The FTSE 100 fell on Thursday, following unexpectedly weak US jobs data, as the pound strengthened to close to a three-year high against the dollar.
The blue-chip index dropped 100 points, or 1.5%, to 6,610, having been flat in early trading.
The FTSE was hurt by a stronger pound, which appreciated 0.7% to $1.395, after data showed there had been a marked decline in coronavirus infections across England since lockdown began last month. With blue-chips earning the majority of their revenues outside the UK, an ascendant sterling hit profits.
Meanwhile, the numbers of American filing for unemployment benefits rose last week, jobs data released by the US Department of Labor showed.
Initial claims for state unemployment benefits came in at a seasonally adjusted 861,000 for the week ended 13 February, compared to 848,000 in the prior week, for which figures were also revised higher.
Economists polled by Reuters had forecast that jobless claims would fall to 765,000, with the negative suprise suggested a stalling recovery in the labour market.
The major US indices all opened lower, with the S&P 500 falling 0.7%, or 27 points, to 3,905.
Analysts said that part of the increase may be attributable to the temporary shutdown of automobile plants due to a global semiconductor shortage. Both General Motors and Ford have halted or reduced production at some locations.
Neil Birrell, chief investment officer at Premier Miton, said: ‘Initial jobless claims came in way higher than expectations and higher than last week. The good news on retail sales yesterday has not followed through into the labour market. The data that we are seeing is not providing much clarity on the economy at present.’
Barclays (BARC) continued to decline through the day, with the market underwhelmed by its lacklustre return to the dividend list. The shares fell 5.6% to 146p.
Sherborne Investors C (SIGC) shed 1.8p or 3.9% to 45p on the lukewarm response to the results of Barclays, the primary investment of Ed Bramson’s investment company.
KKV Secured Loan (KKVL) jumped 3.5p or 22% to 19p after offering some respite to investors in the fund with news of a $24.3m windfall from the refinancing of two investments in a US reinsurer. The company said it would consider how much capital would be returned to holders of both its share classes.
Fair Oaks Income (FAIR) gained 0.8% to 64 US cents after the US leveraged loan investor said net asset value rose 5.3% last month on the back of a recovery in loan prices. The investment company’s latest 2.5 cent quarterly dividend puts it on a 15.6% annual yield.
Primary Health Properties (PHP) slipped 0.4% to 148.9p after a resilient set of annual results came in line with expectations and the alternative income fund expressed confidence that recent NHS reforms would generate additional interest in primary health facilities to support overburdened hospitals.
Diverse Income (DIVI) eased 0.6% lower to 103.8p despite the Gervais Williams and Martin Turner managed portfolio reporting a total return on net assets of 11.7% for the six months to 30 November, outpacing the 6.9% of its stock market benchmark. Dividend income fell 11.1% to 1.77p but the trust has committed to maintain the full-year dividend of 3.7p.
UK equity income peer Murray Income (MUT) slid 1% or 8p to 834p after interim results that also saw it lag the FTSE All-Share, reporting a NAV total return of 9.2% in the six months to 31 December versus 9.3%. It was weighed down by an underweight in oil and gas stocks but boosted by the merger with Perpetual Income & Growth at the end of last year.
(9:59) FTSE flat after glum Barclays results
A rally in mining stocks did little to cheer the FTSE 100 as disappointing results from Barclays and Smith & Nephew (SN) weighed on the blue-chip index.
The main market was broadly flat this morning at 6,712 despite a good showing from miners that continue to soar on hopes of a new commodities super-cycle.
Rio Tinto (RIO) led the board, up 3.6%, or 228p, at £64.63, Glencore (GLEN) gained 3% to trade at 296p, and Antofagasta (ANTO) climbed 2.9% to £17.65.
Other miners racking up gains were:
- Fresnillo (FRES) up 2.9% at 999p
- Evraz (EVRZ) up 2.6% at 543p
- BHP (BHP) up 2.4% at £22.99
- Anglo American (AAL) up 2.2% at £28.43
The mining gains were not enough to offset glum results from other parts of the market, with Barclays down 3.2%, or 5p, at 150p as it set aside another £500m of pandemic impairment provision in the final quarter of 2020, taking the total to £4.8bn.
Interactive Investor head of markets Richard Hunter said the provision ‘distorted the overall picture’, with a pre-tax profit of £3.1bn solid, and Barclays, which is the first of the banks to publish results this reporting season, has ‘set the bar high for its rivals’.
‘In all, the performance is dogged, set against an extraordinary backdrop,’ he said. ‘There is light at the end of the tunnel given the bank’s financial strength and diversity though, and Barclays is currently the preferred play in the sector.’
Smith & Nephew fell to the bottom of the blue chips, shedding 5.4%, or 85p, to trade at £14.82 after the provider of wound care and knee and hip implants reported an almost halving of profits last year and a revenue fall of 12% as the Covid-19 pandemic continues to take its toll on elective surgeries.
The FTSE 250 fared better this morning, no doubt helped by a jump in sterling that benefited the more domestically focused index, with the pound climbing 0.45% to trade at $1.3914 against the dollar.
The mid-cap index was up 0.3%, or 79 points, at 21,228 led by Moneysupermarket (MONY), which gained 6.7%, or 18p, to change hands at 286p. The price comparison platform has suffered a 27% fall in profit last year as lockdowns reduced the number of insurance and credit products bought.
Liberum analyst Harry Read said to hit targets this year will ‘require strong and rapid recovery in both money and travel-related channels’.
However, he predicted that earnings ‘will likely be towards the lower end’ if travel restrictions stay in place and the ‘dynamics within money’ stay close to fourth quarter 2020 levels.
— to citywire.co.uk