LONDON MARKETS: FTSE 100 Faces Worst Session In Nearly 4 Months After Gloomy Housing, Trade Data
August 10 2017 - 6:27AM
Dow Jones News
By Carla Mozee, MarketWatch
Hefty ex-dividend day for FTSE 100; Glencore shares fall
U.K. stocks dropped sharply Thursday, with home builders hurt
after downbeat figures from the British housing sector, while U.K.
trade numbers were a disappointment and a number of FTSE 100
companies were without dividend rights for the session.
The FTSE 100 fell 1.2% to 7,411.88, with only the health care
sector showing a modest gain. The index was on course for its
steepest percentage decline since April 18, according to FactSet
data.
The benchmark on Wednesday dropped 0.6%
(http://www.marketwatch.com/story/ftse-100-falls-as-us-north-korea-tensions-prompt-flight-to-safety-2017-08-09),
hurt as investors fled so-called risk assets as tensions between
the U.S. and North Korea escalated. Caution on that front lingered
in U.K., European and Asian stock markets on Thursday.
In London, shares of home builders were pushed lower after the
Royal Institution of Chartered Surveyors said U.K. house prices in
July rose at the slowest rate
(http://www.marketwatch.com/story/uk-house-prices-grow-at-slowest-rate-in-4-years-rics-2017-08-10)
in more than four years. Headline price growth across the U.K. was
1% compared with 7% in June.
Shares of Barratt Developments PLC (BDEV.LN) fell 1.6%,
Persimmon PLC (PSN.LN) lost 1.9%, and Taylor Wimpey PLC (TW.LN)
gave up 2%.
"The RICS price expectations balance also fell to zero,
indicating that estate agents anticipate broadly flat prices
through the remainder of 2017," said Conall MacCoille, chief
economist at Davy Research, in a note.
"However, the U.K. still faces the many uncertainties posed by
Brexit. Clearly the housing market and its potential impact on the
stretched U.K. consumers pose risks for the broader economy."
Data: Investors received a mixed batch of economic data
(http://www.marketwatch.com/story/uk-industrial-output-rises-on-north-sea-oil-bump-2017-08-10)
from the Office for National Statistics. Industrial production
unexpectedly rose, by 0.5% in June, and factory production was flat
in June compared with expectations for a modest decline.
But the U.K.'s trade deficit in goods in June widened to GBP12.7
billion, which was GBP1.7 billion more than expected by economists
and higher than the GBP11.3 billion deficit in May.
"Trade and production data provide no evidence that exports or
investment are picking up to offset a slowdown in consumer spending
due to falling real wages," said Citi Research economists led by
Antonio Montilla.
"We note the continued divergence between more bullish soft data
and stagnant hard data, which makes us cautious on the growth
outlook for 2H-17 and beyond amidst Brexit and political
uncertainty," said Citi.
The pound did rise after the data, buying $1.2996, compared with
$1.3004 late Wednesday in New York.
Stock movers: Coca-Cola HBC shares surged 7.6% after the
beverage bottler said strong volume growth, price increases and
improved packaging mix resulted in a rise in first-half earnings
(http://www.marketwatch.com/story/coca-cola-hbc-earnings-rise-on-volume-growth-2017-08-10).
But shares of miner Glencore PLC (GLEN.LN) fell 1.7% even after
the miner posted said it swung to first-half profit
(http://www.marketwatch.com/story/glencore-swings-to-profit-on-commodities-boom-2017-08-10)
and raised its full-year earnings outlook. The company's shares are
still up 20% in 2017.
Meanwhile, 16 companies on the FTSE 100 were trading without
dividend rights on Thursday, which can sometimes mean lower
short-term share prices. Among those losing ground, Lloyds Banking
Group PLC (LLOY.LN) (LLOY.LN) fell 1.2%, oil major Royal Dutch
Shell PLC (RDSB.LN) (RDSB.LN) was down 0.7%. But miner Anglo
American PLC (AAL.LN) moved up 0.4%.
Travel services company TUI AG backed its guidance for at least
10% growth for the year
(http://www.marketwatch.com/story/tui-sees-summer-trading-in-line-with-expectations-2017-08-10)
and said this year's summertime business is in line with its
expectations, with good demand for hotels, cruises and holidays.
But shares were down 1.8% on Thursday.
Prudential PLC's (PRU.LN) first-half net profit more than
doubled to GBP1.51 billion pounds ($1.96 billion), helped by a
strong growth in its Asia business. The financial services company
also said it will merge its U.K. businesses. Shares were off 0.9%.
The stock has risen 12% this year.
(END) Dow Jones Newswires
August 10, 2017 07:12 ET (11:12 GMT)
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