LONDON: Britain’s export-heavy FTSE 100 ended lower on Thursday weighed by a strengthening pound and concerns over slowing economic growth, while easyJet’s share sale plan sent the British airline to the bottom of the mid-cap index.
The blue-chip index ended down 1.0%, recording its worst session in three weeks with consumer staple and pharmaceutical stocks weighing the most.
The domestically focused mid-cap FTSE 250 index fell 0.2%.
The FTSE 100, which jumped around 26% from October lows, is on course to end the week in the red as the rising spread of the Delta variant of coronavirus and supply chain issues raised worries of a slowdown in economic recovery.
“One thing investors hate is tax and taxing a market full of dividend darlings is a body blow for sentiment,” said Keith Temperton, sales trader at Forte Securities.
“I think that’s the overriding reason for stocks being lower today and that will be a driver for the performance going forward as well.”
Earlier this week, British Prime Minister Boris Johnson set out plans to raise taxes on shareholder dividends to try to fix a health and social care funding crisis.
Dollar-earning consumer staples stocks, including Unilever , British American Tobacco and Imperial Brands , shed between 1.4% and 1.6% on a stronger pound.
“And a big negative there is also a pretty strong pound,” Temperton said.
Meanwhile, the European Central Bank signalled it will only slightly reduce its emergency bond purchases over the coming quarter.
easyJet fell 10.2% after the British airline said it rejected a takeover offer and would raise $1.7 billion from shareholders to fund its pandemic recovery and expand operations.
Genus slid 7.6% as Peel Hunt downgraded the livestock genetics firm’s stock to “hold” from “buy” after it missed annual profit estimates.