By Carla Mozee and Victor Reklaitis, MarketWatch
April retail sales crush forecasts; Shire rallies on test
results
U.K. blue-chips closed with sizable losses Thursday, with a pop
in the pound above $1.30 for the first time in almost eight months
accelerating an ongoing selloff prompted by troubles surrounding
U.S. President Donald Trump's administration.
The FTSE 100 index fell 0.9% to end at 7,436.42. The index
suffered its biggest percentage loss since April 13, according to
FactSet data.
The benchmark lost as much as 1.5% intraday as the pound climbed
to $1.3048 after U.K. retail sales for April blew past
expectations. A stronger pound puts pressure on foreign-denominated
earnings made by the London gauge's multinational companies.
Check out:The pound looks set for 'significant further upside'
now that it's regained $1.30
(http://www.marketwatch.com/story/the-pound-looks-set-for-significant-further-upside-now-that-its-regained-130-2017-05-18)
The FTSE 100 on Wednesday fell 0.3%
(http://www.marketwatch.com/story/ftse-100-steady-ahead-of-jobs-data-but-trump-worries-limit-gains-2017-05-17),
the first loss in 10 sessions and a retreat from its record close
of 7,522.03 logged Tuesday
(http://www.marketwatch.com/story/ftse-100-clings-onto-record-high-ahead-of-inflation-report-2017-05-16).
Trump's tribulations: European stocks slumped 0.5% on Thursday,
and U.S. stocks were stabilizing
(http://www.marketwatch.com/story/fragile-start-ahead-for-us-stocks-as-political-concerns-weigh-heavy-2017-05-18),
after the Dow industrials on Wednesday
(http://www.marketwatch.com/story/us-stock-futures-slide-as-concerns-over-trump-grow-2017-05-17)
tumbled 372.82 points.
The fall for equities followed a New York Times report
(https://www.nytimes.com/2017/05/16/us/politics/james-comey-trump-flynn-russia-investigation.html?_r=0)
that Trump in February asked then-director of the Federal Bureau of
Investigation, James Comey, to stop his investigation into links
between Trump's associates and Russian officials.
Read:Trump campaign had at least 18 undisclosed contacts with
Russia: report
(http://www.marketwatch.com/story/trump-campaign-had-at-least-18-undisclosed-contacts-with-russia-report-2017-05-18)
"Realistic discussions of impeachment are now being had, and
markets are rightly concerned that this is another significant
spanner in the works for Trump's legislative plans," said Richard
Perry, market analyst at Hantec Markets, in a not. "If he struggled
with health care reform how is he going to get through
controversial plans over huge fiscal stimulus, banking reform and
deregulation?"
Banks shares world-wide had booked gains on the prospect of
looser regulatory rules for the financial industry. A slide in
shares of financial companies on Wednesday led Wall Street's
decline, leaving Bank of America Corp. (BAC) slumping 6%. The
American bank's stock was rallying somewhat Thursday, trading up by
less than 1%.
In London, shares of HSBC Holdings PLC (HSBA.LN) (HSBA.LN)
drooped 1%, though Barclays PLC (BCS) shook off an early stumble
and closed 1.3% higher.
Questions also arose about the feasibility of infrastructure
plans touted by Trump and the continuation of an accompanying
reflation trade. That hurt shares of metals producers, with Anglo
American PLC (AAL.LN) down 1%.
But there's "a potential calming impact with the appointment of
former FBI Director Robert Mueller as a special counsel for the
Russia investigation," said Perry. "Global equities are still under
pressure, but are they set for a bounce too as the bargain hunters
move in?"
See: Robert Mueller, ex-FBI director, named special counsel for
Russia probe
(http://www.marketwatch.com/story/robert-mueller-ex-fbi-director-named-special-counsel-for-russia-probe-2017-05-17)
Pound and data: The pound leapt above the $1.30 level for the
first time since early October, according to FactSet data. It
recently was at $1.3010 after fetching $1.2971 late Wednesday in
New York.
The advance came after the Office for National Statistics said
April retail sales rose 2.3%
(http://www.marketwatch.com/story/uk-retail-sales-rebound-overshoot-expectations-2017-05-18),
well above the FactSet consensus estimate of 1.2%. "Anecdotal
evidence from retailers suggests that good weather contributed to
growth," the ONS said.
Year-over-year, sales climbed 4%, outstripping expectations of
2% increase.
The report "will surely give some respite to the Bank of England
and its policy makers. Although the U.K.consumers have started to
feel the effects of high Inflation and a slower wage growth over
the first quarter of 2017, consumer confidence looks to have turned
a corner for April," wrote Anthony Kurukgy, sales trader at Foenix
Partners.
The Bank of England last week held the key interest rate at
0.25%.
Stock movers: Shire PLC (SHPG) (SHPG) gained 1.8% after the drug
company reported positive results from a late-stage trial
(http://www.marketwatch.com/story/shire-adrs-jump-almost-7-premarket-after-positive-trial-of-angioedema-treatment-2017-05-18)
of a treatment for hereditary angioedema, a rare genetic disease
that causes swelling of the extremities, gastrointestinal tract and
upper airways.
Burberry Group PLC (BRBY.LN) rose 4.7% as the luxury-goods
retailer said it was on target with its cost-savings program
(http://www.marketwatch.com/story/burberry-pretax-profit-below-forecasts-2017-05-18),
backed its current-year forecasts and disclosed it'll buy back an
additional GBP300 million
(http://www.marketwatch.com/story/burberry-to-buy-back-up-to-gbp300-mln-of-shares-2017-05-18)
($388.2 million) of shares.
Royal Mail PLC (RMG.LN) climbed 0.7% as the postal company
posted a 25% rise in fiscal 2017 pretax profit.
(http://www.marketwatch.com/story/royal-mail-pretax-profit-rises-25-2017-05-18)
Experian PLC shares (EXPN.LN) fell 2% even as the provider of
financial data and services posted an 11% rise in 2017 pretax
profit
(http://www.marketwatch.com/story/experian-plans-600-million-share-buyback-2017-05-18).
Experian said it's planning to buy back $600 million worth of
shares. UBS said that is below its estimate of a $700 million
buyback plan.
(END) Dow Jones Newswires
May 18, 2017 12:11 ET (16:11 GMT)
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