Dixons Carphone plunge after profit warning
U.K. stocks finished higher Thursday, with investors appearing more confident ahead of the summit of global central bankers in Jackson Hole and shaking off downbeat data on the U.K. economy.
Meanwhile, shares in Dixons Carphone PLC (DC.LN) sank more than 30% during the session after the retailer warned on profit, citing challenges to its mobile phone business.
The FTSE 100 index closed up 0.3% at 7,407.06, the best settlement since Aug. 16, according to FactSet data.
The London benchmark gained ground even after a relatively lackluster batch of U.K. data. Second-quarter gross domestic product growth was confirmed at 0.3%, up from 0.2% in the first-quarter. However, the report also showed consumer spending slowed in the quarter "as households continue to feel the squeeze of negative real wage growth," according to Craig Erlam, senior market analyst at Oanda.
Another data set out on Thursday showed business investments in the U.K. stagnated in the second-quarter.
"It's clear that while the economy has not nose-dived, it is suffering in the aftermath of the Brexit vote, Erlam said in a note.
"The pound fell initially after the data but quickly recovered to trade off its lows just below $1.28 against the dollar. The pair remains under pressure though and should this support break, $1.26 could be on the cards," he added.
Sterling hit an intraday high of $1.2838 after the report from the Office for National Statistics. The pound eventually moved to $1.2810, compared with $1.2799 late Wednesday in New York. Against the euro , sterling reached an intraday high of EUR1.0883. It bought EUR1.0845 in late London trade, not far off from EUR1.0840 on Wednesday, when the pound lingered around an eight-year low against the shared currency.
The weak pound on Wednesday helped the FTSE close marginally higher as it offset a broader European selloff. Sterling weakness tends to boost shares of the FTSE's many multinational companies with earnings in other currencies.
In other economic news, U.K. car manufacturing rose 7.8% in July, said industry body SMMT. (https://www.smmt.co.uk/2017/08/british-car-manufacturing-rebounds-july-new-models-hit-production-lines/)
Traders also looked ahead to the annual gathering of central bankers in Jackson Hole, Wyo., which kicks off Thursday and runs through Saturday. European Central Bank President Mario Draghi and Federal Reserve Chairwoman Janet Yellen will speak on Friday, with markets watching for hints on the future path for monetary policy.
Read:Here's what investors will be watching when Draghi, Yellen speak at Jackson Hole (http://www.marketwatch.com/story/heres-what-investors-will-be-watching-when-draghi-yellen-speak-at-jackson-hole-2017-08-22)
Stock movers: CRH PLC (CRG.DB) (CRG.DB) climbed 3.8% after the building-materials company said it's selling its Americas Distribution business to Beacon Roofing Supply Inc. (BECN) for $2.63 billion in cash (http://www.marketwatch.com/story/crh-to-sell-us-distribution-unit-in-26b-deal-2017-08-24). Additionally, the Dublin-based company said it would buy Fels, a German lime and aggregates business, for EUR600 million.
WPP PLC (WPP.LN) (WPP.LN) rose 3%. That follows an 11% slump on Wednesday when the world's largest advertising firm issued a disappointing growth outlook.
Provident Financial PLC (PFG.LN) jumped 13%, adding to a 12% gain from Wednesday. The U.K.-based lender tumbled 66% on Tuesday (http://www.marketwatch.com/story/provident-warns-on-profit-again-ceo-to-leave-2017-08-22) after warning it will lose between 80 million pounds ($102 million) and GBP120 million in the third quarter.
Shares of Dixons Carphone PLC (DC.LN) was shoved down 20.5%. The stock, listed on the midcap FTSE 250 index , tumbled as much as 32% after the mobile phone and electronics retailer warned fiscal 2018 profit would be much lower than last year (http://www.marketwatch.com/story/dixons-carphone-warns-on-2018-profit-2017-08-24), blaming challenging conditions in the U.K. mobile phone market.
"Handset demand across the market has been lower with consumers holding on to their current devices for longer due to...more expensive handsets, resulting from FX swings and...a slower rate of innovation," said Liberum analysts in a note discussing Dixons's conference call.
"Management notes that the consumer's phone replacement cycle may have been pushed out slightly, from say 24 to 28 months," analyst Adam Tomlinson wrote.
The FTSE 250 index fell 0.2% to end at 19,710.30.
(END) Dow Jones Newswires
August 24, 2017 12:14 ET (16:14 GMT)