U.K. unemployment data on deck at 9:30 a.m. London
U.K. stocks headed lower on Wednesday, with big multinationals leading the charge south as a rally in the pound spooked investors out of companies that generate most of their revenue abroad.
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What are markets doing?
The FTSE 100 index dropped 0.3% to 7,711.89, setting the benchmark on track for its lowest close since last Thursday.
Meanwhile, the pound jumped to $1.4059 from $1.4000 late Tuesday in New York. Sterling, which has climbed as high as $1.4091 on Wednesday, is now trading at its highest level since the U.K.'s Brexit referendum in June 2016, but is still a ways off from the $1.50 handle reached ahead of the vote.
What is driving the markets?
U.K. stocks were weighed by the appreciating pound, as a stronger sterling hits earnings for large international companies that generate the bulk of their revenue outside Britain. About 75% of revenue for the FTSE 100 is generated overseas, so the London benchmark is particularly sensitive to pound swings.
The pound rally came partly as investors grew more confident London and Brussels will agree on a Brexit transition deal in coming months, and partly because of a renewed selloff in the dollar. Analysts say the expected Federal Reserve rate hikes for 2018 largely are priced into the dollar, and that traders now are positioning themselves for other central banks to start tightening.
At 9:30 a.m. London time, or 4:30 a.m. Eastern Time, the U.K. unemployment data for November are also likely to drive the markets.
Which stocks are in focus?
Shares of Antofagasta PLC (ANTO.LN) dropped 1% after the miner copper production in the fourth quarter of 2017 fell 1.3% (http://www.marketwatch.com/story/antofagasta-says-copper-production-fell-13-2018-01-24) quarter on quarter, while gold production fell 32%.
Sage Group PLC (SGE.LN) slumped 5.8% after a strong rise in sales still missed analyst forecasts (http://www.marketwatch.com/story/sage-group-backs-guidance-after-revenue-rises-63-2018-01-24).
Outside the FTSE 100, Fevertree Drinks PLC (FEVR.LN) jumped 5.2% after the producer of mixers posted a 66% jump in 2017 revenue.
(END) Dow Jones Newswires
January 24, 2018 04:18 ET (09:18 GMT)