LONDON MARKETS: FTSE 100 Knocked Off Course After Trying For Fresh Record

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Services-sector reading exceeds expectations

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U.K. stocks swung lower Friday, tracking an upturn for the pound, and the move put into question whether London's blue-chip benchmark can mark a new record.

But the FTSE 100 remained on track for a weekly advance.

What markets are doing: The FTSE 100 index was down nearly 3 points at 7,552.80, as financial, commodity, telecom and health-care shares fell. However, industrial and consumer-related stocks held to gains. The benchmark earlier hit an intraday high of 7,580.95 that put it on course to knock out its record close of 7,556.24 made Oct. 12.

The pound , meanwhile, drove up to $1.3110, bouncing up from $1.3058 late Thursday in New York.

Against the euro, sterling bought EUR1.1247 versus EUR1.1201 in the previous session.

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The FTSE 100 on Thursday jumped 0.9% (http://www.marketwatch.com/story/ftse-100-fails-to-find-purchase-as-traders-brace-for-bank-of-england-2017-11-02). This week, a gain of 0.6% appeared likely, after two weeks of declines.

What's moving markets: The FTSE 100 was swept down Friday as the pound marched higher against the greenback following the October U.S. jobs report. Roughly 75% of revenue for FTSE 100-listed multinational companies is generated in foreign currencies, according to FactSet data, so pound strength can hurt shares of those companies.

261,000 U.S. nonfarm jobs were added in October compared with an expected increase 325,000 in a MarketWatch poll of economists. Meanwhile, wages fell a penny to an average of $26.53 an hour, slowing the year-over-year increase in hourly pay to 2.4%.

Read: U.S. adds 261,000 jobs in October in hurricane-inflated gain (http://www.marketwatch.com/story/us-adds-261000-jobs-in-october-in-hurricane-inflated-gain-2017-11-03)

The FTSE 100 had charged above its record closing high earlier Friday as the pound continued to struggle after Thursday's mauling. Sterling had tumbled 1.4% against the dollar, the largest percentage loss since June 9, FactSet data showed, after the Bank of England hiked its key interest rate for the first time in 10 years, but also sounded unlikely to raise rates again soon.

See:BOE delivers a 'typical dovish hike'--analysts react to historic U.K. rate rise (http://www.marketwatch.com/story/boe-delivers-a-typical-dovish-hike-analysts-react-to-historic-uk-rate-rise-2017-11-02)

Also: 5 key Carney quotes after BOE hikes rates for first time in a decade (http://www.marketwatch.com/story/5-key-carney-quotes-after-boe-hikes-rates-for-first-time-in-a-decade-2017-11-02)

What strategists are saying: "Though the headline jobs number was below expectation, upward revisions for September and August show the U.S. economy continues to create jobs at a decent rate," said David Lamb, head of dealing at Fexco Corporate Payments, in a note.

"Of greater concern is the slowing rate of wage growth, which is set to be the most likely impediment to the Fed's dovish new chairman pulling the trigger on a December hike," he said.

Stock movers: Among multinational companies, shares of tobacco company Imperial Brands (IMBBY) fell 1.4%, medical technologies company ConvaTec Group PLC (CTEC.LN) lost 1.1% and drug maker Shire PLC (SHPG) declined 0.9%.

British Airways parent IAG (IAG.LN) turned lower and fell 1.6%. The shares had been up earlier after the air carrier raised its earnings and other long-term targets (http://www.marketwatch.com/story/british-airways-parent-iag-lifts-earnings-target-2017-11-03).

Economic docket: A reading on services-sector activity for October came in at 55.6, above the 53.3 expected (http://www.marketwatch.com/story/uk-services-pmi-rises-to-556-beating-forecasts-2017-11-03) in a FactSet consensus estimate.

Read:'Soft' Brexit will propel U.K. stocks, says Thornburg fund manager (http://www.marketwatch.com/story/soft-brexit-will-propel-uk-stocks-thornburg-fund-manager-says-2017-11-02)

(END) Dow Jones Newswires

November 03, 2017 09:59 ET (13:59 GMT)