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 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.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.