Sterling keeps FTSE 100 under pressure, Vodafone surges on annual forecast

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(Businesshala) – London’s FTSE 100 fell lower on Tuesday as a stronger pound weighed on dollar-earnered stocks, while mobile operator Vodafone and spirits maker Diageo limited overall declines in earnings.

FILE PHOTO: Pedestrians exit and enter the London Stock Exchange in London, Britain August 15, 2017. Businesshala/Neil Hall/File photo

The blue-chip FTSE 100 index was down 0.2% in morning trade, with companies with large foreign exposures including British American Tobacco, Reckitt Benckiser and Unilever falling between 0.4% and 0.9%.

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A large proportion of the constituents of the FTSE 100 generate revenue in dollars, putting them under pressure from a stronger domestic currency.

The pound rose as data showed British employers added 160,000 workers to their payrolls in October, the first month since the end of the UK’s furlough scheme, cementing hopes of an interest rate hike in December.

Bank of England Governor Andrew Bailey said on Monday he was “very uneasy” about the outlook for inflation. Investors’ focus will be on consumer price data on Wednesday.

Financial markets currently have an almost 100% chance that the BoE will raise rates to 0.25%, up from 0.1% in December.

“While the MPC will continue to preach the temporary nature of the current price hike, tomorrow’s release will be an uncomfortable reading,” said Stuart Cole, economist at Equity Capital.

“In conjunction with today’s strong employment data, the release tomorrow in line with expectations will strengthen market sentiment in December.”

Vodafone jumped 5.2% after raising its forecast for this year’s free cash flow and reporting a 6.5% increase in adjusted core income in the first half.

Johnnie Walker whiskey maker Diageo added 2.3% after setting higher medium-term growth targets.

Tobacco Group Imperial Brands’ full-year sales fell 1.5% after reporting a decline in volumes despite a modest increase in sales.

The domestic focused midcap index also fell 0.2%.

Land Securities Group, the UK’s largest commercial property firm, added 2.7% after swinging a half-year profit as it recovered from the pandemic that battered its key central London-focused office portfolio.

Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Shounak Dasgupta

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