London close: FTSE closes lower as traders weigh Brexit debate, Trump policies

The FTSE 100 closed slightly lower on Thursday as investors tuned into parliament’s Brexit debate and sifted through a mix of economic data.

The index ended down 0.27% to 7,099.15, reversing gains earlier in the session.

Sterling recovered against the dollar due to the latter’s weakness on worries about US President Donald Trump’s policies, including a travel ban on people from seven Muslim-majority countries.

Overnight, Trump fired acting US attorney general Sally Yates after she questioned the legality of his immigration ban.

The pound rose 0.63% to $1.265. Against the euro, sterling fell 0.27% to €1.16. The euro spiked after Trump’s top trade advisor Peter Navarro told the Financial Times the currency was “grossly undervalued”. He claimed it was a German currency in disguise used to exploit trading partners. German Chancellor Angela Merkel rejected the claims, saying the nation has always called for the European Central Bank to pursue an independent policy".

Closer to home, members of parliament started a two-day debate on the Brexit bill to determine whether to trigger Article 50, which kicks off the formal process for the UK exiting the European Union. The first day of the debate saw arguments for and against invoking Article 50 but it remains unclear what the outcome will be when the time comes for them to vote.

Amid worries about Brexit and its drag on the pound, a survey showed UK consumer confidence remained in negative territory in January. GfK’s consumer confidence index increased two points to -5 this month, beating expectations of -7, as more positive views on personal finances were offset by a weak outlook on the general economic situation.

Barclays Research analysts said despite the marginal increase in January, the headline consumer confidence index is one point below its one-year average. The bank also said the “slight positivity” is likely to be short-lived in light of Brexit, rising inflation and Trump’s controversial policies.

Separately, a report showed UK business confidence fell in January. The Lloyds business barometer dropped 10 points to 29% in January, the lowest level in four months, as economic optimism declined.

In the Eurozone, the unemployment rate fell to 9.6% in December 2016 from a downwardly-revised 9.7% in November and 10.5% in December 2015. This is the lowest rate recorded in the bloc since May 2009 and came in ahead of analysts’ expectations for a reading of 9.8%.

Gross domestic product in the Eurozone rose 1.8% year-on-year in the fourth quarter, unchanged from the third quarter’s pace and beating expectations of 1.7%. Compared to the previous three-month period, GDP edged up 0.5% following a 0.4% quarter-on-quarter rise in the third quarter. Economists had expected a 0.4% quarterly increase.

Eurozone inflation grew 1.8% year-on-year in January, up from 1.1% the previous month, exceeding estimates of 1.5%.

In the US, the Conference Board’s consumer confidence index fell to 111.8 in January after reaching a 15-year high of 113.7 in December, driven by a less optimistic outlook for business conditions, jobs and consumers' income prospects. Economists had expected the index to fall marginally to 113 in January.

Meanwhile, the Labor Department revealed US employment costs rose less than forecast in the fourth quarter due to steady wage growth and the smallest increase in benefits in more than a year. The employment cost index climbed 0.5% after a 0.6% gain in the previous three months, missing forecasts for an unchanged 0.6%.

Wages and salaries edged up 0.5% for a second straight quarter, while benefits costs eased to 0.4%.

House prices in the US unexpectedly rose in November, according to the S&P/Case-Shiller National Home Price Index. The 20-City Composite index was up 5.3% year-on-year from 5.1% in October, beating expectations for a slowdown to 5%.

Another report showed economic activity in the Chicago area unexpectedly deteriorated in January. The Chicago purchasing managers’ index fell to 50.3 from a previously-revised 53.9 in December, marking its lowest level since May 2016 and missing expectations for an increase to 55.0.

Among corporate stocks, mining stocks rallied as a weaker dollar gave metal prices a boost. Fresnillo, Antofagasta and Anglo American were among the top risers.

Britvic was also on the front foot as it reported growth in first-quarter revenue and said it was confident it will meet market expectations for the full year.

Convenience food manufacturer Greencore advanced as it reported strong first-quarter revenue growth and said its efforts to improve efficiency were offsetting inflation in raw materials, packaging and labour costs.

CYBG slumped as reported a drop in core small and medium enterprises lending and unsecured personal loans in the first quarter.

Market Movers

FTSE 100 (UKX) 7,099.15 -0.27%
FTSE 250 (MCX) 18,165.64 0.46%
techMARK (TASX) 3,225.82 -0.20%

FTSE 100 - Risers

Fresnillo (FRES) 1,453.00p 2.76%
Antofagasta (ANTO) 835.00p 2.58%
London Stock Exchange Group (LSE) 3,181.00p 2.35%
Hargreaves Lansdown (HL.) 1,353.00p 1.88%
Anglo American (AAL) 1,358.00p 1.88%
Randgold Resources Ltd. (RRS) 6,755.00p 1.81%
Provident Financial (PFG) 2,731.00p 1.60%
BHP Billiton (BLT) 1,437.50p 1.55%
Glencore (GLEN) 326.45p 1.52%
Paddy Power Betfair (PPB) 8,345.00p 1.21%

FTSE 100 - Fallers

Legal & General Group (LGEN) 234.90p -2.04%
Carnival (CCL) 4,238.00p -1.99%
Associated British Foods (ABF) 2,386.00p -1.85%
International Consolidated Airlines Group SA (CDI) (IAG) 476.70p -1.79%
Barclays (BARC) 219.45p -1.77%
WPP (WPP) 1,844.00p -1.76%
Royal Bank of Scotland Group (RBS) 221.80p -1.64%
Tesco (TSCO) 194.60p -1.62%
AstraZeneca (AZN) 4,194.00p -1.56%
Croda International (CRDA) 3,348.00p -1.47%

FTSE 250 - Risers

Greencore Group (GNC) 235.50p 7.88%
Kaz Minerals (KAZ) 470.30p 7.60%
Nostrum Oil & Gas (NOG) 472.00p 6.47%
Britvic (BVIC) 625.50p 6.20%
Ferrexpo (FXPO) 151.80p 5.42%
Hochschild Mining (HOC) 246.50p 5.34%
Aldermore Group (ALD) 219.00p 3.84%
Acacia Mining (ACA) 430.50p 3.76%
Centamin (DI) (CEY) 156.80p 3.29%
Vedanta Resources (VED) 1,046.00p 3.26%

FTSE 250 - Fallers

CYBG (CYBG) 269.70p -5.24%
Wizz Air Holdings (WIZZ) 1,781.00p -2.68%
IG Group Holdings (IGG) 533.00p -2.56%
Millennium & Copthorne Hotels (MLC) 428.70p -2.50%
Sports Direct International (SPD) 284.00p -2.07%
IP Group (IPO) 191.00p -2.05%
Fidessa Group (FDSA) 2,300.00p -1.84%
Cobham (COB) 135.60p -1.74%
Atkins (WS) (ATK) 1,461.00p -1.55%
Assura (AGR) 51.85p -1.14%