London close: Stocks slightly lower despite gains for financials
London's main stock indices ended the session lower as government bond yields continued climbing higher on expectations for tighter monetary policy around the world, although a late move higher in lenders' shares allowed them to trim earlier losses.
So although higher interest rates are good news for the likes of banks and life insurers, the same cannot be said of the rest of the market, particularly because of the resulting strength in the pound.
At the closing bell, the FTSE 100 was down 0.41% or 30.32 points at 7,337.28, while the FTSE 250 was lower by 0.42% or 82.16 to 19,369.06, with the latter giving up most of its gains from a solid previous session.
Minutes from June's meeting of Federal Reserve rate setters, which were released overnight, suggested they were readying for the great unwinding of the nation's balance sheet, despite continued disappointing inflation data, according to analysts.
The pound was up 0.23% at 1.2963, with a stronger currency generally weighing on the FTSE 100, as a large majority of stocks earn much of their profits overseas.
In parallel, yields on 10-year Gilts were up six basis points to 1.32%.
"This is due to a stronger EUR pushing USD lower, and thus GBP higher, hurting their international contingents," Mike van Dulken a Accendo Markets said. "Oil is clawing back lost ground, along with metal prices, but FX moves are driving sentiment."
Oil prices continued to gain altitude, with Brent futures rebounding by 2% on Thursday to $48.38 thanks to US government data which revealed a 6.3m barrel drawdown in the country's commercial oil inventories.
A host of stocks going ex-dividend on Thursday was a definite weight on the main indices, with the list including Burberry, N Brown, Dairy Crest, Homeserve, Next, Pennon, Talktalk and Telecom Plus.
Top of the FTSE 100 leaderboard was Associated British Foods as it reported an improved performance in the third quarter, with particularly strong trading at its Primark clothing retail arm that has slightly lifted the full year expectations. Primark sales grew 21% in the for the 40 weeks to 24 June and 15% at constant currency rates versus the 22% at actual rates and 12% constant in the first half of the year.
Embattled Bovis Homes slipped even after it said its trading performance over the first six months of 2017 was in-line with management expectations. This followed a strong update from Persimmon the previous session, which saw it, Barratt and Taylor Wimpey extending their gains for a second day.
ITV shares were up slightly and Easyjet down as reports emerged that the broadcaster is about to poach Dame Carolyn McCall to be its new chief executive. Easyjet also reported an 11.3% increase in the number of passengers it carried in June to reach 7.720m, alongside a 0.8 percentage point improvement in its so-called load factor to 94.8%.
Shire was boosted as HSBC lifted its rating to 'hold' as it said the drugmaker's haemophilia headline risk from rival Roche's plans was now "largely in the price".
Reckitt Benckiser shares fell after it updated the market on the cyberattack which happened on 27 June, claiming it had made "good progress" in getting key applications and systems “back on track” so it could resume normal trading with all of its customers and partners. But the company now expects like-for-like net revenue in 2017 to increase by about 2%, down from an earlier growth forecast of 3%, which would equate to about £100m in lost revenue.
Dairy Crest was down amid 'scaremongering' stories about shortages of butter and cheese dairy products in the UK later this year.
Market Movers
FTSE 100 (UKX) 7,337.28 -0.41%
FTSE 250 (MCX) 19,369.06 -0.42%
techMARK (TASX) 3,483.39 -0.65%
FTSE 100 - Risers
Associated British Foods (ABF) 2,997.00p 2.57%
Barclays (BARC) 209.15p 2.42%
Barratt Developments (BDEV) 592.00p 1.72%
Royal Bank of Scotland Group (RBS) 259.90p 1.64%
Lloyds Banking Group (LLOY) 66.68p 1.51%
Marks & Spencer Group (MKS) 340.30p 1.28%
Persimmon (PSN) 2,374.00p 1.24%
Royal Mail (RMG) 424.50p 1.14%
International Consolidated Airlines Group SA (CDI) (IAG) 615.50p 1.07%
RSA Insurance Group (RSA) 630.00p 1.04%
FTSE 100 - Fallers
Next (NXT) 3,785.00p -3.07%
Glencore (GLEN) 299.65p -2.52%
Fresnillo (FRES) 1,436.00p -2.45%
Ashtead Group (AHT) 1,551.00p -2.21%
Convatec Group (CTEC) 303.30p -2.16%
Smurfit Kappa Group (SKG) 2,352.00p -2.04%
Worldpay Group (WPG) 364.50p -2.02%
Provident Financial (PFG) 2,354.00p -2.00%
Compass Group (CPG) 1,577.00p -1.87%
Shire Plc (SHP) 4,257.00p -1.77%
FTSE 250 - Risers
Lancashire Holdings Limited (LRE) 738.00p 3.87%
Vedanta Resources (VED) 712.50p 3.04%
TBC Bank Group (TBCG) 1,665.00p 2.34%
Intermediate Capital Group (ICP) 885.50p 1.78%
Greene King (GNK) 661.50p 1.77%
Marshalls (MSLH) 381.70p 1.52%
Wizz Air Holdings (WIZZ) 2,480.00p 1.43%
B&M European Value Retail S.A. (DI) (BME) 347.00p 1.40%
Britvic (BVIC) 707.50p 1.36%
Woodford Patient Capital Trust (WPCT) 99.00p 1.28%
FTSE 250 - Fallers
Nostrum Oil & Gas (NOG) 478.00p -6.55%
Northgate (NTG) 436.60p -4.01%
Pennon Group (PNN) 791.50p -3.59%
Caledonia Investments (CLDN) 2,861.00p -3.43%
Dairy Crest Group (DCG) 563.50p -3.43%
Hunting (HTG) 497.40p -3.23%
UDG Healthcare Public Limited Company (UDG) 840.00p -3.12%
Workspace Group (WKP) 861.00p -2.88%
Telecom Plus (TEP) 1,120.00p -2.86%
Mitie Group (MTO) 268.40p -2.75%