UK stocks weaken as Fed rate cut hopes fade; tobacco stocks rise

08 Jul, 2019

UK blue-chip index edged 0.1pc lower in its third session of losses - its longest losing streak in two months, while the midcaps fell 0.4pc as a weaker sterling also weighed on its domestically-exposed constituents.

Upbeat US jobs data last week put off bets that the US Federal Reserve would give in to calls for aggressive policy easing.

"Ordinarily, a strong set of employment data would lift global equity sentiment, but seeing as a large portion of the rally was driven by the belief that the Federal Reserve will cut rates this month, equity markets are broadly lower today," CMC Markets analyst David Madden said.

Imperial Brands helped contain the losses on the blue-chip index, adding 2.2pc after the tobacco company announced plans for a 200-million-pound buyback and said it would revise its dividend policy.

Rival British American Tobacco rose 1.5pc.

Losses in the blue-chip index were spread across sectors, with pharmaceutical companies and banks most hit.

Miners, however, snapped a three-day losing streak on the back of higher copper prices. The sub-index had slipped last week after China's top steel mills formed a group to probe a record surge in ore prices.

British Airways owner IAG lost 1.4pc on news that it was facing a record $230 million fine from the UK's Information Commissioner's Office for the theft of data from 500,000 customers from its website last year.

Asset manager Schroders was among the biggest FTSE 100 losers with a 2.6pc drop after brokerages Jefferies and Barclays cut their ratings on the stock.

Online gambling firm GVC slumped 7.1pc to the bottom of the midcap index after a Sunday Times report that the company was facing questions as its CEO sold its Turkish business to a partner associated with a stud farm.

Shares had briefly trimmed losses after GVC refuted the report, saying it does not benefit from any operations in Turkey.

Vivo Energy gave up 3.6pc as the African fuel retailer issued a statement noting a media report in Morocco citing engagement between the Competition Council and industry participants as part of an ongoing investigation.

Copyright Reuters, 2019

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