LONDON MARKETS: FTSE 100 Slumps As Pound Rallies On EU Agreement To Brexit Transition
2018年3月20日 - 2:26AM
Dow Jones News
By Victor Reklaitis and Sara Sjolin, MarketWatch
Micro Focus shares plunge as CEO exits; Hammerson's stock soars
after takeover offer
U.K. blue-chip stocks lost ground Monday, getting squeezed by a
rally in the pound that came after Brussels and London agreed on
the terms of a Brexit transition deal.
Analysts were also pinning the retreat in part on expectations
that the Bank of England and the U.S. Federal Reserve will signal
this week how their respective monetary policies may be
tightening.
Micro Focus International PLC's stock was the FTSE 100's biggest
loser as the software maker warned on its outlook and said its CEO
has resigned.
How markets are moving
The FTSE 100 index slumped 1.7% to close at 7,042.93, suffering
its biggest one-day percentage loss since early February.
The pound jumped to $1.4037, up from $1.3944 late Friday in New
York.
What's driving markets
Sterling's rally came after news the EU and U.K. had agreed on
the broad terms of a transition deal. Under the terms of the
agreement, the U.K. will remain in the EU's single market and
customs union until the end of 2020, providing businesses with at
least an extra 21 months to prepare for life outside the union. The
transition period will also allow more time for negotiators to
hammer out a post-Brexit trade agreement.
A stronger pound sometimes weighs on the FTSE 100 as about 75%
of the benchmark's revenue is made overseas, and that revenue
therefore shrinks when translated back into sterling.
Traders also dumped stocks ahead of two important central bank
meetings later in the week. A BOE monetary policy decision is
expected on Thursday after a U.S. Fed decision on Wednesday. The
U.S. central bank is expected to raise interest rates for the first
time this year, while analysts say the BOE could hint at a rate
rise in May.
Don't miss: What to expect from the new Fed dot plot on interest
rates
(http://www.marketwatch.com/story/what-to-expect-from-the-new-fed-dot-plot-on-interest-rates-2018-03-16)
And read:It's time for stock-market investors to refocus on the
Fed
(http://www.marketwatch.com/story/now-its-time-for-the-stock-market-to-refocus-on-the-fed-2018-03-16)
(http://www.marketwatch.com/story/now-its-time-for-the-stock-market-to-refocus-on-the-fed-2018-03-16)Concerns
over trade wars further lingered in the back of investors' minds.
The Trump administration has taken a hawkish stance on U.S. trade
with China and is moving ahead with tariffs on foreign steel and
aluminum.
Read: U.S. soybeans would be China's biggest weapon in a trade
war
(http://www.marketwatch.com/story/us-soybeans-would-be-chinas-biggest-weapon-in-trade-war-2018-03-17)
And see:Trump's most market-rattling trade blasts are still to
come, warns Pimco
(http://www.marketwatch.com/story/trumps-most-market-rattling-trade-blasts-are-still-to-come-warns-pimco-2018-03-16)
What strategists are saying
"The EU and Britain have made good progress on certain aspects
of the Brexit negotiations, however other area such as the Northern
Irish border require more work. The U.K. has succumbed to almost
all of the EU's demands as [U.K. Brexit negotiator David] Davis
& Co. are so desperately keen to move forward to the next phase
-- the post Brexit trade deal. This includes a backstop agreement
for Northern Ireland remaining in the single market in the case
that no other solution is found," said Fiona Cincotta, senior
market analyst at City Index, in a note.
Read:Pound could surge in 'frenetic' week of Brexit and BOE
news, ING says
(http://www.marketwatch.com/story/pound-could-surge-in-frenetic-week-of-brexit-and-boe-news-ing-says-2018-03-16)
Stock movers
Micro Focus shares (MCRO.LN) dived 46% for the software giant's
biggest ever one-day loss after the company said CEO Chris Hsu has
resigned
(http://www.marketwatch.com/story/micro-focus-shares-slump-on-ceo-exit-revenue-warning-2018-03-19)
and warned that revenue for fiscal 2018 will fall more than
previously anticipated.
On the upside, Hammerson PLC shares (HMSO.LN) soared 24% for the
FTSE 100's biggest gain. The move came after the mall owner drew
and rejected a 4.9 billion-pound ($6.9 billion) takeover offer
(http://www.marketwatch.com/story/klepierre-makes-49-bln-hammerson-takeover-step-2018-03-19)
from French real-estate investment company Klepierre SA (LI.FR) ,
whose shares were down 4%.
William Hill PLC shares (WMH.LN) rose 4.2% along with other
British gambling companies as a U.K. government crackdown on a key
business -- fixed-odds betting terminals -- looked like it could be
less drastic than feared.
A commission is "recommending maximum stakes on fixed-odds
betting terminals should be cut to GBP30, not the GBP2 as feared,"
said Neil Wilson, ETX Capital's senior market analyst, in a note.
"This should be a relief for the sector as the worst-case scenario
looks to have been avoided."
Barclays PLC (BCS)(BCS) tacked on 3.6% after the British bank
said activist shareholder Sherborne Investors Management LP has
acquired a 5.2% stake
(http://www.marketwatch.com/story/barclays-activist-sherborne-has-taken-52-stake-2018-03-19).
Melrose Industries PLC (MRO.LN) on Monday lowered the acceptance
condition for its hostile 8.1 billion-pound ($11.3 billion) offer
for GKN PLC (GKN.LN) , meaning it is lowering the barrier to the
success of its takeover bid. In addition, Melrose said it will pay
up to GBP1 billion into GKN's pension scheme
(http://www.marketwatch.com/story/melrose-to-put-1-billion-into-gkn-pension-fund-2018-03-19)
over the period of ownership. Shares of GKN ended 0.6% lower, while
shares of Melrose dropped 0.7%.
(END) Dow Jones Newswires
March 19, 2018 13:11 ET (17:11 GMT)
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