FTSE hit by sterling strength following elevated expectations of UK rate rise in August
Source - SMW
Having fallen to a seven-month intraday low of $1.31 earlier on Thursday, sterling displayed a small bounce back to $1.32 following the Bank of England's latest interest decision where rates were unchanged.
Some analysts believe the currency movement is a signal that a rate rise in August is now more likely.
A stronger pound is negative for the FTSE 100 as a large proportion of its constituents earns revenue in foreign currencies. That explained why many dollar-earners, in particular, were weak on the UK stock market today. Examples included construction firm CRH (CRH), down 2% to £27.10.
Bucking the negative trend were various UK domestic stocks including retailer Next (NXT), up 0.8% to £59.07.
The FTSE 100 closed the day 0.9% points lower at 7,556.
Markets were also weak in mainland Europe including a 1.6% decline in Germany's Dax index; and the US also took a step back. At 4.15pm UK time, the Dow Jones traded 0.6% lower at 24,507.
MID AND LARGE CAP RISERS AND FALLERS
Various bits of negative news on the housebuilding sector earlier this week continued to weigh on investor sentiment towards this part of the construction industry. Barratt Developments (BDEV), Berkeley (BKG) and Pesimmon (PSN) all saw share price declines in the region of 3% to 6%.
Electricals retailer Dixons Carphone (DC.) reported annual pre-tax profit fell 23.6% as the UK and Ireland mobile division faced headwinds, while margin growth in the electricals business slowed. Despite the drop in profit, shares in the retailer rose 4% to 198.48p, perhaps because there were no new negative surprises in the results.
Over 50s insurance provider Saga (SAGA) dipped 2.2% to 124.45p despite trading in line with expectations in the four months to 31 May 2018.
Rare diseases specialist Shire (SHP) enjoyed a small bounce thanks to a 4.5% rise in its takeover suitor Takeda Pharmaceutical. The latter is trying to buy Shire for a mixture of cash and shares, so a movement in Takeda's share price has a direct impact on Shire's valuation. Takeda moved upwards following a bullish research note from UBS.
SMALL CAP RISERS AND FALLERS
Among the lower end of the UK stock market, gold miner Dalradian Resources (DALR) agreed to be taken over by private equity business Orion Mine Finance, triggering a 53% rally to 81.5p.
Greatland Gold (GGP) jumped 77% to 1.26p after saying it had found gold nuggets on the surface at its Black Hills project in Western Australia.
Dunedin Smaller Companies Investment Trust (DNDL) agreed to merge with Standard Life UK Smaller Companies Trust (SLS).
Echo Energy (ECHO) rallied 25.9% to 15.55p on the discovery of a 'material and potentially transformational' light oil column in the emerging Tobifera play of its third well in Argentina.
Electro-mechanical group LPA (LPA) reported annual pre-tax profit rose 1.1% but investors focused on falling orders in electro-mechanical and weakness in the LED lighting division. The stock crashed 27.1% to 117p.