U.K. services activity slows; Reckitt Benckiser shares under pressure
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U.K. stocks edged higher Tuesday as shares of retailers and miners gained ground, but the overall mood was subdued after a reading on British services activity missed expectations and tensions surrounding North Korea's nuclear program remained.
The FTSE 100 was up 0.1% to 7,419.02, but was held back from a larger gain as shares of consumer goods and financial services companies moved lower. On Monday, the index on Monday fell 0.4% (http://www.marketwatch.com/story/ftse-100-slips-after-pyongyang-again-tests-its-nuclear-capabilities-2017-09-04), with markets throughout Europe and Asia rattled (http://www.marketwatch.com/story/how-north-koreas-nuclear-test-rattled-markets-in-5-charts-2017-09-04) after North Korea carried out a significantly larger nuclear test than before. U.S. stock markets were closed Monday for the Labor Day bank holiday.
But on Tuesday, investors seemed to be continuing with flight-to-safety moves. The Japanese yen and the Swiss franc , both perceived as less-risky assets, moved higher against the U.S. dollar .
See:North Korea is getting ready for another possible ICBM launch, says South Korea (http://www.marketwatch.com/story/north-korea-is-getting-ready-for-another-possible-icbm-launch-says-south-korea-2017-09-04)
And check out:Here's a win-win solution for the U.S. and China on North Korea (http://www.marketwatch.com/story/heres-a-win-win-solution-for-the-us-and-china-on-north-korea-2017-09-04)
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"As the U.S. returns from Labor Day, market sentiment remains cautious, with tensions over North Korea still at the forefront of traders' minds," said Richard Perry, market analyst at Hantec Markets.
"The U.S. is looking for the UN to take a hard line with North Korea, whilst in the immediate proximity South Korea continues to prepare for military maneuver," he said in a note.
Data: Activity in the U.K. services sector hit an 11-month low in August. IHS Markit/CIPS said its services PMI came in a 53.2, and expectations were for 53.5 in a FactSet survey of analysts. The pound , however, was able to rise to $1.2948 after the data, compared with $1.2932 late Monday in New York. Pound strength can put pressure on shares of U.K.-listed multinational companies.
Miners move higher: But mining shares largely rose after upbeat economic data out of China, a big buyer of industrial and precious metals. The Caixin China services purchasing managers' index rose to 52.7 (http://www.marketwatch.com/story/china-caixin-services-pmi-rises-breaks-losing-run-2017-09-05) in August from 51.5 in July.
Shares of Anglo American PLC (AAL.LN) gained 1%, iron ore heavyweight BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) advanced 0.6%, and Rio Tinto PLC (RIO) (RIO) (RIO) tacked on 0.5%.
Retailers: Shares of retail companies rose after a British Retail Consortium/KPMG survey showed retail sales rose 1.9% on like-for-like basis in August on a year-over-year basis. Total sales increased 2.4% year-on-year.
Apparel and home furnishings seller Next PLC (NXT.LN) bulked up 1.2% and department stores operator Marks and Spencer Group PLC (MKS.LN) was up 1.7% and Whitbread PLC (WTB.LN) , the company behind the Premier Inn and Costa Coffee chains, rose 1.7%.
Sales of non-food items grew as shoppers bought items for the new school term, clothing for the autumn season and housewares, the surveyors said.
"However, these figures tell a less positive story about the health of consumer spending than it might seem at first glance," said Helen Dickinson, chief executive of British Retail Consortium, in a statement. "Non-food sales have only just recovered to levels seen two years ago, after a dismal August in 2016; while strong figures for food are largely the result of rising prices, leaving growth in volume terms weaker than last year."
Stock movers: Shares of Aveva Group PLC (AVV.LN) on the mid-cap FTSE 250 jumped 24% as French industrial group Schneider Electric SE (SU.FR) reached a deal to take control of the British engineering software maker (http://www.marketwatch.com/story/schneider-electric-takes-controling-stake-in-aveva-2017-09-05).
Reckitt Benckiser Group PLC (RB.LN) shares lost 3.2% after the consumer-goods company said four of its senior executives are leaving (http://www.marketwatch.com/story/reckitt-benckiser-says-4-top-execs-leaving-2017-09-04). The exodus is unusually large, given the company is absorbing its biggest-ever acquisition and dealing with various headwinds.
Admiral Group PLC shares (ADM.LN) fell 0.4% after a ratings downgrade of the insurer to sell from hold at Berenberg. "Although Admiral's [first half] 2017 results were in line with consensus, we thought the results highlighted some concerning trends for earnings," said Berenberg analyst Iain Pearce.
(END) Dow Jones Newswires
September 05, 2017 06:37 ET (10:37 GMT)