FTSE 100 shares closed lower on Tuesday in sympathy with declines of up to 160 points on Wall Street’s DJIA as the fallout of US President Donald Trump’s first week in office continued to take its toll.
Controversy continued to whirl on the implications of a rushed travel ban from certain Muslim-majority countries Trump ordered on Monday and who later fired his attorney-general after refusal to enforce the executive order.
The Dow Jones Industrial Average gave up its hard-fought 20,000 level and London’s stocks were sensitive to events at the recently boosted Special Relationship partner.
The FTSE 100 closed down 0.3% at 7,099. At least it didn’t give up the 7,000 level itself.
The top decliner was insurer Legal & General Group plc (LON:LGEN). The insurance sector was sold down early on and stayed that way. With little between them, Admiral Group (LON:ADM) ended down 1.2% at 1776p, Prudential (LON:PRU) down 1.2% at 1532p and Experian (LON:EXPN), a credit broker, down 1.2% to 1529p.
Conversely, the more domestic-centric mid-cap FTSE 250 index closed higher, up 0.4% at 18,147.
Irish food company Greencore Group plc (LON:GNC) led the mid-cap gainers, up 8.1% to 236p after it reported strong first-quarter revenue growth and said its efforts to increase efficiency were offsetting inflation in raw materials, packaging and labour costs.
For the quarter ended 30 December, revenue of £417mln was up 17.1% on a reported basis, while on a like-for-like basis, excluding revenue from The Sandwich Factory acquisition in July, sales rose 9.1%.
The FTSE AIM 100 Index also ended higher, by 0.2% to 4220 and the FTSE AIM All-Share Index up 0.2% at 883.
Losers and gainers were neck-and-neck at 33% apiece across the London bourse on Tuesday.
1530 GMT - FTSE 100 off highs as US stocks drop back again on Trump worries
FTSE 100 up around 13 points, off peak
Dow Jones drops 130 points
Precious metal miners up with gold price
3.30pm … Gains eroded …
The Footsie’s rally started to run out of steam in late afternoon trading, with the UK blue chip index falling back from earlier highs as US stocks posted further sharp falls early on.
Around 3.30pm, the FTSE 100 was up 13.5 points at 7,132, off the session low of 7,116, but below the morning peak of 7,162, having dropped 65 points yesterday.
But on Wall Street, the Dow Jones dropped another 130 points having surrendered the hard-fought 20,000 level yesterday as investors continued to grapple with political worries caused by newly-inaugurated President Donald Trump's initial, controversial executive orders.
Late Monday, Trump fired the acting US attorney general, who had declined to defend an executive order calling for a travel ban on visitors from seven mainly-Muslim countries.
Joshua Mahony, market analyst at IG, said: “The response to Trump’s ban has been a classic risk-off move, with the likes of Treasuries, gold and the yen gaining ground at the detriment of the dollar and riskier assets.
“However, bear in mind that this is a big week from an economic front and with February bringing with it some big hitting economic releases, there is a good chance that market sentiment will not be driven by this topic for much longer.”
On currency markets, the dollar beat a retreat on the Travel ban fall-out, and as one of the new President’s administration called the euro ‘undervalued’. Sterling rose 0.3% versus the greenback to US$1.2532, but dropped 0.6% against the euro to $1.1609.
Gold prices were strong, helped by the dollar’s decline, with the yellow metal gaining 1.7% at US$1,213 an ounce, pushing precious metal miners Fresnillo PLC (LON:FRS) and Randgold Resources Limited (LON:RRS) to the top of the FTSE 100 leader board, both up around 3% to 1,453p and 6,815p respectively.
12.45pm ... Rally continues ...
The FTSE 100 went some way to recouping Monday’s losses as it climbed 42 points to 7,160.01 in early afternoon trade.
The story of the morning has been the attack by one of Donald Trump’s top trade advisers on Germany for currency exploitation.
