Pound loses grip of $1.27 again, but that doesn't get FTSE into the green
U.K. stocks slipped Monday, hampered by ongoing questions about the political landscape in Britain after the Conservative Party lost its parliamentary majority last week.
The FTSE 100 fell 0.2% to end at 7,511.87, suffering its fifth loss in six sessions.
The benchmark on Friday shot up 1%, aided by a slide in the pound below $1.27 after U.K. Prime Minister Theresa May failed in her bid to expand the Conservative Party's grip on power in the House of Commons. A weaker value for sterling can help bolster revenue and earnings made overseas by multinational companies on the FTSE 100.
The FTSE pared Monday's decline as the pound fell again, but sterling's slump was not enough to let the stock gauge settle higher.
"The hung parliament outcome from the general election is still hanging over the London market, and will continue to do so until investors have some clarity about the U.K.'s political future," wrote David Madden, market analyst at CMC Markets.
May has been hit with criticism for her decision to hold a general election that resulted in a hung parliament. The vote took place just before the slated June 19 start of negotiations over Britain's exit from the European Union.
Read:Questions grow over Theresa May's future as U.K prime minister (http://www.marketwatch.com/story/questions-grow-over-theresa-mays-future-as-uk-prime-minister-2017-06-12)
May has been working on forming a new government with support from Northern Ireland's Democratic Unionist Party, which holds 10 seats, and talks were expected to continue Tuesday.
"The DUP are in favour of the U.K. leaving the EU, but they are against having a hard border with the Republic of Ireland, and there is increased talk of a soft Brexit," said Madden.
The "Conservative Party's reduced share of the vote [in parliament] may indicate a higher likelihood that a 'softer' form of Brexit might now be pursued, involving compromises with the EU that Ms May would not have countenanced previously, and which would be positive," said Moody's analyst Kathrin Muehlbronner in note dated June 9.
"Overall, we believe that the election outcome will hamper Brexit negotiations and increase fiscal risks, and therefore be negative for the U.K.'s credit profile," she wrote.
The pound was buying $1.2655, down from $1.2741 late Friday in New York. Sterling on Friday sank to seven-week lows as it lost the $1.29 handle in the wake of the election result.
Among advancers Monday, oil producer Royal Dutch Shell PLC (RDSB.LN)(RDSB.LN) climbed 1.6% and chemicals supplier Johnson Matthey PLC (JMAT.LN) picked up 2%.
Vodafone PLC (VOD.LN) rose 1.5%, with the mobile-services company upgraded at Deutsche Bank to a buy rating, according to Dow Jones Newswires. Telecom operator BT Group PLC (BT.A.LN) finished up 1.3%.
Tesco PLC shares (TSCO.LN) closed up 1.5% ahead of the supermarket chain's first-quarter trading report on Friday.
Also on deck this week will be reports on U.K. consumer-price inflation, employment and wages, retail sales and the Bank of England's policy decision. The central bank is expected to leave policy unchanged.
May and French President Macron were scheduled to meet in France on Tuesday. Macron's upstart party on Sunday won the first round of France's parliamentary elections (http://www.marketwatch.com/story/macrons-party-on-pace-for-landslide-win-in-french-elections-2017-06-11).
Near the bottom of the FTSE 100 were shares of Micro Focus International PLC (MCRO.LN) as they fell 3.8%, and shares of Sage Group PLC (SGE.LN) gave up 1.8%.
European and Asian tech stocks followed on Friday's abrupt selloff in the sector on Wall Street that left the Nasdaq Composite Index down nearly 2%. U.S. tech stocks remained under pressure Monday, in part as Apple Inc. (AAPL) suffered its second ratings downgrade in a week. (http://www.marketwatch.com/story/apple-downgraded-by-mizuho-the-second-ratings-cut-in-a-week-2017-06-12)
See:Pay attention to the ominous pattern in big technology stocks (http://www.marketwatch.com/story/pay-attention-to-the-ominous-pattern-in-big-technology-stocks-2017-06-09)
(END) Dow Jones Newswires
June 12, 2017 12:15 ET (16:15 GMT)