Parliament gives its OK; Burberry slides after sales update
U.K. blue-chip stocks on Wednesday finished with losses and turned lower for the year, as investors digested a parliamentary vote that confirmed Britain will hold an early general election in June.
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Meanwhile, earnings reports rolled in, with Burberry Group PLC's stock unraveling after the luxury goods maker's financial update.
The FTSE 100 shed 0.5% to end at 7,114.36. The index on Tuesday slid 2.5% to close at 7,147.50, the largest single-session percentage drop since June 27, 2016. That was just after U.K.'s vote to leave the European Union.
The fall on Wednesday means the benchmark lost its year-to-date gain, and it's now down 0.4% for 2017.
On Wednesday, British Prime Minister Theresa May scored parliamentary approva (http://www.marketwatch.com/story/uk-lawmakers-approve-general-election-for-june-2017-04-19)l for her plan to hold a snap general election on June 8 (http://www.marketwatch.com/story/uk-leader-theresa-may-calls-snap-general-election-on-june-8-2017-04-18), rather than waiting until 2020 as scheduled. The plan, unveiled Tuesday, is seen as a bid to strengthen May's position in Brexit negotiations with EU officials, as a resounding win would give the government a mandate for its approach.
"My concern is a 7-week campaign is too long--too much time has been accorded to slip up on political banana skins waiting in spurious places," said David Buik, market commentator at Panmure Gordon, in a note. "I fear her majority will not be as great as the polls suggest."
The pound was buying $1.2784 after the parliamentary vote, compared with $1.2841 late Tuesday. Sterling had been trading above $1.25 early Tuesday.
Read:Why the snap U.K. election is a 'game-changer' for the pound (http://www.marketwatch.com/story/heres-why-the-pound-surged-to-10-week-high-after-may-called-snap-uk-election-2017-04-18)
And see:What's a 'snap election' and why does Theresa May want one? (http://www.marketwatch.com/story/whats-a-snap-election-and-why-does-uk-prime-minister-theresa-may-want-one-2017-04-18)
Stock movers: Burberry (BRBY.LN) sank 7.9% after the luxury goods retailer gave a financial update. It said second-half underlying revenue was down at GBP1.61 billion (http://www.marketwatch.com/story/burberry-revenue-down-but-boosted-by-fx-gains-2017-04-19) ($20.6 billion) although it was boosted by foreign exchange gains.
Associated British Foods PLC shares (ABF.LN) jumped 1.3%. The food ingredients producer and owner of retailer Primark raised its dividend and said its outlook for its fiscal 2017 has improved. (http://www.marketwatch.com/story/ab-foods-profit-up-36-as-primark-sales-beat-view-2017-04-19)
Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) fell 2.7% and BP PLC (BP.LN) (BP.LN) lost 1.1% following a Citigroup downgrade of the oil producers's ratings. Shell was cut to sell, and BP to neutral. "A deepening of structural reforms is surely going to have to address the high cost of dividends that, for the most part, has not yet been reset. RDS and BP have the biggest questions to answer," wrote Citi analyst Alastair Syme in a research note.
Mining stocks were higher Wednesday, rebounding from the previous day's battering. Shares in the sector were dragged down Tuesday by a slide in iron ore prices, which were hit by concerns about Chinese growth.
Glencore PLC (GLEN.LN) rose 1.5%, and Antofagasta PLC (ANTO.LN) moved up 2.1%.
(END) Dow Jones Newswires
April 19, 2017 12:06 ET (16:06 GMT)