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Corporate news puts FTSE under pressure

The FTSE is being dragged lower this morning by a sharp drop in Sainsbury’s and Taylor Wimpey shares, with banks and the mining sector creating an additional drag.

The UK’s competition watchdog scotched Sainsbury’s attempt to merge with Asda, arguing that the merger would be bad for the consumer and lead to higher prices in shops, online and at petrol stations. Sainsbury’s shares plunged over 6% on opening, dragging down other supermarket shares as the watchdog’s decision was seen as a clear signal that further mergers in the relatively narrow UK food retail market will not become a potential way out from the current difficulties facing the UK retail sector. 

Quarterly earnings failed to bring a good outcome for the banking sector and instead Barclays' results triggered a slide across the sector. Although the bank managed to turn last year’s losses into a net profit, Barclays' pretax profit came in somewhat below expectations because of trading weakness at the investment part of the group.

Pound slides against the dollar

Sterling remains under pressure against the dollar as the potential resolution to the Brexit deadlock seems to be heading towards the removal of the Prime Minister. Although according to its own rules the Conservative party can’t vote to oust Mrs May for another nine months, Tory hardliners were disappointed that Brexit did not materialize in March and are asking for a clear timeline for the PM’s departure. The pound is holding steady against the euro but only because of a broad-based weakness in the common currency.
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