London close: Stocks finish weaker as pound surges
London’s top-flight index closed in the red ahead of the bank holiday weekend, weighed down by a sharp move higher in sterling.
The FTSE 100 ended the session down 0.61% at 5,963.57, while the FTSE 250 managed to close 0.15% higher at 17,788.33.
Sterling was well into positive territory against its major trading pairs, last rising 1.03% on the dollar to $1.3337, and advancing 0.46% against the euro to €1.1217.
Gold was rallying alongside, with spot gold prices last 2% firmer at $1,968.05 per ounce.
“Suffering from yesterday’s Jackson Hole address from Jerome Powell, and down against the yen following Shinzo Abe’s resignation, the greenback had another rough session,” said Spreadex financial analyst Connor Campbell.
“Sterling’s swagger knocked the FTSE to the floor,” he added, noting that the index dropped 0.7% earlier in the session, sitting at its worst price since the start of August.
Stoking gains in the pound, the day before the US central bank had signalled that interest rates would remain lower for longer, but contrary to many analysts, Michael Every at Rabobank said the Fed had in fact done less than was expected.
“That’s it. Not even yield curve control. Not even nominal GDP targeting. Nada,” he quipped.
“By doing nothing for longer against a post-Covid-19 structural backdrop that is far, far worse than it was when the Fed’s policy review began, the odds of it meeting its future goals have improved?" he added.
On home shores, the Lloyds Bank Business Barometer showed an improvement in overall business confidence for a third consecutive month in August, improving by eight percentage points to -14%, but it remained well below the historical long-term average.
Roughly half of the firms surveyed still had staff on furlough or were not yet ready to commit to retaining everyone.
In equity markets, Amigo Holdings rose 15.83% after saying it had enough liquidity to survive as the troubled guarantor lender reported a sharp fall in first-quarter profit.
Profit after tax for the three months to the end of June dropped 81% to £3m from a year earlier as revenue fell 32% to £48.8m.
Pretax profit fell to £1.4m from £22.6m.
Greggs was 1.6% weaker following news that its distribution centre in Leeds had been temporarily closed to conduct a 'deep clean' after some staff tested positive for Covid-19.
Essentra was 1.6% lower, even after reporting that business was improving and that it would consider restarting dividends in the current year as it posted a 40% decline in underlying profit.
Adjusted operating profit for the six months to the end of June fell to £29m from £48m as revenue dropped 11% to £448m.
The company paid no interim dividend and said it was on track to meet market expectations for annual profit.
Avon Rubber was down 1.16% after confirming that the US Department of Defence has announced the award of a dual source contract to supply replacement M61 filters for the M50 mask system.
The company said it would complete each order of the $127m contract over a duration of up to seven years.
It said the contract has a five-year base period and two further one-year extension periods.
Market Movers
FTSE 100 (UKX) 5,963.57 -0.61%
FTSE 250 (MCX) 17,788.33 0.15%
techMARK (TASX) 3,821.62 -0.82%
FTSE 100 - Risers
Polymetal International (POLY) 2,028.00p 4.54%
Whitbread (WTB) 2,529.00p 2.93%
Fresnillo (FRES) 1,262.50p 2.85%
Standard Chartered (STAN) 392.40p 2.08%
Taylor Wimpey (TW.) 123.75p 2.00%
Prudential (PRU) 1,223.00p 1.88%
Evraz (EVR) 324.20p 1.85%
Barratt Developments (BDEV) 525.20p 1.70%
Anglo American (AAL) 1,832.80p 1.60%
Barclays (BARC) 111.96p 1.28%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 241.10p -3.56%
Melrose Industries (MRO) 101.80p -3.51%
Smith (DS) (SMDS) 258.70p -3.07%
Smurfit Kappa Group (SKG) 2,688.00p -2.90%
WPP (WPP) 645.60p -2.83%
Unilever (ULVR) 4,460.00p -2.30%
Kingfisher (KGF) 270.10p -2.21%
Bunzl (BNZL) 2,422.00p -2.14%
Pearson (PSON) 559.40p -2.03%
Smiths Group (SMIN) 1,401.50p -1.99%
FTSE 250 - Risers
Petropavlovsk (POG) 36.65p 9.24%
Wood Group (John) (WG.) 247.80p 6.17%
Calisen (CLSN) 176.00p 5.61%
Cineworld Group (CINE) 63.08p 4.85%
Centrica (CNA) 46.04p 4.71%
Just Group (JUST) 50.35p 3.88%
FirstGroup (FGP) 43.66p 3.75%
Carnival (CCL) 1,054.50p 3.48%
Jupiter Fund Management (JUP) 209.60p 3.35%
Hochschild Mining (HOC) 240.60p 3.26%
FTSE 250 - Fallers
Rank Group (RNK) 135.20p -4.38%
Future (FUTR) 1,486.00p -3.76%
Schroder Oriental Income Fund Ltd. (SOI) 234.00p -3.72%
Oxford Instruments (OXIG) 1,560.00p -3.42%
Network International Holdings (NETW) 374.40p -2.90%
Coats Group (COA) 55.20p -2.82%
Apax Global Alpha Limited (APAX) 167.80p -2.78%
Liontrust Asset Management (LIO) 1,280.00p -2.68%
PayPoint (PAY) 630.00p -2.48%
Polar Capital Technology Trust (PCT) 2,180.00p -2.25%