LONDON MARKETS: U.K. Stocks Fall From Record As AstraZeneca, Mining Stocks Decline
May 18 2018 - 12:52PM
Dow Jones News
By Sara Sjolin, MarketWatch
FTSE 100 on track for longest weekly win run since 2005
U.K. stocks ended lower on Friday, pulling back from the
previous session's record close, as shares of AstraZeneca declined
following the heavyweight drugmaker's earnings report, and as
shares in mining companies skidded in the wake of a selloff in
metals prices.
What are markets doing?
The FTSE 100 index dropped 0.1% to close at 7,778.79, breaking a
three-day winning streak. On Thursday, the London benchmark ended
at an all-time closing high
(http://www.marketwatch.com/story/uk-stocks-at-4-month-high-as-government-opens-up-for-customs-union-after-brexit-2018-05-17),
boosted by a weaker pound and a rally in oil stocks.
For the week, the FTSE 100 scored a 0.7% gain, marking an eighth
straight weekly advance. That is its longest weekly winning run
since July 2005, when the index also rose for eight consecutive
weeks.
The pound on Friday fell to $1.3475 from $1.3516 late Thursday
in New York.
What is driving the market?
U.K. investors paused for breath after pushing the blue-chip
index to a record on Thursday. They also monitored geopolitical
risks and the latest developments in the Brexit discussions.
On the Brexit front, U.K. Prime Minister Theresa May denied
reports earlier this week that Britain was looking to stay in the
EU customs union after Brexit. Instead, her cabinet agreed to a
"backstop" proposal that would align the U.K. with EU tariffs after
2020 to avoid a hard border with Ireland. The backstop plan would
only be needed if the U.K. was unable to agree on a separate
customs deal with the EU, which would raise prospect of a hard
border in Ireland, according to the BBC
(http://www.bbc.co.uk/news/uk-politics-44148027).
On the global scene, U.S. President Donald Trump raised concerns
about prospects for a trade deal between the U.S. and China. At a
press conference on Thursday, Trump said he doubts that the
negotiations will succeed because "China has become very spoiled"
on trade.
With no major economic reports on deck in the U.K. on Friday,
traders instead focused on the latest corporate news.
Aside from financial markets, the royal wedding between Prince
Harry and Meghan Markle also grabbed attention in the U.K. The
couple will get married on Saturday in Windsor.
Read: Prince Charles to walk Meghan Markle down the aisle for
royal wedding
(http://www.marketwatch.com/story/prince-charles-to-give-meghan-markle-away-at-royal-wedding-2018-05-18)
(http://www.marketwatch.com/story/prince-charles-to-give-meghan-markle-away-at-royal-wedding-2018-05-18)Read:Royal
wedding's $1.4 billion economic impact: Here's the boost by sector
(http://www.marketwatch.com/story/royal-weddings-14-billion-economic-impact-heres-the-boost-by-sector-2018-05-14)
What are strategists saying?
"The pound was trading lower versus the dollar once again on
Friday, as it heads towards fresh 5-month lows. Whilst a run of
soft U.K. economic data, a dovish [Bank of England] and growing
concerns over the future health of the U.K. labor market has been
weighing on demand for the pound over the past month, the negative
sentiment intensified this week by the return of Brexit fears and
an ever-stronger U.S. dollar," said Fiona Cincotta, senior market
analyst at CityIndex, in a note.
"With the U.K. economic calendar quiet for the first part of
next week, investors will need to wait until Wednesday's inflation
data for any hope of a meaningful change in direction for the
battered pound," she added.
Stock movers
Shares of AstraZeneca PLC (AZN.LN) (AZN.LN) dropped 2% after the
pharma giant reported core earnings that missed forecasts
(http://www.marketwatch.com/story/astrazeneca-quarterly-profit-drops-sales-rise-2018-05-18).
Core operating profit -- the company's preferred measure, which
strips out one-time gains and impairments -- fell to $896 million
from $1.67 billion a year ago.
Glencore PLC (GLEN.LN) fell 4.4% after Bloomberg reported that
the miner may face a formal bribery investigation
(https://www.bloomberg.com/news/articles/2018-05-18/glencore-said-to-face-u-k-bribery-probe-over-congo-dealings-jhbxhab4)
over its business conduct in Congo.
Other miners also fell, with shares of BHP Billiton PLC (BLT.LN)
(BHP.AU) ending 0.7% lower and Anglo American PLC (AAL.LN) losing
1.2%.
J Sainsbury PLC (SBRY.LN) fell 0.6%. The loss came after the
U.K. competition watchdog said it is considering investigating the
proposed merger
(http://www.marketwatch.com/story/sainsbury-asda-ma-plan-may-undergo-uk-scrutiny-2018-05-18)
between J Sainsbury PLC and Walmart Inc.'s (WMT) British arm, Asda
Group Ltd.
Outside the FTSE 100, shares of Carpetright PLC (CPR.LN) rallied
11% after the floor coverings retailer said it plans to raise GBP60
million ($80.86 million) in a share issue.
(END) Dow Jones Newswires
May 18, 2018 12:37 ET (16:37 GMT)
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