Quoted in the Financial Times, Peter Navarro, the head of Trump’s new National Trade Council, said the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners.
He also said Germany was one of the main hurdles to a US trade deal with the EU.
All of this plays to the narrative the Trump administration will play hardball with potential trade partners. Based on the rhetoric, the UK may be actually better outside the EU, analysts said.
Firmer commodity prices boosted the miners, with BHP Billiton (LON:BLT) leading the charge, while Tesco (LON:TSC) and Primark owner Associated British Foods (LON:ABF) led the fallers.
9.00am ... Solid start ...
The FTSE 100 got off to a solid if unspectacular start Tuesday following Monday’s 66 point decline.
At 8.35am the index of blue-chips shares was up just over 14 points at 7,132.87 as traders took a more sanguine view on President Donald Trump’s move to curb travel from seven mainly Muslim states into the US.
The insurance sector was sold down early on with Aviva (LON:AV.), Prudential (LON:PRU) and Legal & General (LON:LGEN) topping the fallers’ list.
Among the second-liners, Ocado (LON:OCDO) was in demand and up almost 8% after a better than expected update on trading.
The online grocer reported modest growth in full-year core earnings and said it was well positioned for future growth, but there was no new news on a long awaited international deal for the group.
Regulatory concerns again bubbled to the surface for those trading the spread betting firms CMC Markets (LON:CMCX) and IG Group (LON:IGG), which fell 3.6% and 3.3% respectively.
6.45am ... Steady start predicted ...
UK stocks are set for a steady start after yesterday’s heavy fall, despite a shake-out overnight on Wall Street.
President Trump’s moves to restrict immigration put US investors in “risk-off” mode, sending US indices tumbling but it looks like London got most of the reaction out of its system yesterday, when the FTSE 100 index fell 66 points.
Spread betting quotes indicate it will open a handful of points lower than last night’s close of 7,118
US markets had their worst day of the year, with the benchmark S&P giving up 14 points at 2,281 and the Dow Jones dropping below 20,000, surrendering 123 points at 19,971.
Asian markets remain out of sorts, with the Japanese market having an especially torrid time in the final hour of trading. The Nikkei 225 was another index falling below 20,000, down 268 points at 19,101.
In Hong Kong, the Hang Seng index was down 13 points at 23,361.
On the corporate news front in the UK today, focus early doors will be on utility company SSE PLC (LON:SSE), floor coverings flogger Carpetright PLC (LON:CPR) and food delivery group Ocado Group PLC (LON:OCDO).
Around the markets
- Sterling: US$1.2515, up 0.15 cents
- Gold: US$1,201 an ounce, up US$7.80
- Brent crude: US$55.13 a barrel, down 10 cents
Business Headlines
- Randgold Resources hit by sit-in at Ivory Coast mine – Daily Telegraph
- Bond markets sniff mounting risks in France and Italy – Daily Telegraph
- Openreach stalemate as BT pensions fears increase – The Times
- Tesco deal sparks Sainsbury’s/Morrisons merger speculation – The Times
- Ex-HBOS manager and five others face jail over £245 million scam – The Guardian
- Weetabix warns it may raise prices due to fall in pound since Brexit vote – The Guardian
- VW becomes world’s No 1 car maker despite diesel emissions scandal – The Guardian
- Google sets up £4 million fund to help those affected by Trump’s refugee ban – The Independent
- Boohoo staff can get fired ‘for smiling’ – The Independent
- Building boom drives UK regions to pre-2008 highs – Financial Times
- Twitter signs with Sky for first European live streaming deal – Financial Times
- Sony warns it will take $1 billion write-down on its movie business- Financial Times
- Trump travel ban wallops air travel as American Airlines stocks plummet by 4.8% with others following suit – Daily Mail
- Germany launches brazen bid to lure banks out of London amid Brexit – Daily Express
- London salaries hit but regional pay is faring better – City AM
- Spread betting lobby group plots bid to appease City watchdog amid industry crackdown – City AM