LONDON (Alliance News) - UK stock indices ended lower on Monday as the pound hit its highest level against the dollar since the start of 2017, with the greenback sliding on US President Donald Trump's protectionist inauguration speech on Friday.
The pound hit an intraday high of USD1.2495 and at the London stock market close traded the dollar at USD1.2483. This was higher than the USD1.2329 seen at the close on Friday. The euro traded the dollar at USD1.0735 at the London close on Monday, compared with USD1.0673 on Friday.
In his inauguration speech on Friday, Trump kicked off his presidency promising to put Americans first and hitting out at global trade deals, offsetting optimism that he will follow through on promises of higher infrastructure spending and tax cuts for businesses and individuals.
Since then, Trump has signed an executive order to renegotiate NAFTA and, soon after the London equities close on Monday, signed an executive order to withdraw the US from the Trans-Pacific Partnership, a trade deal among 12 countries in the Americas and Asia.
The dollar's fall supported the price of gold, which was quoted at USD1,216.40 an ounce at the end of London stock trade on Monday, higher than the USD1,202.88 an ounce seen on Friday. Gold miners Fresnillo, up 3.0%, and Randgold Resources, up 1.4%, were among the best performers in the FTSE 100.
Hochschild Mining was the biggest FTSE 250 gainer, up 12%, benefiting from the higher gold price. The miner also said operations at its Pallancata mine in Peru will restart by Wednesday, after an agreement was reached with a local community that had been blockading a road at the mine.
Brent oil traded at USD55.24 a barrel at the close on Monday, a touch lower than the UD55.36 at the close on Friday.
The stronger pound as a result of the dollar's fall hit the FTSE 100, which ended down 0.7%, or 47.26 points, at 7,151.18. The FTSE 250 was not as badly hit, closing down 0.2%, or 34.81 points, at 18,116.03, and the AIM All-Share closed up 0.09 points, at 873.64.
The BATS UK 100 index closed down 0.6% at 12,083.80, the BATS 250 ended down 0.2% at 16,474.46 and the BATS Small Companies down 0.3% at 10,918.70.
In Europe, the CAC 40 in Paris finished down 0.6% and the DAX 30 in Frankfurt down 0.7%.
In New York, the DJIA and S&P 500 were down 0.3% and the Nasdaq Composite was down 0.4%.
On the London Stock Exchange, Paddy Power Betfair was the worst performer in the FTSE 100, down 4.4%. The bookmaker said it expects to report underlying earnings at around the mid-point of its previously guided range, notwithstanding worse-than-expected gross win margins in November and December.
The group said that revenue rose by 18% in 2016 to GBP1.55 billion from GBP1.32 billion in 2015, or by 11% at constant exchange rates. As a result, Paddy Power Betfair now expects group underlying earnings before interest, tax, depreciation and amortisation to be at the mid-point of its previously guided range of GBP390 million to GBP405 million.
The group's European sportsbooks lost money on football bets in December. Paddy Power Betfair estimates that the hit to revenue from these "customer-friendly results" was around GBP40 million in the fourth quarter of 2016, although lower than expected marketing and staff costs helped mitigate the hit to profit.
Components manufacturer Essentra said it expects its adjusted operating profit for 2016 to be at, or "modestly below", the lower end of its previous guidance. In a trading update, Essentra said its Health & Personal Care Packaging unit saw a significant decline in revenue and profitability in the last two months of 2016.
"As a result, and while the detailed year-end close and audit is ongoing, the board expects adjusted operating profit to be at, or modestly below, the bottom end of the company's previously communicated guidance of GBP137 million to GBP142 million," said Essentra. The stock closed as the worst performer in the FTSE 250, down 5.4%.
SSP Group closed up 4.7% after Jefferies lifted the stock to Buy from Hold. The bank believes the travel concessions operator is set to remain a market leader despite a reduction in dwell times at rail stations and airports, meaning time waiting for trains and planes.
A top investor in Bovis Homes Group is pushing for a GBP5.0 billion merger with a fellow London-listed rival Berkeley Group Holdings, the Sunday Times reported.
Schroders Investment Management, which holds a 6.4% stake in Bovis, making it the second largest shareholder, is understood to have written to Berkeley, a bigger competitor, pushing it to consider an all-share merger, the newspaper said.
However, on Monday, The Telegraph reported that Berkeley sources said the company had dismissed the call, instead choosing to concentrate on growing through partnerships.
Bovis closed up 3.6% and Berkeley up 1.8%.
Braemar Shipping Services ended as the biggest FTSE All-Share faller, down 16%, after it said it expects a big drop in full year underlying operating profit, as underperformance in its Technical division continued to hit group results.
The company, which provides services for the shipping, marine, energy, offshore and insurance industries, said it now expects its underlying operating profit before interest, acquisition costs and tax to be between GBP3.0 million and GBP3.5 million for its financial year to the end of February.
Braemar attributed the weaker underlying performance to its Technical division, which has continued to be hit by weakness in the oil and gas sectors. This has worsened more than Braemar originally anticipated, "impacting the division in several ways not least a marked deterioration in replacement work".
The event of note in the economic calendar on Tuesday is the Supreme Court ruling on whether MPs must give their assent to Brexit, and is expected at 0930 GMT. Elsewhere, the Nikkei manufacturing purchasing managers' index for Japan is at 0030 GMT. There are also flash Markit services, manufacturing and composite PMIs from France at 0800 GMT, Germany at 0830 GMT and the eurozone at 0900 GMT.
UK public sector borrowing is at 0930 GMT, preliminary Markit manufacturing PMI for the US is at 1445 GMT, existing US home sales at 1500 GMT and API weekly crude oil stock at 2130 GMT.
In the UK corporate calendar, there are first quarter results from budget airline easyJet and a Christmas trading statement from electricals retailer Dixons Carphone. Spread betting firm IG Group Holdings and consumer goods and personal care products provider PZ Cussons report interim results.
There are also full-year results from housebuilder Crest Nicholson Holdings, aquaculture biotechnology and food chain sustainability business Benchmark Holdings, asset and energy support services group Lakehouse and software designer Blue Prisms Group.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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