U.K. stocks dropped for a fourth straight session on Thursday, with pressure on London’s blue-chips benchmark coming from continued strength in the pound and a decline in shares of Primark chain operator Associated British Foods following a trading update.
How markets are moving: The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.71% ended down 0.3% at 7,700.96, moving further away from its an all-time closing high of 7,778.64 hit last week.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.2013% traded at $1.3893, up from $1.3830 late Wednesday in New York.
What’s driving markets: The FTSE 100 lagged behind other European equity benchmarks in Thursday’s session in part as the pound continued to scale at levels against the U.S. dollar not seen since the 2016 Brexit referendum. Sterling rose for a fifth day in six sessions and has picked up roughly 1.2% this week.
Sterling strength can hurt shares of multinational companies on the FTSE 100 as a stronger pound can dent earnings made overseas. About 75% of revenue generated by FTSE 100 companies comes from international markets.
What strategists are saying: “Whilst we should see GBP/USD break through 1.40 this year it has to be driven and buoyed by either a pick up in the U.K. economy and an interest rate hike, or major developments towards a favorable Brexit with Single Market access,” said Hamish Muress, currency analyst at OFX, in a note.
“Alongside a strengthening pound, the FTSE has also been struggling to overcome a raft of disappointing earnings reports, with yesterday’s Burberry figures continuing to play a role while Associated British Foods led the index lower after a weakened outlook for its sugar department," said Joshua Mahony, market analyst at IG, in a note.
Stock movers: Associated British Foods PLC shares /zigman2/quotes/204493701/delayed UK:ABF -2.49% /zigman2/quotes/208608489/composite ASBFF 0.00% fell 3.6% as the company posted a drop in revenue from its sugar business during the 16-week period to Jan. 6. The company said, however, that fall was countered by a sales increase at its Primark fashion arm. AB Foods left its full-year outlook unchanged.
Whitbread PLC /zigman2/quotes/207954631/delayed UK:WTB -2.35% pushed up 3.5% as the company, which runs the Costa Coffee and Premier Inn brands, said it’s on track to meet its full-year expectations.
Online real estate listings firm Rightmove PLC /zigman2/quotes/201303150/delayed UK:RMV -0.35% tracked Countrywide lower, falling 3.7%.
Economic news: U.K. house prices bounced back in December, with the Royal Institution of Chartered Surveyors saying its monthly reading came in at a plus 8. Analysts polled by The Wall Street Journal expected, on average, the index to slip further, to minus 2.