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Trading day marked by sterling dip and new losses for FTSE 100

Published 13/09/2016

The FTSE 100 was down 0.06% or 4.2 points at 6696.8 points
The FTSE 100 was down 0.06% or 4.2 points at 6696.8 points

Sterling fell to a one-week low and the FTSE 100 logged its second straight day of losses after inflation data showed consumer prices dodging the effects of a weaker pound in August.

The pound dropped 1.2% to 1.317 against the US dollar, marking its lowest level since September 1.

Against the euro, sterling was trading 1.2% lower at 1.171.

Meanwhile, the FTSE 100 closed lower by 0.5% or 34.5 points, to 6666.5 points, as energy and mining stocks weighed down the index.

The Consumer Price Index (CPI) measure of inflation came in at 0.6% in the year to August, in line with July, but below consensus estimates of 0.7%.

The Office for National Statistics explained that rising food prices and airfares, as well as a slower-than-expected drop in fuel prices helped support the CPI reading. But that was offset by falling hotel, wine and clothing prices.

Alan Clarke, head of European fixed income strategy at Scotiabank, said: "I think today's reading is a lesson that patience is a virtue.

"It is only two months since the Brexit vote. It takes much longer than that for th e impact of currency weakness to feed through to end customer prices."

Across Europe, the German Dax closed 0.4% lower while the French Cac 40 dropped by 1.2%.

In oil markets, Brent crude prices took a hit after the International Energy Agency (IEA) reported that demand for oil was slowing at a faster pace than expected.

Brent prices dropped as much as 2.3% to around 47.21 US dollars per barrel.

The IEA report also hit the share prices of UK-listed miners and energy companies. Anglo American was the worst performing stock on the FTSE 100 down 4.3% or 35.7p to 783.8p.

BHP Billiton was down 22.9p at 968.1p, Glencore dropped 3.8p to 177p, and BP fell 8.2p to 420.6p.

On the second tier stock index, JD Sports topped the FTSE 250 after reporting record half-year profits, announcing plans to set up shop in Australia, and vowing to press ahead with European expansion despite the Brexit vote.

Pre-tax profit rocketed 66% to £77.4 million, driven by 10% like-for-like sales growth.

JD Sports closed higher by 5% or 67p to 1400p.

Esure shares rose 5.4p to 292.6p after the motor insurer confirmed plans to spin off its Gocompare price comparison site in the fourth quarter and line it up for a stock market listing worth around £474 million.

Ocado Group was the biggest loser on the FTSE 250, with shares slumping 13.7% or 44p to 278p.

While the grocer reported an 18.9% rise in weekly orders in the 12 weeks to August 7 compared to the same period last year, investors zeroed in on comments from chief executive Tim Steiner regarding the state of the food retail market.

Mr Steiner said the market remains "very competitive" and that sustained margin pressure was unlikely to change in the short term.

The biggest risers on the FTSE 100 were Carnival up 81p to 3453p, London Stock Exchange Group up 34p to 2697, Worldpay Group up 3.6p to 291.7, and Coca-Cola HBC AG up 20p to 1649p.

The biggest losers on the FTSE 100 were Anglo American down 35.7p to 783.8p, British Land Company down 17.5p to 628.5p, Associated British Foods down 75p to 2740p, and Prudential down 34.5p to 1333.5p.

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