LONDON MARKETS: FTSE 100 Pares Gain As Oil Shares Swing Lower
20 Juni 2017 - 01:39PM
Dow Jones News
By Carla Mozee, MarketWatch
Pound falls below $1.27
U.K. stocks pared gains Tuesday as a reversal in oil prices
weighed on energy stocks, but blue-chips were bumped out of the red
after the head of the Bank of England said he's not inclined to
raise interest rates at this time.
The FTSE 100 was up 0.2% at 7,534.58, led by utility and
consumer-related shares. But bank shares were mostly lower as BOE
Gov. Mark Carney advocated a lower-for-longer scenario in interest
rates.
"From my perspective, given the mixed signals on consumer
spending and business investment, and given the still subdued
domestic inflationary pressures, in particular anaemic wage growth,
now is not yet the time to begin that adjustment," said Carney in
Tuesday's speech at Mansion House in London.
Meanwhile, Barclays PLC (BCS) (BCS) was down 0.3% after the U.K.
Serious Fraud Office charged the bank and four former executives
with conspiracy to commit fraud
(http://www.marketwatch.com/story/barclays-4-former-top-execs-charged-with-fraud-2017-06-20)
in a case related to fundraising in Qatar during the financial
crisis.
Basic materials stocks struggled, and oil and gas shares were
knocked down as oil prices swung lower by 2%
(http://www.marketwatch.com/story/oil-hovers-at-seven-month-low-as-investors-weigh-up-supply-issues-2017-06-20).
U.S. oil futures were below $44 a barrel, trading at their lowest
this year, as oversupply concerns mounted.
In London, shares of oil producer Royal Dutch Shell PLC
(RDSB.LN) (RDSB.LN) declined 1.1% and BP PLC (BP.LN) (BP.LN) lost
0.8%. Weekly supply data from the American Petroleum Institute is
due Tuesday after the close of European trade.
Oil and gas stocks have a hefty weighting of roughly 14% on the
FTSE 100.
Carney's pause: The FTSE 100 was thrust out of the red early
Tuesday, as the pound dropped below $1.27 after Carney talked down
prospects of an imminent rate hike
(http://www.marketwatch.com/story/boe-chief-carney-too-early-to-lift-interest-rates-2017-06-20)
.
The bank's Monetary Policy Committee last week voted 5-3 to hold
the key interest rate at a record low 0.25%, an unexpected tally as
analysts had expected at the most one policy maker to vote for a
rate hike.
Read:This is what elite fund managers are watching closely --
and it's not Trump or Brexit
(http://www.marketwatch.com/story/this-is-what-elite-fund-managers-are-watching-closely-and-its-not-trump-or-brexit-2017-06-19)
With interest rates poised to remain lower, bank shares fell.
Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) fell 1.2%, Standard
Chartered PLC (STAN.LN) flipped down 0.6% and HSBC PLC (HSBA.LN)
(HSBA.LN) shed 0.2%. Royal Bank of Scotland Group PLC (RBS.LN)
(RBS.LN) was fractionally lower.
"We continue to judge that on balance the committee will be
dissuaded from a rate rise by a continued run of lackluster data,
particularly on the consumer front, between now and the August
meeting. That 'on hold' view is strengthened knowing that the
governor is minded to act cautiously," said Investec economist
Victoria Clarke.
A new policy maker, economics professor Silvana Tenreyro, is set
to be on the rate-setting board starting next month, the bank said
Monday.
"Although we are limited in what we know about Professor
Tenreyro's views, recent comments suggests she would be more than
wary of the downsides a poor outcome to Brexit negotiations might
imply for the U.K. economy," said Clarke.
But the low-rate scenario helped bump up shares of home builders
Persimmon PLC (PSN.LN) and Taylor Wimpey PLC (TW.LN) , rising 1.6%
and 0.7%, respectively. As the pound fell, consumer-goods
heavyweight Unilever PLC (ULVR.LN) (ULVR.LN) rose 1.3% and drug
maker AstraZeneca PLC (AZN.LN) (AZN.LN) was 1.2% higher.
A lower value of the pound can help boost revenue made overseas
by multinational companies, many of which are listed on the FTSE
100.
Elsewhere on the FTSE 100, Wolseley PLC (WOS.LN) said quarterly
sales rose
(http://www.marketwatch.com/story/wolseley-quarterly-sales-trading-profit-rise-2017-06-20)and
that it was on track to meet full-year expectations. Shares of the
plumbing and building supplies company shook off earlier losses and
rose 0.3%.
(END) Dow Jones Newswires
June 20, 2017 07:24 ET (11:24 GMT)
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