After a bumper session for US stocks overnight, UK investors may be disappointed with the soggy session for the FTSE 100, which was trading down heavily in afternoon trade.
UK-specific macro news was to blame, and concerns about the upcoming budget have started to take hold in the market.
“The FTSE 100 started off on the back foot on Friday despite record highs in the US overnight. The index was dragged lower by a surge in the pound which affects the relative value of constituents’ overseas earnings,” said AJ Bell investment director Russ Mould.
“Chancellor Rachel Reeves’ regular warnings of ‘difficult decisions’ in the Budget will be carrying increasing weight after new figures showed public debt as a share of the economy had reached 100% for the first time since the 1960s.”
UK sentiment was hit by mixed economic data related to the consumer. Retail sales rose 1% in August, but Gfk Consumer Confidence fell on worries about the consequences of taxes and disposable spending.
The FTSE 100 was down 0.8% at the time of writing. Although the S&P 500 surged to record highs overnight, US futures were on the back foot after a warning from FedEx about their outlook.
“Often seen as a good indicator of the health of the wider economy thanks to the breadth of its exposure across areas like transportation, logistics and e-commerce, FedEx’s big warning overnight might have wider resonance. It was severe enough to wipe $8 billion off its market value,” Russ Mould said.
“FedEx’s shares were down by double digits in pre-market trading as the company slashed its guidance after missing first-quarter forecasts by a notable degree. The company’s core Federal Express business is really in the doldrums.”
In London, the top risers and fallers were almost a mirror image of yesterday’s leaderboard. Utilities companies were among the very few gainers on Friday, and cyclical sectors were heavily in the red.
National Grid was the top riser with a 1% gain, and United Utilities wasn’t far behind.
All the optimism evident in retailers yesterday was obliterated after this morning’s economic data. Frasers Group and Kingfisher were heavily hit. Even B&M Value was down more than 2%.
Burberry, set to be ejected from the index on Monday, was the top faller with a 4% loss.