Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

FTSE dips on US slump despite manufacturing boost

FTSE dips on US slump despite manufacturing boost

The FTSE dipped again as a fresh sell-off in the US and escalating political tensions between Russia and Ukraine outweighed strong UK manufacturing and industrial production data.

The FTSE 100 shed 34 points or 0.5% to 6,588 points in choppy trading, while the pound surged to $1.6712 against the dollar after the Office for National Statistics released much stronger figures than the market had expected.

Industrial production in February rose 0.9% on January levels, ahead of the 0.3% jump the market had been expecting, and 2.7% up on the same period last year, ahead of the 2.2% that had been anticipated.

Manufacturing output figures were also strong, up 1% on January, versus a 0.3% expected rise, and 3.8% year-on-year, compared to the 3.1% that had been forecast.

Howard Archer, chief UK and European economist at HIS Global Insight, labelled the data ‘a very welcome and encouraging upward surprise’.

‘While decent manufacturing growth had been expected in February, it came in way above expectations. Buoyant manufacturing output in February lifts first quarter growth prospects and supports hopes that manufacturing can make a sustained healthy contribution to UK growth,’ he said.

Alex Edwards, head of the corporate desk at UKForex, added the surprise was likely to lend medium-term support for the pound, which could push towards $1.68. ‘These are very impressive numbers and will serve to boost expectations for an early rate hike by the Bank of England, perhaps even as early as January or February next year, and certainly before the UK general election in May 2015.’

The FTSE had been trading under the weight of another day of losses in US markets, with tech stocks hammered as investors took another look at lofty valuations.

The UK blue-chip index opened lower, but losses were more modest than those on the S&P 500, which erased its yearly gains with the biggest three-day drop in two months, suggesting UK stocks haven’t been pushed to the elevated levels of their US counterparts.

‘The surprise is that it’s taken investors so long to catch on to the fact that a lot of high growth stocks are trading on stupidly high valuations as companies like Twitter, Facebook, Pandora and Zynga continue to get pummelled,’ said Michael Hewson, analyst at CMC Markets UK.

Escalating tensions between Russia and Ukraine have also taken their toll on sentiment, after pro-Russian demonstrators seized government buildings in three Ukrainian cities and rebels declared independence in the Donetsk region, calling for a referendum in May.

‘Markets again are on edge as this fresh escalation of the crisis could see further turbulence in financial markets and more worrying, this crisis is now becoming a protracted affair which stands to further dent the West’s relations with Russia to the point where the damage could be irreparable for some time,’ said Ishaq Siddiqi, analyst at ETX Capital.

Sports Direct (SPD.L) was the biggest faller, shedding 61p, or 6.8%, to 832.5p after founder Mike Ashley sold around £200 million of his shares to Goldman Sachs. The disposal of 25 million shares represents around 7% of Ashley’s stake, taking his holding to around 55%.

Associated British Foods (ABF.L) slid 88p, or 3.2% lower at 265.5p, with some traders attributing the drop to a profit warning by German sugar producer Suedzucker, according to Reuters.

Insurers endured further losses after yesterday’s sell-off, as their recovery following the damage inflicted by Budget changes and a regulatory review of pensions sales was dealt a further setback. Resolution (RSL.L) was the worst hit, dropping 12.8p, or 4.4%, to 275p. Prudential (PRU.L) shed 25p, or 1.9%, to £12.93, Standard Life (SL.L) fell 5.4p, or 1.4%, to 387.4p, Legal & General (LGEN.L) dropped 3.5p, or 1.6%, to 212.9p and Aviva (AV.L) traded 5.6p, or 1.1% lower, at 485.5p.

Miners bucked the trend of losses, with Rio Tinto (RIO.L) and Fresnillo (FRES.L) up 1% and 0.7% at £33.64 and 900p respectively. Randgold (RRS.L) rose 24p, or 0.5%, to £46.99 while Antofagasta (ANTO.L) added 3p, or 0.4%, to trade at 854.5p.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Trump protests: Psigma's Becket reports from the US

Trump protests: Psigma's Becket reports from the US

Psigma's chief investment officer Tom Becket encounters a little more than he bargained for in a recent trip to the US.

Play Neil Woodford uncut: the full video

Neil Woodford uncut: the full video

We bring you the full video from Woodford's recent visit to Citywire HQ.

Play What the Next Generation is bringing to the wealth world

What the Next Generation is bringing to the wealth world

To mark Citywire's inaugural Next Generation Forum we ask tomorrow's talent what influence they think they can have on the wealth industry.

Read More
Your Business: Cover Star Club

Profile: Brewin's Newcastle boss on the increasingly competitive NE

Profile: Brewin's Newcastle boss on the increasingly competitive NE

William Baker Baker, Brewin Dolphin’s Newcastle office head, is a fixture in the firm, having been with them for 30 years.

Wealth Manager on Twitter
Retirement income challenge: we need round pegs for round holes
  • Old Mutual Wealth hires adviser distribution specialist
  • Vodafone leads FTSE higher on European turnaround
  • Treasury pushes 'City visa' for financial high fliers
  • Ex-Coutts directors join forces at fledgling wealth boutique
  • Cable becomes new Lib Dem leader
  • Charles Stanley strikes pay deal with Manchester team
  • Wealth boutique hires ex-Close specialist investment head
  • Friday Papers: May pledges no Brexit ‘cliff edge’ for business
  • Overnight Markets: Wall Street flat as Home Depot pressures Dow
  • FTSE rallies as dovish Draghi can't stop euro surge
  • Boutique plans to unitise managed portfolio
  • ‘Brain disorder research’ scheme guilty of tax avoidance
  • Neuberger Berman hires China expert
  • FCA tells property funds to up liquidity management
  • Schroders veteran Tosato among trio of Pictet board hires
  • Wealth Manager's 25 most popular fund managers in H1 2
  • FSCS opens compensation door at failed wealth firm
  • S&W revenue jumps as wealth arm gains momentum
  • Walker Crips poaches Tilney London director 1
  • Robo onslaught continues with two new launches 2
  • IoD warns May businesses ‘still in the dark’ about Brexit
  • Read More
    -->