FTSE burrow further under 7200
Trump protectionism rallies sterling, hurts bourse
Pound gains 0.6% vs US dollar at $1.2450
FTSE 100 stocks fell further below 7200 on Monday after sterling gained strength against the US dollar in the aftermath of President Donald Trump's inauguration speech.
Concern over Trump's untempered protectionist rhetoric hit the US currency, and the pound hit a one-month high against the dollar, rising 0.6% to $1.2450.
As the pound rose, the stock market fell, with the FTSE 100 ending down 0.7% at 7151.
A stronger pound hurts multinational firms, as overseas profits are worth less when converted back into sterling.
The biggest faller in the FTSE 100 was bookmaker Paddy Power Betfair (LON:PPB). Its shares dropped 4.4% to 8295p after it said revenues had been affected by a run of "customer friendly" results.
The company said football results in December and Donald Trump's surprise US election win had cost it about £40mln in the final quarter of 2016.
Meanwhile, the top risers were miners. They stand to gain from the expansionist policies of Trump.
Read: Mining hits new highs, as world awaits Trump
The top gainers were Antofagasta Holdings (LON:ANTO) up 3.6% to 789.5p, and Fresnillo (LON:FRES) up 3.4% to 1450p.
Similarly, in the FTSE 250, which dropped by 0.2% to 18,116 and was led by a 4.9% loss by Hunting Plc (LON:HTG), it was miners who dominated the gains. Hochschild Mining Plc (LON:HOC) led with a 12.2% gain to 253.4p and Ferrexpo plc (LON:FXPO) up 5% to 136.6p.
Also in the mid-caps, shares in Bovis Homes (LON:BVS) rose 3% to 820.5p following a report that a key shareholder in the housebuilder has written to rival Berkeley about the possibility of a merger. Berkeley shares were up 1.1%.
The FTSE AIM 100 Index lost 0.07% to 4158 and the FTSE AIM All-Share Index was flat at 873.
Overall, 28% of London stocks gained and 36% lost.
1515 GMT - FTSE 100 stays weak on caution over Trump's protectionist rhetoric
FTSE 100 off 42 at 7,156
US stocks lower, Dow Jones sheds 32 points
Sterling jumps versus dollar
Miners benefit as gold, metal prices rise on greenback's decline
3.15pm … Weakness continues in New York …
The Footsie stayed lower in late afternoon trading, just holding off session lows, as US stocks made a cautious start reflecting worries over new US president Donald Trump’s protectionist trade policies.
Around 3.10pm, the FTSE 100 was down 42 points at 7,1256, almost midway between session highs and lows.
Across the pound, the Dow Jones Industrials was off around 32 points in early trading at 19,795, while the broader S&P 500 and technology-laden Nasdaq composite also declined.
Remo Fritschi, institutional sales manager at ADS Securities said: “Donald Trump’s inauguration speech on Friday may have been light on economic policy details, but we’re starting to see more of this emerge, with the White House website having been busy over the weekend.
“However the confirmation that the US would walk away from the Trans Pacific Partnership certainly isn’t impressing markets”.
He added:” Further political announcements will be expected in the coming days and should bring with them a slug of market volatility”
The uncertainty over Trump’s policies saw the dollar weaken versus the pound today, with sterling up 0.7% to US$1.2458, near a five-week high.
Drug stocks were under pressure in London, with AstraZeneca PLC (LON:AZN), GlaxoSmithKline plc (LON:GSK), and Shire Plc (LON:SHP) all down just under 1% on worries over US healthcare policy.
But mining shares were higher as the weaker dollar gave gold and other metal prices a lift.
Chilean copper miner Antofagasta PLC (LON:ANTO) stood out, up over 4% to 793p, also helped by a upgrade in rating from Citigroup to 'buy' from 'neutral' with a target price of 807p.
The bank said the miner is set to benefit from lower taxes and sees improved free cash flow in the next decade.
On the second line, Hochschild Mining PLC (LON:HOC) was strong, jumping over 7% to 243p as it reached an agreement with a local community at its Pallancata mine in Peru to allow the silver and gold mine to reopen this week.
But mid cap Essentra PLC (LON:ESNT) fell 2.6% to 431.1p after the maker of cigarette filters and plastic packaging warned that its profit will be below expectations due to operational issues at its health and personal care packaging unit.
11.15am ... First bad week continues ...
The bad news is the FTSE 100 remains stuck in reverse, having finally had its first bad week of the year last week.
The good news is that we can officially start blaming Donald Trump after his inauguration on Friday.
Or is that the bad news?
“Equities are on the back foot to start the new trading week, sentiment dented by a weak USD [US dollar] derived from Trump's Friday inauguration speech striking a very anti-globalisation tone,” opined Mike van Dulken, head of research at Accendo Markets and part-time Bond super-villain.
