FTSE 100 stocks shed nearly 100 points on Friday, as a combination of strong sterling, weak construction data and a sell-off by majors on Wall Street left the London market only slightly higher on the week.
The FTSE 100 ended down 1.4%, or 97.55 points, a 6730 and led by miners Fresnillo (LON:FRES), down 9% at 1435p and Randgold Resources (LON:RRS) down 6.7% to 5955p.
It was the second day that these gold miners came off sharply, as gold was out of fashion following the stampede for growth policies promised by US President-elect Donald Trump.
Asia-focused banks like Standard Chartered (LON:STAN), down 4% to 632.82p and HSBC (LON:HSBA) down 1.3% at 617.11p, came off as markets grew anxious Trump could introduce protectionist trade policies, hitting emerging markets. Markets both sides of the pound unwound some of the previous session’s rally when pro-business policies were assessed on the top line. Now the smaller print came into view.
In the FTSE 250, which fell 1.2% to 17,444, shares in building materials firm SIG (LON:SHI) led the decliners, falling 21.9% to 90.5p as it warned on profits and said its chief executive had left the company.
SIG said it had been affected by softer trading conditions in the UK since the Brexit vote and increased competition.
As a result, it has lowered its forecast for full-year profits to between £75mln and £80mln.
Sterling rose 0.5% against the dollar to $1.2615 and was 0.7% higher against the euro at €1.1525 – having chalked up 16-month highs against the single European currency this week.
The pound gained on a combination of Trump’s electoral victory this week as well as official UK figures which showed construction output fell 1.1% in the third quarter - the sector's weakest performance for four years – but output managed to rise 0.3% in September.
The FTSE AIM 100 Index fell 0.4% to 3819 while the FTSE AIM All-Share Index edged 0.1% lower to 800.
Late session
FTSE 100 down 117 at 6,713
Pound on the march
Exporters hit
Construction data worst in four years
Late small cap movers
GCM Resources PLC (LON:GCM) rocketed more than 200% to 43.4p as it signed an early stage deal with China Gezhouba Group International Engineering to develop mine-mouth coal-fired power plants at the Phulbari site.
CGGCINTL is a subsidiary of China Energy Engineering Group, a super central state-owned enterprise of the People's Republic of China.
Aquatic Foods Group PLC (LON:AFG) jumped like a proverbial salmon and added 13% to 13p on results that showed revenues improved quarter on quarter and a comment that margins had stabilised. The company supplies and processes fish in China.
15.15pm - FTSE 100 sheds hundred points on pound and weak data
FTSE 100 ran into a sustained burst of profit taking as US market turned lower and the pound rallied.
London blue chips was almost 100 points lower with the poor construction data earlier in the day providing a good reason to take some money off the table.
Gold was especially weak, shedding US$33 to US$1,233 as the prospect of higher US interest rate rises weighed heavily.
Gold miners were the worst performers with Fresnillo (LON:FRES) giving up most of its recent gains with a 8% drop to 1,451p and Randgold (LON:RRS) down 6% to 5,980p.
Oil too was under pressure, with the crude price heading for its third weekly dip as hopes that OPEC may curb output fade further. Light crude (WTI) dropped 2.5% to US$43.55. Shell ( LON:RDSB) eased 91p to 2, 044p.
Marks & Spencer was the best riser adding 4% to 329.7p. BT (LON:BT.A) was also going well with a 13p rise to 360.7p.
11.15am - FTSE 100 hit by strong pound and construction data
Sterling’s march above US$1.26 hit Britain’s biggest exporters (which had previously benefited from the weak pound) and dragged the FTSE 100 lower.
At 11.10am, the index of blue-chip shares was down around 71 points at 6,757.21.
Engineers Smiths and Rolls-Royce were hit as was the packing firm Mondi.
Shire was also in the doghouse after the feedback from Thursday’s capital markets day filtered out into the market.
The big economic news of the day came from the construction industry – and it wasn’t good.
The latest data from the Office for National Statistics showed volumes fell 1.1% in the quarter to the end of September – the weakest reading in four years.
The numbers charted the immediate aftermath of the Brexit vote and the showed large falls in repair work, partly offset by small rises in infrastructure and public building.
But there is some light at the end of the tunnel, according to Chris Williamson of IHS Markit.
“Both the official and business survey data therefore hint at the construction industry starting to revive after being hit hard by the economic and political uncertainty that surrounded June’s Brexit vote,” he said.
Seemingly a victim of the industry downturn was building materials firm SIG, which earlier sounded the earnings alarm. The shares tanked 20%.
9am - a down day
- FTSE 100 in reverse gear
- US fears receding
- Precious metal miners hit as gold slides
The FTSE 100 failed to follow the lead set by the Wall Street, which finished on a record high overnight as it slid back 22 points to 6,805.56.
The momentum, at least in investors’ eyes, is behind the US with closer analysis of the soon-to-be installed Trump administration’s pro-business credentials.
The fall-back in the price of gold hit precious metals miners Fresnillo (LON:FRES) and Randgold Resources (LON:RRS), while Standard Charted (LON:STAN) was the Footsie’s biggest casualty, down 5% in early deals.
It emerged last week the Asia-focused bank was the focus of a regulatory probe in Hong Kong into its handling of certain IPOs.
There was a rare day in the sun for serial profit warner Pearson (LON:PSON), which was up 2%.
6.30am - flat start predicted
- Wall Street finishes on a hgh
- Asia markets in rude health
The FTSE 100 is expected to open the day flat at 6,957.60 with London market unmoved by the upward momentum seen in the US overnight.
Wall Street finished on a record high, while the Hang Seng was the only major Asian bourse to see share prices reverse.
The reality that Trump the campaigner and Trump the President-in-waiting are two different animals appears to be sinking in with investors.
His likely pro-business stance meant that US Treasuries have been in high demand.
“OK, the US presidential election is over but what can we expect from Trump’s regime?” asked the market commentator David Fuller, of Fuller Treacy Money.
“Interestingly, infrastructure spending is back on a number of political agendas.
“That should help GDP growth. Commodities are generally firm, with ‘Dr Copper’ joining other metals in breaking to the upside.
“A number of government bond yields bottomed in July, including US ten-year Treasuries.”
*Brent crude fell 11 cents overnight to $45.73 after the International Energy Agency warned that the oil market will remain heavily oversupplied next year if OPEC fails to agree on a co-ordinated cut to output this month.
*Gold US$4.80 lower at US$1261.60 an ounce.
*The pound worth US$1.2570.
City Headlines
- Jamie Dimon, the boss of JPMorgan, has reportedly been approached to become Donald Trump’s treasury secretary – Telegraph.
- Shares in Siemens on Thursday hit a 16-year high on confirmation of plans to spin off its healthcare business – FT.
- The chief executive of challenger bank Aldermore has said that its board will discuss paying its debut dividend next year after the specialist U.K. mortgage and small business lender generated capital organically for the first time – FT.
- Royal Dutch Shell will seek to expand in Brazil’s deep water oil exploration and production fields following regulatory changes that are expected to open up the sector – FT.
- Canada’s wealthy Weston family has received a dividend of more than £14 million from its global department store business which includes Selfridges & Co – Times.