London close: FTSE down as Carney, Draghi plead 'Don't let me be misunderstood'
Stocks in London flopped to a lower close Wednesday as Bank of England governor Mark Carney and European Central Bank chief Mario Draghi separately sought to ensure their earlier comments to the market were not misunderstood.
Their moves were reminiscent of the catch line in The Animals' classic 1960s tune Don't Let Me Be Misunderstood, naturally minus the dulcet tones of vocals man Eric Burdon.
Carney declared UK interest rates might need to be hiked. At first glance it appeared to be a case of dove-turned-hawk, but this -- as shall soon be seen -- was probably not the case.
"As a result, the pound surged above $1.29 for the first time since its election night drubbing," said IG's Chris Beauchamp. "This prompted the FTSE 100 to drop back to the lows of the day."
At the close of trade, the FTSE 100 was down 0.63% to 7,387.80, and the FTSE 250 was 0.26% lower at 19,476.35. Wall St had opened strongly on the front foot, with Europe struggling but mostly ahead.
Over in Europe, the ECB's Draghi was also seeking not to be misunderstood.
"European equity markets were given a nice lift after the European Central Bank (ECB) said dealers misinterpreted Mario Draghi's comments yesterday," said David Madden at CMC Markets UK.
"The ECB made sure the market got the message that they are keeping their policy as is for the time being."
Neil Wilson at ETX Capital said there was a sense the BoE's Monetary Policy Committee might 'correct' its rate cut last summer in light of a surprisingly resilient UK economy and accelerating inflation.
"But as with Mario Draghi's remarks (which were misinterpreted by the market as being hawkish), Mr Carney offered little that is fundamentally new.
"We know the MPC’s tolerance for above-target inflation is limited and falls as spare capacity erodes. We know there is dissent in the MPC."
Looking more closely at the stocks, Shell and BP suffered as key US data revealed a rise in US crude stores last week, although the prices of WTI and Brent both improved.
Pharmaceutical companies such as Shire and Astrazeneca fell . Other sectors withdrawing included insurers, commercial property, consumer goods, utilities and supermarkets.
Marching higher were multi-commodity miners, airlines and house builders, the latter getting a boost as Nationwide data revealed a rally in UK house prices in June.
Hargreaves Lansdown was in focus after the Financial Conduct Authority called for asset managers to overhaul their charging structures and prices following a near two-year consultation on the £7trn industry.
Bunzl rallied after it said revenue for the half year was expected to have increased by 7% at constant exchange rates due to the improved underlying growth of between 3% and 4% and a similar impact from acquisitions. It also announced acquisitions in Spain and Canada.
Dixons Carphone posted preliminary results beat expectations, with headline profit before tax of £501m, up 10%.
Market Movers
FTSE 100 (UKX) 7,387.80 -0.63%
FTSE 250 (MCX) 19,476.35 -0.26%
techMARK (TASX) 3,569.86 -0.72%
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 630.00p 3.87%
easyJet (EZJ) 1,360.00p 2.18%
BT Group (BT.A) 294.10p 1.94%
Antofagasta (ANTO) 788.50p 1.74%
Sainsbury (J) (SBRY) 258.40p 1.69%
Tesco (TSCO) 171.75p 1.63%
Bunzl (BNZL) 2,343.00p 1.47%
Barratt Developments (BDEV) 571.50p 1.42%
Standard Life (SL.) 395.90p 1.36%
Marks & Spencer Group (MKS) 340.80p 1.25%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,705.00p -3.45%
Shire Plc (SHP) 4,406.00p -2.52%
Hargreaves Lansdown (HL.) 1,306.00p -2.32%
SEGRO (SGRO) 485.20p -2.08%
Scottish Mortgage Inv Trust (SMT) 405.60p -2.03%
GlaxoSmithKline (GSK) 1,663.50p -2.00%
AstraZeneca (AZN) 5,240.00p -2.00%
Convatec Group (CTEC) 324.00p -1.91%
Micro Focus International (MCRO) 2,375.00p -1.86%
Rentokil Initial (RTO) 277.00p -1.84%
FTSE 250 - Risers
Nostrum Oil & Gas (NOG) 498.90p 4.86%
Petrofac Ltd. (PFC) 437.10p 4.67%
TalkTalk Telecom Group (TALK) 182.90p 4.22%
RPC Group (RPC) 749.00p 3.31%
Acacia Mining (ACA) 308.00p 2.22%
Brewin Dolphin Holdings (BRW) 340.80p 2.07%
Kaz Minerals (KAZ) 503.50p 1.99%
Go-Ahead Group (GOG) 1,757.00p 1.98%
Hochschild Mining (HOC) 280.00p 1.97%
Jupiter Fund Management (JUP) 503.00p 1.95%
FTSE 250 - Fallers
Petra Diamonds Ltd.(DI) (PDL) 103.50p -8.73%
Stagecoach Group (SGC) 191.20p -6.19%
Sophos Group (SOPH) 443.20p -5.90%
TBC Bank Group (TBCG) 1,552.00p -4.90%
Homeserve (HSV) 728.00p -2.68%
Workspace Group (WKP) 881.00p -2.54%
Hikma Pharmaceuticals (HIK) 1,478.00p -2.51%
Mitie Group (MTO) 278.80p -2.45%
Aveva Group (AVV) 1,971.00p -2.43%
Hill & Smith Holdings (HILS) 1,350.00p -2.39%