London Markets: U.K. stocks threaten longest losing streak since February

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The U.K.’s main stock index switched between small gains and losses Wednesday, struggling to snap a four-day losing streak as the ongoing turmoil in Turkey’s currency and equity markets showed some signs of stabilization.

How markets are performing

The FTSE 100 UKX, -0.01% was roughly unchanged at 7,610.44 after dropping 0.4% in Tuesday’s session. Should the index end in negative territory, that would mark its fifth straight daily drop, its longest losing streak since February.

Thus far this week, the FTSE is off 0.7%, and it is down 1.8% over the course of August.

The British blue-chip gauge is showing a drop of 1.1% for the year to date.

The pound GBPUSD, -0.0865% was buying $1.2722, essentially unchanged with where it had traded late Tuesday.

What’s moving markets

Investors continued to monitor the currency crisis in Turkey, which many fear could spread and have a negative impact on the European banks that have exposure to the country. There were some signs of stabilization, with the Turkish lira TRYUSD, +3.3875%  up 4% against the dollar, bringing its week-to-date gain to nearly 5%. However, it remains sharply lower of late, having dropped about 20% thus far this month, recently hitting an all-time low.

Volatility should remain elevated, after Turkey raised tariffs on a number of American products, in the latest escalation in tensions between the two countries. U.S. President Donald Trump raised tariffs on Turkish aluminum and steel last week; the latest tariffs from Turkey are in response to those “conscious attacks,” according to a translation of a tweet posted by Fuat Oktay, the country’s vice president.

Also in focus was a round of U.K. data, including reads on inflation. The consumer price index rose 2.5% in July, in line with expectations, while it was flat compared with June.

Separately, the producer price index was up 3.1% year-over-year, while it was flat compared with last month. The mean estimate of analysts polled by FactSet was for a gain of 3% from July 2017.

The July retail price index was up 3.2% year-over-year, compared with the 3.5% expectation.

Don’t miss: A top London startup’s CEO flags the biggest Brexit threat to his industry

What are strategists saying?

“Turkey’s president Erdogan is showing no indication of backing down, and it appears he is keen to endure the ‘economic war’ with the US, and this is likely to hang over stocks,” said David Madden, market analyst at CMC Markets UK, in a note.

David Carruthers, head of research at Credit Benchmark, on Tuesday wrote that the risk European banks were facing from the lira were “overblown,” adding, “if you look at the credit quality of European banks, it’s been pretty stable.”

Read more: Contagion from Turkish currency collapse to European banks is ‘overblown,’ says analyst

Stocks in focus

GlaxoSmithKline Plc GSK, +1.53%  rose 1.5%. According to Dow Jones Newswires, the company’s subsidiary has reported positive results in its first phase 3 study for an injectable two-drug regimen for the treatment of HIV.

Admiral Group PLC ADM, +5.11%  gained 4.5% after reporting its second-quarter results. The stock was the index’s biggest percentage gainer, and it was on track for its biggest one-day percentage gain since March 2017.

Copper miner Antofagasta PLC ANTO, -1.90%  fell 1.7%, extending a recent decline that came after it reported results and warned about the impact of trade tensions between the U.S. and the country’s major trading partners. The stock is down more than 15% thus far this month.

The price of copper was down 0.4% on Wednesday.

Among other decliners, BHP Billiton Plc BLT, -1.63%  fell 1.5%.

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