LONDON MARKETS: FTSE 100 Rises, As Pound Falls On BOE Rate-hike Doubts

By Carla Mozee, MarketWatch

Benchmark heads for 4th straight win; Shire falls as Allergan rules out bid

U.K. stocks advanced Friday, aided by a drop in the pound's value after Bank of England Governor Mark Carney suggested that an interest-rate increase may not come next month as expected.

How markets are moving

The FTSE 100 index was up 0.4% to 7,354.50, led higher by the financial group, while the health care sector was in the red. The London benchmark on Thursday rose 0.2% (http://www.marketwatch.com/story/uk-stocks-climb-to-10-week-high-as-metals-prices-soar-2018-04-19) to close at its highest level since Feb. 5, according to FactSet data. A win on Friday would be its fourth in a row.

For the week, the blue-chip stock gauge was on course to rise 1.2%, which would mark a fourth straight weekly advance.

The pound traded at $1.4055, down from $1.4082 late Thursday in New York. Against the euro, sterling bought EUR1.1390, down from EUR1.1408 in the prior session.

What's driving the markets

The pound was a major factor driving the FTSE 100's direction. Sterling dropped below $1.41 late Thursday after Bank of England Governor Mark Carney dampened expectations for an interest rate rise next month.

In an interview with the BBC (http://www.bbc.co.uk/news/business-43831159), Carney said a rate hike is "likely" this year, but said he didn't "want to get too focused on the precise timing," citing uncertainty over Brexit and recent disappointing retail and inflation data. The market had been pricing in a rate increase at the BOE's meeting on May 10.

A weaker pound can help lift the British blue-chip index, as its multinational companies generate most of their sales in foreign currencies.

What are strategists saying?

"It's being reported that the EU is set to reject Britain's proposed solution to the Irish border conundrum, leaving U.K. Prime Minister Theresa May between the rock of the EU and the hard place of a compromise unacceptable to the 'Leave' faction in the U.K.," said Marshall Gittler, chief strategist at ACLS Global, in a note.

"So the 'Goldilocks' scenario of rising interest rates and falling Brexit tensions, which has pushed [the pound] up to its post-Brexit high, is now collapsing, leaving GBP exposed," he added.

Stocks in focus

Among multinationals, shares of drug maker GlaxoSmith Kline PLC (GSK.LN) added 1.2%, and British American Tobacco PLC (BATS.LN) picked up 1.8%.

Reckitt Benckiser Group PLC shares (RB.LN) dropped 4.8%. First-quarter like-for-like sales growth at the consumer products maker came in (http://www.marketwatch.com/story/reckitt-benckiser-sales-rise-backs-yearly-view-2018-04-20) at 2%, falling short of expectations for 2.6% growth.

Shire PLC (SHPG) (SHPG) shares fell 3.3% after Allergan PLC (AGN) late Thursday said it doesn't plan to make a bid for the Dublin-based drug maker (http://www.marketwatch.com/story/blink-and-you-missed-it-allergan-doesnt-plan-to-make-a-shire-bid-2018-04-19).

Topping advancers, Mediclinic International PLC (MDC.LN) shares rose 3%, and building materials supplier CRH PLC moved up 2.2%.

Barclays PLC (BCS) said British regulators have proposed fining its Chief Executive Jes Staley (http://www.marketwatch.com/story/barclays-ceo-jes-staley-fined-but-keeps-job-2018-04-20), after an investigation into his attempt to identify a whistleblower. But the bank said the CEO will keep his job. Shares were up 0.5%.

(END) Dow Jones Newswires

April 20, 2018 04:33 ET (08:33 GMT)

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