UK stocks whimpered to a lower close on Friday as sterling lost traction on renewed Brexit fears and commodity prices headed south.
The spectre of the Lisbon Treaty’s Article 50 rose once more, following a media report that claimed UK Prime Minister Theresa May was sympathetic to starting Britain’s EU divorce by next April at the latest.
The pound renewed its plunge into the red this Friday,the ensuing pall saw sterling dive lower after lunch.
At about 16:16 BST, sterling was down 0.49% to $130.884, down 0.8% to 1.3062 yen and lower 0.48% to €1.1542. Same time, gold faltered 0.59% to $1349.20 an ounce.
Collectively, this dampened both the FTSE 100 and FTSE 250. Wall St was mostly lower, as were key indices in Europe.
Blue-chip home builders were notable among fallers, piloted by Taylor Wimpey, Persimmon and Barratt Developments on jitters surrounding the UK housing market’s outlook.
“The big question,” wrote IG’s Josh Mahony, “is whether sterling’s fall will also drive renewed foreign interest in UK housing, thus mitigating any fears of a crash in house prices.”
Overall, Mahony opined that it was clear the “overstretched nature of the FTSE means traders are happy to wait for another opportunity to buy the dips.”
Both in the UK and across the Atlantic, all eyes are on next week’s Jackson Hole speech by US Federal Reserve chair Janet Yellen, and pundits are already pondering what precisely that might bring.
There is little space for manoeuvre, with any hawkish comment from Yellen likely to be seen through cynical eyes given the perception of can-kicking in 2016 to date.
Against this backcloth oil prices were mixed much of the day, but, by about 16:31 BST, West Texas Intermediate had shed 0.31% to $48.07 a barrel as Brent had lost 0.9% to $50.43 a barrel. This spurred Shell and BP’s respective share prices lower.
On the economic front, UK public sector net borrowing hit a £1bn surplus in July, from £1.2bn a year ago, Office for National Statistics said. A surplus of £1.6bn was expected.
German producer prices ticked higher in July, Destatis said. The index of producer prices for industrial products was up 0.2% after a 0.4% rise in June and May. A 0.1% rise was expected.
Back to the stocks indices, other sectors heading south included pharmaceuticals, commercial property, consumer goods, leisure and utilities, among others.