LONDON MARKETS: FTSE 100 Finishes With Gain As Commodity Shares Rise, Pound Drops
July 17 2018 - 12:53PM
Dow Jones News
By Carla Mozee and Victor Reklaitis, MarketWatch
U.K. jobs figures met expectations
U.K. stocks closed higher Tuesday, as commodity shares worked on
recovering ground lost in the prior session and a softer pound
provided a boost.
The pound lost ground as traders assessed ongoing political
turmoil and U.K. jobs data that arrived before the Bank of England
decides what's next for monetary policy.
How markets are moving
The FTSE 100 index closed 0.3% higher at 7,626.33, erasing part
of Monday's fall of 0.8%
(http://www.marketwatch.com/story/ftse-100-heads-toward-first-fall-in-3-sessions-as-miners-decline-2018-07-16).
The pound fell to $1.3162 from $1.3236 late Monday in New York.
A weaker pound can boost the FTSE 100, as the index's multinational
companies generate most of their sales in other currencies.
What's driving the market
Commodity-related stocks advanced following a rough session for
the sector on Monday that contributed to the FTSE 100 closing lower
for the first time in three sessions.
Mining shares on Tuesday advanced after struggling Monday on
concerns that slowing economic growth in China
(http://www.marketwatch.com/story/china-growth-slows-slightly-in-second-quarter-2018-07-16)
could hurt demand for industrial and precious metals, particularly
as the U.S. engages in a trade fight with the world's
second-largest economy.
Read: These are the retail brands that will be hurt most by
Chinese tariffs
(http://www.marketwatch.com/story/these-are-the-retail-brands-that-will-be-hurt-most-by-chinese-tariffs-2018-07-12)
Also:Here's when Americans will start feeling the pain from
escalating Trump-imposed tariffs
(http://www.marketwatch.com/story/heres-when-americans-will-start-feeling-the-pain-from-escalating-trump-imposed-tariffs-2018-07-11)
Shares of oil producers were higher Tuesday, but then turned
mixed, as September Brent crude was up slightly after a nearly 5%
beating in the prior session.West Texas Intermediate crude prices
couldn't hold on to an early gain. Oil futures on Monday tumbled,
(http://www.marketwatch.com/story/oil-price-drops-ahead-of-trump-putin-summit-2018-07-16)
hit by talk about a possible release of oil by the U.S. from global
crude reserves and the potential for U.S. waivers on Iran oil
sanctions.
The FTSE 100 briefly slipped into the red in midmorning action
as the pound rose against the U.S. dollar in the wake of the U.K.
jobs data, which largely met expectations as the unemployment rate
stood at 4.2% and basic wages rose 2.7% between March and May. But
then political worries weighed on the currency.
The labor report will be under consideration by the Bank of
England, which investors are watching for the possibility of an
interest-rate rise by policy makers from 0.5%. Their decision is
due to be released Aug. 2. BOE Gov. Mark Carney on Tuesday during
Treasury testimony from the Farnborough Airshow reportedly said the
U.K. leaving the European Union without a Brexit deal would be a
"material event" for the outlook on interest rates, and a no-deal
outcome would have "big economic consequences" for Britain.
U.K. Prime Minister Theresa May late Monday narrowly won support
in the House of Commons for changes related to trade in the bill
that will take the U.K. out of the EU. May accepted amendments
sought by anti-EU members of her Conservative Party, including one
that would keep the U.K. from collecting tariffs for the EU, and
May's move raised the ire of pro-EU members of her party.
What strategists are saying
The pound "is dipping on the back of fears that Theresa May's
government could face defeat in the Commons," said Kathleen Brooks,
research director at Capital Index, in a note. Referring to the
opposition Labour Party, Brooks said the defeat could come "if
Labour sides with pro-European MPs and calls for the U.K. to remain
in the Customs Union, if there is no trade deal with the EU by
March next year."
Stock movers
Among miners, Antofagasta PLC (ANTO.LN) rose 2.2%, Glencore PLC
(GLEN.LN) picked up 1.3% and Rio Tinto PLC (RIO.LN) gained
1.7%.
In the oil sector, shares of Royal Dutch Shell PLC (RDSA.LN)
(RDSA.LN) rose 0.4%, and BP PLC (BP.LN) (BP.LN) was up 0.5%.
Royal Mail PLC shares (RMG.LN) advanced 1.8% after the
postal-services provider backed its 2019 financial expectations
(http://www.marketwatch.com/story/royal-mail-backs-fiscal-2019-outlook-2018-07-17)
after a 2% rise in underlying revenue in the first quarter.
British Land Co. PLC shares (BLND.LN) fell 0.9% as the property
developer warned that the retail market remains challenging. The
company did say it plans to pay an interim dividend of 7.75 pence
per share, up 3% from the first-quarter dividend a year ago.
(END) Dow Jones Newswires
July 17, 2018 12:38 ET (16:38 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Mar 2024 to Apr 2024
FTSE 100
Index Chart
From Apr 2023 to Apr 2024