LONDON MARKETS: FTSE 100 Flops As Burberry Earnings, U.S. Rate-hike Prospects Weigh
May 18 2016 - 5:51AM
Dow Jones News
By Carla Mozee, MarketWatch
Wage growth slows; stocks face loss after 3-days of wins
U.K. stocks fell Wednesday, with Burberry Group PLC shares under
pressure after financial results, and as European investors
assessed the prospects for an increase in U.S. interest rates.
The FTSE 100 was off 0.5% at 6,139.69, with only the consumer
goods sector printing gains. The index on Tuesday rose 0.3%
(http://www.marketwatch.com/story/ftse-100-rises-as-oil-marches-higher-2016-05-17),
marking a third consecutive gain.
The broader European equity market also fell, following a slide
in U.S. stocks
(http://www.marketwatch.com/story/us-stock-futures-seesaw-as-oil-rally-fades-2016-05-17)
on Tuesday after two Federal Reserve officials said the central
bank could raise interest rates as soon as June
(http://www.marketwatch.com/story/fed-officials-stress-that-june-meeting-is-live-2016-05-17).
Late Wednesday, investors will look for minutes from the Federal
Reserve's April policy meeting, out at 7 p.m. London time or 2 p.m.
Eastern Time.
Mining shares were among Wednesday's biggest decliners, with
Anglo American PLC (AAL.LN) down 5.7% and Glencore PLC (GLEN.LN)
(GLEN.LN) losing 4.5%.
"Natural resources stocks would suffer off the back of a rate
hike, as this would not only strengthen the dollar but also push up
borrowing costs for many emerging markets," said Tony Cross, market
analyst at Trustnet Direct, in a note.
Movers: In London trade, Burberry (BRBY.LN) (BRBY.LN) shares
fell 2.3% as the luxury-fashion house posted an 8% decline in
yearly profit
(http://www.marketwatch.com/story/burberry-tackles-slump-with-cost-cuts-buyback-2016-05-18).
The company said it's undertaking a share buyback and a
cost-cutting program to save at least 100 million pounds ($144.7
million) a year.
"The ambitious cost-cutting program will be aligned with an
attempt to boost productivity, but in the meantime, metrics such as
earnings per share and profits have moved in the wrong direction,
largely attributed to a challenging environment," particularly in
Hong Kong, said Richard Hunter, head of research at Wilson King
Investment Management, in a note.
EasyJet PLC (EZJ.LN) rose 1.1% to GBP14.54 after RBC raised its
price target on the budget airline to GBP15.50 from GBP15.00.
Data: Stocks overall remained lower after the release of U.K.
labor-market data. The unemployment rate held steady at 5.1% in the
three months to March. Average weekly earnings excluding bonuses
rose 2.1%, compared with 2.2% in the three months through
February.
Policy makers at the Bank of England have said they want to see
the pace of wage growth pick up if they were to consider raising
interest rates. The benchmark interest rate has stood at 0.5%, a
record low, since March 2009.
Interest-rate sensitive home builders were higher, with
Persimmon PLC (PSN.LN) up 1.8% and Taylor Wimpey PLC (TW.LN)
gaining 1.2%,
The pound was buying $1.4414, falling from around $1.4440 before
the data were released.
(END) Dow Jones Newswires
May 18, 2016 05:36 ET (09:36 GMT)
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