At 11am, the FTSE 100 was off its lows for the day but still down 39 points at 7,159.
Banks were getting it in the neck, with Royal Bank of Scotland Group PLC (LON:RBS), down 2.6%, the biggest faller. Barclays, HJSBC and Standard Chartered all suffer falls on one per cent or more.
You can certainly blame Donald Trump for Paddy Power Betfair plc (LON:PPB) being one of the morning’s worst blue-chip performers.
The betting shops and betting exchange operator dropped a bundle on Donald Trump’s election victory.
Its European sportsbooks lost money on football bets in the month of December, before any benefit from the re-cycling of winnings (also known as mug punters blowing their winnings).
The shares were off 2.3%.
Mining stocks received a boost from the Trump-inspire dollar decline, while small caps backers were in the garden of Eden, with Eden Research PLC (LON:EDEN), up 42%, the top riser, and Edenville Energy PLC (LON:EDL), up 36%, the next best.
The former sprouted after it received French marketing approval for its wine fungus treatment.
Edenville Energy went on a charge after it announced a partnership with Sinohydro Corporation on its Rukwa coal-to-power project.
8.50am ... it's all Trump's fault ...
The FTSE 100 dropped 64 points to 7,134.06 in early trade, reacting to the protectionist rhetoric of Donald Trump over the weekend.
Giving investors a case of the ‘willies’ was Trump’s assertion that he is ready to redraw the North American Free Trade Agreement.
Some investors will view this as perhaps just the opening salvo in a trade war that could drag in China.
Meanwhile Trump’s move on NAFTA comes just days before Prime Minister Theresa May visits Washington for her first talks on the post-Brexit relationship between the US and UK.
Looking at the Footsie, the banks and insurers were on offer early on, while Unilver PLC (LON:ULVR) was down 1.6% after being hit by a Barclays Capital downgrade.
6.45am ... Gloomy start predicted ...
The FTSE 100 looks set to open its weekly account on the back foot as investors here in the UK begin to assess the reality of a Trump presidency ahead of Prime Minister Theresa May’s Washington visit on Friday.
The index of blue-chip shares is expected to fall 30 points at the open to 7,168.44 after enduring its first week in seven in negative territory.
After the inauguration, Donald Trump’s rhetoric over the weekend continued to be protectionist with potential renegotiation of the North American Free Trade agreement on the cards.
“What is clear is that this new US President will go about doing things his way, as he sets about making his mark on the US economy, and markets had better take note, as it becomes clear that Donald Trump intends on acting the same way as president as he did on the campaign trail,” said Michael Hewson, analyst at CMC Markets.
In Asia overnight the markets were mixed. Export-led Japan’s Nikkei index fell 1.3%, Shanghai was up 0.3% and Hong Kong was flat.
Back here in the UK, Theresa May will set out her vision for Britain’s industrial future on Monday promising to boost world-class industries and sectors while closing the productivity gap between to the top performers and laggards.
In London investors are braced for another big corporate reporting week with updates from Unilever, Diageo, Dixons Carphone and BHP Billiton.
- Brent crude 8 cents lower at US$55.41 per barrel.
- Gold US$10.50 higher at US$1,204.90 an ounce.
- Pound US$1.2420.
Business Headlines
- Stamp duty is making the UK’s housing crisis worse by distorting the market and harming long-term development, the head of one of the world’s biggest property groups has warned – Telegraph.
- Royal Dutch Shell has agreed an US$820mln deal to sell its share of a Saudi Arabian petrochemicals joint venture, taking it past the US$6bn milestone in its asset sales programme – Times.
- MPs say they could intervene if banks fail to resolve a dispute that threatens millions of customers with being charged to withdraw their own money from thousands of cash machines that at present are free to use – Times.
- London-listed companies paid a record-breaking £16.6bn to their investors during the final three months of 2016, as the plummeting pound gilded an otherwise downbeat year for dividends – Telegraph.
- Britain’s consumers rushed to buy dollars and euros for their holidays as the value of sterling dropped after Theresa May’s commitment to a hard Brexit last week – Guardian.
- Official figures this week are expected to provide fresh evidence that the U.K. economy remained resilient in the face of Brexit uncertainty at the close of 2016 but economists warn Britain is headed for a sharp slowdown this year – Guardian.
- Ministers may backtrack on plans to sell the Green Investment Bank to the so-called Aussie vampire kangaroo. Plans to offload the bank to investment firm Macquarie may be scrapped in favour of floating it on the stock exchange. Ministers had been widely criticised over plans to sell the Green Investment Bank – Daily Mail.