British political turmoil hits pound and frightens investors
Kingspan flags possible slowdown in orders from UK
In London, equities closed at nearly six-week lows, dragged down by financial sector shares and ceding earlier gains fuelled by the weak pound. Photograph: PA
European shares dipped on the back of speculation over British political instability and the possible effect of this on Brexit talks.
In London, equities closed at nearly six-week lows, dragged down by financial sector shares and ceding earlier gains fuelled by the weak pound.
US stock indexes made little ground, with some investors seeking bargains after a few days of losses while others were put off by a dividend cut from heavyweight General Electric.
The Iseq fell 1.3 per cent, a sharper drop than many of its European peers.
Cavan insulation group Kingspan was the standout poor performer, closing down more than 6.5 per cent after a trading statement that spooked some investors.
Kingspan flagged a possible slowdown in orders from the UK, and the news helped to end a long run of upgrades by analysts on the back of the company’s trading updates.
Tullow Oil, which maintains its main listing in London, fell almost 4.5 per cent in Dublin, despite projections that the price of oil could soon rise over supply curbs.
Hibernia Reit fell almost 2.5 per cent ahead of the release this week of its interim results. Analysts say investors are waiting to see if the results show any negative impact from the budget changes to stamp duty.
The FTSE 100 index closed 0.2 per cent lower as financials took a beating from political uncertainty. Shares in RBS, Lloyds, HSBC, Standard Chartered and Barclays all closed lower. The sector took as much as nine points off the index.
Supermarket chains Sainsbury’s, Morrison’s and Marks & Spencer fell between 1.5 and 3 per cent.
Defence contractor Ultra Electronics was the latest in a string of companies to issue a profit warning. Its shares plummeted to eight-year lows after it forecast a weaker second half. It closed almost 20 per cent down on the day. Babcock fell more than 7 per cent, while BAE Systems lost 3.5 per cent.
The pound’s tumble gave a boost to dollar-earning companies on the FTSE 100, with Unilever, Diageo and AstraZeneca up about 1 per cent or more. Oil majors Royal Dutch Shell and BP also received a helping hand from the currency.
Across Europe, the French Cac 40 was down 0.73 per cent, while the German Dax fell 0.4 per cent. Shares of French industrial conglomerate EDF fell as much as 13 per cent, losing up to €4.7 billion in market value. It warned of “lower availability of some nuclear reactors at the beginning of 2018” and dropped a long-held pledge of becoming cash-flow positive next year.
Deutsche Post rose by more than half of 1 per cent on news that the German logistics giant is planning a shake up of its StreetScooter electric vehicles unit.
Swiss drug company Novartis rose by more than 1 per cent after announcing a deal with Homology Medicines to co-develop treatments for blood conditions.
Toymaker Mattel jumped about 20 per cent in early trading after a report that rival Hasbro has made an approach to acquire the company. Hasbro rose 6.6 per cent. Qualcomm rose 1.44 per cent after the chipmaker rejected rival Broadcom’s $103-billion takeover bid, saying it “dramatically” undervalued the company.
The big mover heading into afternoon trading was General Electric, whose shares fell 6 per cent to $19.22, its lowest in more than five years.
It plans to radically shrink to focus on aviation, power and healthcare, betting on sectors where it thinks it can make a profit, as the most famous US conglomerate tries to end a decade and a half of share price stagnation.
GE cut its dividend and profit outlook in half as it begins the transition, in a plan unveiled by new chief executive John Flannery. It will also shed 25 per cent of its corporate staff, meaning 1,500 job losses at its Boston headquarters.
– Additional reporting: Reuters/PA