By Carla Mozee and Victor Reklaitis, MarketWatch
Banks ordered to boost capital buffers
U.K. stocks finished in the red Tuesday, as a profit warning
from British department store Debenhams PLC dragged down shares of
blue-chip retailers, but gains for commodity stocks limited losses
for the London benchmark.
The FTSE 100 fell 0.2% to close at 7,434.36, suffering its fifth
loss in six sessions.
A cloud over consumers: Retail shares lost ground after
Debenhams (DEB.LN) said continued market volatility could leave its
full-year profit at the lower end of expectations. But in the 15
weeks to June 17, like-for-like sales did rise 1.8%, it noted.
Debenhams shares (DEB.LN) were down 2.3% off the FTSE 100.
After the warning, shares of department store chain Marks &
Spencer Group PLC (MKS.LN) lost 2%, and apparel and home
furnishings seller Next PLC (NXT.LN) dropped 1.1% on the FTSE 100.
DIY retailer Kingfisher PLC (KGF.LN) finished flat on the day.
"Recent figures from the Office for National Statistics show
sales volumes in the retail industry are growing at their lowest
level for 4 years, and Debenhams is feeling the pinch. Trends in
its key sales metrics have gone into reverse in recent weeks," said
George Salmon, equity analyst at Hargreaves Lansdown, in a
note.
Adding to the sector's gloom was YouGov/CEBR's survey showing a
sharp drop in consumer sentiment
(https://yougov.co.uk/news/2017/06/26/consumer-confidence-slumps-wake-hung-parliament/)
to levels seen immediately after the U.K. voted last year to leave
the European Union. A slump in optimism over property prices and a
squeeze on Britons' household finances were the key factors behind
the downbeat consumer sentiment, according to the survey.
Shares of home builders also struggled. Persimmon PLC (PSN.LN)
shed 0.1%, Barratt Developments PLC (BDEV.LN) fell 0.2%, and Taylor
Wimpey PLC (TW.LN) declined 0.6%.
Supermarket sweep: Meanwhile, the country's four largest
supermarket chains logged sales growth
(http://www.marketwatch.com/story/uks-big-supermarkets-log-sales-growth-2017-06-27)
in the 12 weeks ended June 18, but lost market share to German
retailers Aldi and Lidl as consumers sought lower prices, according
to a Kantar Worldpanel report.
Shares of grocery chains were mixed. Wm. Morrison Supermarkets
PLC (MRW.LN) turned higher by 0.2%, J Sainsbury PLC (SBRY.LN)
slipped 0.4%, while Tesco PLC (TSCO.LN) moved up 1.3%.
Resources: As the euro strengthened, the dollar was pulled
lower, aiding prices for most dollar-denominated commodities such
as copper .
That, in turn, further lifted shares of metals producers. The
sector started the session higher after Chinese Premier Li Keqiang
said the country has experienced significant job creation
(http://www.marketwatch.com/story/chinas-premier-li-touts-unimaginable-job-growth-2017-06-27)
from his program to bolster the world's second-largest economy.
China is a major buyer of industrial and precious metals.
In London, miners Anglo American PLC (AAL.LN) and Rio Tinto PLC
(RIO) climbed 3.2% and 3.3%, respectively, and copper producer
Antofagasta PLC (ANTO.LN) tacked on 3.1%.
Meanwhile, Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) was up 1.1%
and rival oil producer BP PLC (BP.LN) (BP.LN) was higher by 0.6% as
oil prices traded higher for a fourth consecutive session. Crude
tumbled into a bear market last week.
Banks: Bank shares took in stride the Bank of England's order to
lenders to boost their capital cushions
(http://www.marketwatch.com/story/bank-of-england-orders-banks-to-boost-capital-2017-06-27-5485570),
a move aimed to protect the U.K.'s financial system from risks
including Brexit and increased borrowing by consumers. The buffer
was reduced to zero last year in a bid to support the economy after
the Brexit vote.
Barclays PLC (BCS) was up 1.5%, Standard Chartered PLC (STAN.LN)
moved up 1.8%, and Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN)
gained 0.3%.
The pound bought $1.2790, up from $1.2721 late Tuesday in New
York.
Meanwhile, the euro rallied after European Central Bank
President Mario Draghi said at an ECB forum in Sintra that "a
considerable degree" of stimulus is needed in the eurozone, a step
back from the stimulus levels signaled in earlier speeches. The
shared currency gained more than 0.5% against the pound.
Fed Reserve Chairwoman Janet Yellen was scheduled to speak in
London at 6 p.m. local time, or 1 p.m. Eastern U.S. time.
Read:Don't expect Yellen to signal retreat from Fed's
interest-rate strategy
(http://www.marketwatch.com/story/dont-expect-janet-yellen-to-signal-retreat-in-london-on-feds-interest-rate-strategy-2017-06-26)
Stock movers: At the bottom of the FTSE 100, shares of auto- and
aerospace parts supplier GKN PLC (GKN.LN) fell 4.3% after German
auto parts supplier Schaeffler AG (SHA.XE) cut its profit forecast
for 2017.
WPP PLC shares (WPP.LN) fell 0.8% after the advertising
heavyweight said IT systems at several of its businesses were hit
by a suspected cyberattack
(https://www.wsj.com/articles/cyberattacks-hit-global-companies-in-europe-1498575793).
Other companies reported suspected cyberattacks Tuesday, including
French building materials company Saint Gobain (SGO.FR).
(END) Dow Jones Newswires
June 27, 2017 12:19 ET (16:19 GMT)
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