LONDON MARKETS: FTSE 100 Ends Lower, Erasing 2017 Gains As Snap Election Looms
19 April 2017 - 6:21PM
Dow Jones News
By Carla Mozee and Victor Reklaitis, MarketWatch
Parliament gives its OK; Burberry slides after sales update
U.K. blue-chip stocks on Wednesday finished with losses and
turned lower for the year, as investors digested a parliamentary
vote that confirmed Britain will hold an early general election in
June.
Meanwhile, earnings reports rolled in, with Burberry Group PLC's
stock unraveling after the luxury goods maker's financial
update.
The FTSE 100 shed 0.5% to end at 7,114.36. The index on Tuesday
slid 2.5% to close at 7,147.50, the largest single-session
percentage drop since June 27, 2016. That was just after U.K.'s
vote to leave the European Union.
The fall on Wednesday means the benchmark lost its year-to-date
gain, and it's now down 0.4% for 2017.
On Wednesday, British Prime Minister Theresa May scored
parliamentary approva
(http://www.marketwatch.com/story/uk-lawmakers-approve-general-election-for-june-2017-04-19)l
for her plan to hold a snap general election on June 8
(http://www.marketwatch.com/story/uk-leader-theresa-may-calls-snap-general-election-on-june-8-2017-04-18),
rather than waiting until 2020 as scheduled. The plan, unveiled
Tuesday, is seen as a bid to strengthen May's position in Brexit
negotiations with EU officials, as a resounding win would give the
government a mandate for its approach.
"My concern is a 7-week campaign is too long--too much time has
been accorded to slip up on political banana skins waiting in
spurious places," said David Buik, market commentator at Panmure
Gordon, in a note. "I fear her majority will not be as great as the
polls suggest."
The pound was buying $1.2784 after the parliamentary vote,
compared with $1.2841 late Tuesday. Sterling had been trading above
$1.25 early Tuesday.
Read:Why the snap U.K. election is a 'game-changer' for the
pound
(http://www.marketwatch.com/story/heres-why-the-pound-surged-to-10-week-high-after-may-called-snap-uk-election-2017-04-18)
And see:What's a 'snap election' and why does Theresa May want
one?
(http://www.marketwatch.com/story/whats-a-snap-election-and-why-does-uk-prime-minister-theresa-may-want-one-2017-04-18)
Stock movers: Burberry (BRBY.LN) sank 7.9% after the luxury
goods retailer gave a financial update. It said second-half
underlying revenue was down at GBP1.61 billion
(http://www.marketwatch.com/story/burberry-revenue-down-but-boosted-by-fx-gains-2017-04-19)
($20.6 billion) although it was boosted by foreign exchange
gains.
Associated British Foods PLC shares (ABF.LN) jumped 1.3%. The
food ingredients producer and owner of retailer Primark raised its
dividend and said its outlook for its fiscal 2017 has improved.
(http://www.marketwatch.com/story/ab-foods-profit-up-36-as-primark-sales-beat-view-2017-04-19)
Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) fell 2.7% and BP PLC
(BP.LN) (BP.LN) lost 1.1% following a Citigroup downgrade of the
oil producers's ratings. Shell was cut to sell, and BP to neutral.
"A deepening of structural reforms is surely going to have to
address the high cost of dividends that, for the most part, has not
yet been reset. RDS and BP have the biggest questions to answer,"
wrote Citi analyst Alastair Syme in a research note.
Mining stocks were higher Wednesday, rebounding from the
previous day's battering. Shares in the sector were dragged down
Tuesday by a slide in iron ore prices, which were hit by concerns
about Chinese growth.
Glencore PLC (GLEN.LN) rose 1.5%, and Antofagasta PLC (ANTO.LN)
moved up 2.1%.
(END) Dow Jones Newswires
April 19, 2017 12:06 ET (16:06 GMT)
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