Tesco falls after trading update
U.K. stocks edged lower on Wednesday, on track to break a five-day winning run after a mixed gauge on the country's services sector capped off a disappointing September round of purchasing managers index readings.
Continue Reading Below
The FTSE 100 index was down 0.1% at 7,461.34, but was swinging between small gains and losses.
Meanwhile, the pound rose to $1.3285 from $1.3239 late Tuesday in New York, after the services purchasing managers index for September (https://www.markiteconomics.com/Survey/PressRelease.mvc/6e659475e4c24f8eb1733532532cbd04) rose to 53.6 from an 11-month low of 53.2 in August.
Sterling has been hit hard in recent days, falling to a three-week low against the dollar on Tuesday after the construction purchasing managers index missed forecast by a wide mark and indicated the sector is contracting. The manufacturing PMI out on Monday also missed forecasts.
"After two days of dismal PMIs this [services] data should have been a cause for celebration for sterling; instead the currency rose just 0.2% against the dollar and 0.1% against the euro, barely taking the edge off the sharp losses it has incurred since last Friday," said Connor Campbell, financial analyst at Spreadex, in a note.
"The reason? Well look beyond that headline services surprise and some of the sector details look pretty grim, namely the fact that new business growth is at a Brexit-spooked (what else?) 13-month low while input costs have climbed to a 7-month high," he said.
Stock movers: Shares of Tesco PLC (TSCO.LN) (TSCO.LN) lost 2.7%, erasing earlier gains that came after the supermarket chain--the U.K.'s biggest--said it'll resume dividends (http://www.marketwatch.com/story/tesco-resumes-dividends-as-pretax-profit-jumps-2017-10-04) after pretax profit rose eightfold in the 26 weeks to Aug. 26.
Analysts said uncertainty over Tesco's acquisition of cash-and-carry chain Booker Group PLC (BOK.LN) was weighing on shares.
"The most immediate risk for the group is that the [Competition and Markets Authority] may either reject the Booker buy outright or mandate unattractive conditions. Even then, we would still expect the stock to close the year with gains, based on the view that Tesco could scarcely be handling the consumer outlook more adroitly," said Ken Odeluga, market analyst at City Index.
Other supermarkets were also falling on Wednesday, with shares of J Sainsbury PLC (SBRY.LN) (SBRY.LN) down 1.8% and Wm. Morrison Supermarkets PLC (MRW.LN) (MRW.LN) off 1.2%.
Miners, on the other hand, posted gains as most metals moved higher. Shares of Anglo American PLC (AAL.LN) climbed 1.5%, Randgold Resources Ltd. (RRS.LN) (RRS.LN) added 1.3% and (RIO) (RIO) (RIO) picked up 0.6%.
(END) Dow Jones Newswires
October 04, 2017 08:03 ET (12:03 GMT)