LONDON MARKETS: FTSE 100 Snaps Streak Of Gains, As Banks And Retail Shares Tumble
17 August 2017 - 6:45PM
Dow Jones News
By Carla Mozee, MarketWatch
Retail sales rise slightly in July
U.K. stocks broke a string of advances Thursday, with bank
shares driven down as Federal Reserve officials wrestle over
whether to keep raising U.S. interest rates this year, while retail
stocks fell after British retail sales showed only modest
growth.
The FTSE 100 closed down 0.6% at 7,387.87, and financial shares
lost the most. Thursday's fall was the first for blue-chip stocks
after three consecutive advances.
Stocks were in the red throughout the session as traders
grappled with the prospect that the Federal Reserve may not raise
interest rates again in 2017
(http://www.marketwatch.com/story/some-fed-members-say-bank-can-be-patient-on-interest-rates-due-to-low-inflation-2017-08-16).
Minutes from the Fed's July meeting, released late Wednesday,
showed officials engaged in an intense debate about the path of
U.S. inflation after a run of unexpectedly low readings.
"The prospects of a December hike, which would be the third in
2017, have taken a further hit," said Richard Perry, market analyst
at Hantec Markets, in a note.
"The dollar rally that had been taking hold has subsequently
started to reverse again. Markets such as dollar/yen and gold have
reacted strongly, whilst it was interesting to see to see equities
also stuttering despite the prospect of less stringent tightening
from the Fed," he said.
Rate debate: Bank shares fell on the ramped-up talk about a U.S.
rate hike looking less imminent. Many U.K. banks have operations in
the U.S. and higher interest rates can help bolster net interest
margin for lenders. Shares of HSBC PLC (HSBA.LN) (HSBA.LN) fell
1.3%, Barclays PLC (BCS) (BCS) was off 1.7% and Lloyds Banking
Group PLC (LLOY.LN) (LLOY.LN) slumped 1.5%. Standard Chartered PLC
(STAN.LN) fell 2.7%.
Shares of miners had been mostly higher as the dovish debate at
the Fed weighed on the U.S. dollar , which can help lift
dollar-denominated prices of commodities.
But shares of gold producers Fresnillo PLC (FRES.LN) and
Randgold Resources PLC (RRS.LN) were the only ones that finished
with gains, key off rising gold prices . Fresnillo closed up 3.9%
and Randgold rose 1.8%.
Read: Gold marches higher as haven demand persists
(http://www.marketwatch.com/story/gold-marches-higher-as-haven-demand-persists-after-trump-dissolves-councils-2017-08-17)
In other developments Thursday, Kingfisher PLC (KGF.LN) fell
4.1% after the home-improvement retailer posted a decline in
second-quarter comparable sales
(http://www.marketwatch.com/story/kingfisher-quarterly-comparable-sales-decline-2017-08-17)
in part because of continued weakness in France.
Economic data: U.K. retail sales rose a modest 0.3% in July
(http://www.marketwatch.com/story/uk-retail-sales-grew-only-modestly-in-july-2017-08-17)
on a month-over-month basis, just above a 0.2% estimate from a
FactSet survey of economists, driven by growth only at food and
household goods stores. Sales year-over-year rose 1.3%, meeting
expectations.
The pound rose to an intraday high of $1.2910 after the report,
but drifted back down to $1.2884. Sterling late Wednesday traded
hands at $1.2891.
"What took the punch out of the report and repelled bulls
further was the fact that June's retail sales were ... revised down
from 0.6% to 0.3%," said FXTM research analyst Lukman Otunuga.
"Although the volume of goods sold in July printed above
expectations, the total growth was relatively soft and highlighted
how the gap between inflation and wages continues to squeeze
household finances."
Retail stocks closed lower, with apparel and home-furnishings
store Next PLC (NXT.LN) down by 1.4% and department-chain operator
Marks & Spencer Group PLC (MKS.LN) losing 1.8%.
(END) Dow Jones Newswires
August 17, 2017 12:30 ET (16:30 GMT)
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