2-2-18 5:44 AM EST | Email Article

By Sara Sjolin, MarketWatch

Capita rebounds slightly, but still set for 55% weekly plunge

U.K.'s benchmark stock index dropped for a fourth straight day on Friday, extending its likely weekly loss, after heavyweights AstraZeneca and BT slumped on the back of disappointing earnings reports.

What are markets doing?

The FTSE 100 index shed 0.3% to reach 7,469.11. The blue-chip benchmark is on track for a 2.6% weekly loss, which would be its biggest since August.

The pound fell to $1.4212 from $1.4261 late Thursday in New York.

What is driving the market?

It's been a tough week for stocks globally as concerns over a potential rapid rise in inflation sent bond yields rallying. U.S. benchmark Treasury yields rose to their highest level since April 2014, while European yields also climbed to multiyear highs.

The rate on 10-year U.K. gilts jumped 6 basis points on Friday to 1.578%, a level not seen since May 2016, according to Tradeweb. Higher returns on debt securities typically dull investors' appetite for stocks and other assets perceived as risky.

The FTSE 100 was also weighed down by losses from some of the London index's biggest companies. AstraZeneca PLC (AZN.LN) (AZN.LN) gave up 1.3% after the U.K. drugmaker said pretax profit fell 81% in the fourth quarter (http://www.marketwatch.com/story/astrazeneca-pretax-profit-slumps-on-higher-costs-2018-02-02), citing increased costs.

Shares of BT Group PLC (BT.A.LN) dropped 4.6%. The British telecoms company reported earnings that missed forecasts after revenue fell in the third fiscal quarter (http://www.marketwatch.com/story/bt-earnings-miss-expectations-as-revenue-falls-2018-02-02).

The closely watched U.S. monthly jobs report could also drive market action later in Friday's session. The nonfarm payrolls report is due at 1:30 p.m. London time, or 8:30 a.m. Eastern Time.

See:U.S. jobs report likely to show meaty gain in hiring, low unemployment (http://www.marketwatch.com/story/january-jobs-bonanza-hiring-likely-rebounded-in-early-2018-2018-02-01)

What are strategists saying?

"The FTSE has kicked off the final trading session of the week on the back foot. The index struggled after a mixed finish in the U.S. and a choppy session in Asia," said Fiona Cincotta, senior market analyst at City Index, in a note.

"Looking ahead to the U.S., the nonfarm payroll report will be the central focus. Analysts are expecting a further 180,000 jobs to have been added in January, up from 148,000 in December. However, given that unemployment is forecast to remain at the historically low level of 4.1%, investors are more likely to once again focus on the average earnings growth," she added.

Which other stocks are in focus?

Shares of home builders moved lower after data on the U.K. construction sector showed activity slowing. Markit's purchasing managers' index for the sector dropped to a four-month low of 50.2 in January, down from 52.2 in December. Economists had expected a reading of 52, according to FactSet estimates. A level above 50 signals expansion and while below 50 means contraction.

Shares of Barratt Developments PLC (BDEV.LN) gave up 1.5%, Taylor Wimpey PLC (TW.LN) fell 1.4%, and Persimmon PLC (PSN.LN) lost 0.8%.

Outside the FTSE 100, shares of Capita PLC (CPI.LN) rose 3.4%, slightly trimming the likely weekly loss to 55%. The contractor's shares on Wednesday plunged 48% after Capita issued a profit warning (http://www.marketwatch.com/story/capita-suspends-final-dividend-plans-share-issue-2018-01-31-3485857), suspended dividends and announced plans to issue more shares.

 

(END) Dow Jones Newswires

February 02, 2018 05:44 ET (10:44 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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