By Carla Mozee, MarketWatch

U.K. business investment drops, a sign of Brexit-related caution

U.K. stocks wavered Thursday, hovering near a one-month high, but energy shares moved higher as Brent oil traded above $50 a barrel.

The FTSE 100 was off 0.1% at 6,259.317, and has been swaying between small gains and losses throughout the day. On Wednesday, the blue-chip benchmark rose 0.7% (http://www.marketwatch.com/story/ftse-100-rises-as-oil-aims-for-50-a-barrel-2016-05-25) and finished at its highest since April 28, FactSet data show. A win on Thursday would be the index's third in a row.

"The FTSE is consolidating gains after having hit a four-week high yesterday. The 200-day moving average, 6,145, is expected to lend a base to pullbacks for a potential expansion toward the 6,300 on recovery in energy prices," said Ipek Ozkardeskaya, market analyst at London Capital Group, in a note.

The London benchmark has gained 1.7% so far this week, which would be its biggest weekly rise since mid-April.

Energy boost: Shares of oil heavyweight Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) gained 0.9%, and BP PLC (BP.LN) (BP.LN) added 0.8%, rising alongside oil prices.

Brent crude topped $50 a barrel for the first time since November (http://www.marketwatch.com/story/brent-crude-tops-50-a-barrel-for-first-time-since-november-2016-05-25) after U.S. data showed a larger-than-expected decline in weekly stockpiles. West Texas Intermediate oil during Thursday's session also made it over the $50 hurdle.

Read:Why oil jumping above $50 is actually disastrous for crude (http://www.marketwatch.com/story/why-oil-jumping-above-50-is-actually-disastrous-for-crude-2016-05-26)

Movers: Elsewhere on Thursday, banking shares pulled back. Standard Chartered PLC (STAN.LN) was off 1.2%, and Royal Bank of Scotland PLC (RBS.LN) (RBS.LN) shed 2%. See more on Spanish bank stocks in European Markets (http://www.marketwatch.com/story/european-shares-waver-as-spanish-banks-slide-oil-stocks-rise-2016-05-26).

On the FTSE 250 , Tate & Lyle PLC (TATE.LN) picked up 1% as the Splenda maker posted a rise in 2016 pretax profit (http://www.marketwatch.com/story/tate-lyle-pretax-profit-rises-for-2016-2016-05-26).

Elsewhere, Daily Mail & General Trust PLC (DMGT.LN) fell 12.8% after the publisher cut its operating-margin target for its DMG Media unit (http://www.marketwatch.com/story/daily-mail-profit-up-54-cuts-dmg-media-target-2016-05-26).

Sterling: Meanwhile, the pound slipped after a second reading of U.K. gross domestic product growth in the first quarter.

The pound was buying $1.4708, down from $1.4722, after the Office for National Statistics confirmed the British economy expanded 0.4% quarter-on-quarter. But the year-over-year growth rate was revised downward, to 2% from 2.1%.

The ONS also said U.K. business investment declined 0.5% (http://www.marketwatch.com/story/uk-business-investment-down-as-brexit-vote-nears-2016-05-26) in the first quarter, driven by a pullback in non-residential real-estate investment. The figures arrived ahead of the June 23 in/out referendum on whether Britain should stay in the European Union.

"If the U.K. were to remain in the EU, we could easily see the pound rally to $1.50 or $1.51," he said. But "the reason I'm not saying it will rally higher is because I think the market is pricing in already a 'remain' result," said Markos Solomou, chief marketing officer at EasyMarkets.

But "if it's a Brexit, I see [the pound at] $1.35, easy. There will be lots of confusion," and such a move could take place within the day the result is released, he said. The Electoral Commission expects a vote result on the morning of June 24.

As for equities, stocks on the mid-cap FTSE 250 "will react more negatively to a Brexit" than constituents on the FTSE 100, Solomou said. The FTSE 100 "would act as some kind of hedge to jump into global companies that may not be really affected by the local economy," he said.

 

(END) Dow Jones Newswires

May 26, 2016 09:39 ET (13:39 GMT)

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