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Oct. 23, 2018, 1:43 p.m. EDT

FTSE 100 ends lower for second session in a row as pound gains momentum

Global equity rout takes hold

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By Mark DeCambre and Sue Chang, MarketWatch


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U.K.’s main stock benchmark on Tuesday finished lower for a second session in a row, after being stuck in the red along with other major European bourses, as questions about Brexit tensions and growing concerns about global growth, particularly in China, battered sentiment.

Doubts about Prime Minister Theresa May’s ability to lead the U.K. toward an orderly exit from the European Union, if at all, headlined concerns for British investors. A pickup in strength in sterling against the U.S. dollar added to pressure on U.K. multinational corporations.

How did the markets perform?

The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.18% fell 1.2% to 6,955.21, falling four of the past five sessions.

The British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -1.0410% rose to $1.3003, compared with $1.2966 late in New York on Monday.

What drove the markets?

According to the Financial Times , the EU’s Chief Brexit Negotiator Michel Barnier was advocating a softening of language related to a border in Northern Ireland, which has proved a roadblock to forging a trade deal with Britain as its attempts to exit from Europe’s trade bloc.

Northern Ireland has been a sticking point in trade negotiations because the territory is part of the U.K. while the Republic of Ireland is an EU member.

The latest developments come as May has been fighting for her job as members of her own party have grown frustrated over Brexit efforts. Some, however, believe that the prime minister will find a way to emerge from this political turmoil and secure a Brexit pact.

Contributing to Tuesday’s woes were weakness in China with the Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.60%  slipping a day after enjoying one of its biggest single-session gains in more than two years. The Chinese market’s retreat renewed fears that the second-largest economy in the world may not be able to stave off an economic slowdown that has been exacerbated by trade spats with the U.S.

China is a big user of natural resources, and negative news from that country can hurt the FTSE 100’s mining constituents. Global-rout losses were widespread Tuesday, with U.S. stocks also sharply lower.

What were strategists saying?

“There’s no specific headline driving [British pound] price action this morning, the domestic political risk subsiding for a day is not enough to say ‘everything’s fine.’ Always remember that the political commentariat operate on short news cycles and sometimes in doing so miss the bigger picture,” wrote Jordan Rochester, strategist at Nomura, in a Tuesday research note.

“It does show that our view that this was just noise and Theresa May will find a calculated way through was probably the right one,” he said.

Stocks in focus

Shares of St. James’s Place PLC /zigman2/quotes/200849568/delayed UK:STJ -3.87% led losers, down 5.3%.

Gambling operator GVC Holdings PLC ’s stock /zigman2/quotes/207493593/delayed UK:GVC +7.49% finished off 7.2%, among the worst performers.

Shares of British American Tobacco PLC /zigman2/quotes/209116881/delayed UK:BATS -0.20%  rose 4.2%, adding to sharp gains on Monday. Meanwhile shares of miner Fresnillo PLC /zigman2/quotes/201300065/delayed UK:FRES -6.17%  rallied 9.1%.

/zigman2/quotes/210598409/delayed
UK : FTSE UK
5,415.50
-64.72 -1.18%
Volume: 0.00
April 3, 2020 4:59p
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/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.2263
-0.0129 -1.0410%
Volume: 0.0000
April 3, 2020 4:59p
loading...
/zigman2/quotes/210598127/delayed
CN : China: Shanghai
2,763.99
-16.65 -0.60%
Volume: 20.08B
April 3, 2020 3:01p
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/zigman2/quotes/200849568/delayed
UK : U.K.: London
709.80 p
-28.60 -3.87%
Volume: 2.17M
April 3, 2020 4:35p
P/E Ratio
25.91
Dividend Yield
7.00%
Market Cap
£3.79 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/207493593/delayed
UK : U.K.: London
483.70 p
+33.70 +7.49%
Volume: 3.41M
April 3, 2020 4:35p
P/E Ratio
N/A
Dividend Yield
7.28%
Market Cap
£2.82 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/209116881/delayed
UK : U.K.: London
2,940.00 p
-6.00 -0.20%
Volume: 3.08M
April 3, 2020 4:35p
P/E Ratio
11.81
Dividend Yield
7.16%
Market Cap
£67.21 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201300065/delayed
UK : U.K.: London
636.00 p
-41.80 -6.17%
Volume: 1.34M
April 3, 2020 4:35p
P/E Ratio
29.19
Dividend Yield
1.86%
Market Cap
£4.69 billion
Rev. per Employee
N/A
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Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre. Sue Chang is a MarketWatch reporter in San Francisco. You can follow her on Twitter at @SueChangMW.

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