamp in a note. "Equities
do look less attractive if fixed-income yields keep rising, but in
an environment of still-healthy global growth ... it is perfectly
possible for both bonds and equities to keep rising."
Share movers
Among bank stocks, Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN)
ended up 1.1%, HSBC Holdings PLC (HSBA.LN) picked up 0.9% and Royal
Bank of Scotland Group PLC (RBS.LN) bulked up by 0.6%.
Among insurers and wealth management firms, St. James's Place
PLC (STJ.LN) jumped 3.3%, Old Mutual PLC (OML.LN) rose 2.7% and
Aviva PLC (AV.LN) added 1%.
Whitbread PLC (WTB.LN) shed 0.1%, reversing earlier gains. A
Sunday Times report said the company's boss Alison Brittain
believes a split between the group's hotel and coffee shop
businesses is highly likely to happen. Last week, activist investor
Elliott Management said it has amassed a stake in Whitbread,
calling for the company to spin off its Costa Coffee chain.
Outside the FTSE 100 index, shares of Capita PLC (CPI.LN)
rallied 13% after the company announced a new strategy and plans to
raise GBP701 million pounds
(http://www.marketwatch.com/story/capita-loss-widens-to-issue-1-billion-new-shares-2018-04-23)
($981.4 million) in a rights issue.
(END) Dow Jones Newswires
April 23, 2018 14:17 ET (18:17 GMT)
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