Thursday 24 May 2018

Sterling tanks as manufacturing output hits 17-month low

The poor reading in part reflected a weakening in the pace of expansion of new work from abroad.

Pound sterling strength
Pound sterling strength

By Helen Cahill, Press Association City Reporter

Sterling has tanked as traders were disappointed by data showing the UK’s manufacturing output hit a 17-month low in April.

The pound was trading down by as much as 1.17% against the US dollar at 1.361 after the Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) showed a reading of 53.9, lower than the 54.9 recorded in March, and lower than the 54.8 figure economists were expecting.

Against the euro, the pound was down 0.51% at 1.133.

David Madden, market analyst at CMC Markets, said: “This report fits in with a wider cooling of economic indicators from the UK.

“The pound has dropped to its lowest level versus the US dollar in over three months, and if the bearish moves continue it could target 1.350.”

Sterling’s decline’s supported the FTSE 100, which climbed during the day’s trading, closing the day 11.06 points higher at 7,520.4. France’s Cac was 0.68%, while the Dax in Germany climbed 0.25%.

Monday’s announcement from the Organisation of the Petroleum Exporting Countries (OPEC) that output had fallen to a one-year low continued to encourage profit-taking in oil markets, sending Brent crude’s price down 1.22% to 73.650 US dollars per barrel.

In UK stocks, Just Eat jumped to the top of the FTSE 100 after the firm said revenues rose 49% to £177.4 million in the three months to March 31. Just Eat said the performance was helped by its acquisition of Hungryhouse and increased orders over Easter.

UK orders increased by 24% to 29.7 million, with 1.4 million of those coming from Hungryhouse. Investors gobbled up shares, sending the firm’s share price up 4.08% or 31.6p by the market close to 805.4p.

Oil giant BP reported its best quarterly result for three years after notching up a 71% surge in profits thanks to surging oil prices.

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BP announced strong results on Tuesday (PA)

Shares in the firm briefly hit their highest level since 2010 as the firm said underlying replacement cost profits jumped to a better-than-expected 2.6 billion US dollars (£1.9 billion) for the first three months of 2018, up from 1.5 billion US dollars (£1.1 billion) a year earlier. By the end of the session, shares were up 9.7p to 547.7p.

Aviva announced a £600 million shares buy-back as part of efforts to deploy £2 billion of excess capital. Shares climbed 7.2p by the end of trading to 536.2p.

Alongside the buy-back, the group said £900 million will be spent on debt reduction and £500 million on bolt-on acquisitions, confirming figures released in March.

Virgin Money’s shares soared as it hailed a “strong” performance at the start of the year. The company it posted rising mortgage lending and better-than-expected growth in savings deposits, sending its shares up 18p to 296.7p.

The challenger bank said it delivered £200 million of net mortgage lending – loans less redemptions – in a “competitive” market during the first three months of the year.

The company behind online property portal Zoopla said it sold the Australian division of Hometrack for £71 million.

ZPG, which acquired the property valuation firm in January last year for £120 million, said on Tuesday that it will offload the antipodean unit to local operator REA Group. Shares climbed 3p to 362p.

The biggest risers on the FTSE 100 were Just Eat, up 31.6p to 805.4p, Bunzl up 68.0p to 2,179p, Severn Trent up 49p to 1,989p and AstraZeneca up 110p to 5,213p.

The biggest fallers on the FTSE 100 were British American Tobacco down 99p to 3,900p, Kingfisher down 7.5p to 296.3p, Fresnillo down 30p to 1,245p and BT Group down 4.45p to 245p.

Press Association

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