Economic news

Sterling Keeps FTSE 100 under Pressure, Vodafone Surges

(Reuters) -London’s FTSE 100 turned lower on Tuesday as a stronger pound hit the shares of dollar earners, while upbeat earnings from mobile operator Vodafone and spirits maker Diageo limited overall declines.

The blue-chip FTSE 100 index was down 0.2% in morning trade, with companies that have large overseas exposure including British American Tobacco, Reckitt Benckiser and Unilever falling between 0.4% and 0.9%.

A sizeable chunk of FTSE 100’s constituents earn revenue in dollars, putting them under pressure from a stronger domestic currency.

The pound rose as data showed British employers added 160,000 workers to their payrolls in October, the first month after the end of UK’s furlough scheme, cementing expectations of an interest rate hike in December.

Bank of England Governor Andrew Bailey said on Monday he was “very uneasy” about the inflation outlook. Investors will remain focussed on consumer prices data on Wednesday.

Financial markets have currently priced in a near 100% chance that the BoE raise rates to 0.25% from 0.1% in December.

“While the MPC will likely continue to preach the transitory nature of current price rises, tomorrow’s release will make an uncomfortable reading,” said Stuart Cole, economist at Equiti Capital.

“Taken in conjunction with today’s strong employment data, a release in line with expectations tomorrow will see market sentiment firm towards a rate rise in December.”

Vodafone jumped 5.2% after raising its forecast for this year’s free cash flow and reporting a 6.5% growth in adjusted core earnings in the first half.

Johnnie Walker whisky maker Diageo added 2.3% after setting higher medium-term growth targets.

Tobacco group Imperial Brands fell 1.5% after reporting a decline in volumes despite a slight uptick in its full-year sales.

The domestically focussed mid-cap index also fell 0.2%.

UK’s largest commercial property firm Land Securities Group added 2.7% after swinging to a half-year profit, as it recovers from the pandemic which battered its key Central London-focused office portfolio.

Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Shounak Dasgupta

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree