FTSE falls as bonds sell-off, Johnson Matthey results weigh

Reuters London | Updated on January 24, 2018 Published on June 04, 2015

Britain’s top share index fell on Thursday, led lower by speciality chemicals maker Johnson Matthey after results, amid a broad sell-off in equities as bond yields ticked higher.

Johnson Matthey, the world’s largest maker of auto catalysts, fell 3.4 per cent, among the top FTSE 100 fallers.

The company posted a small rise in annual profit helped by higher sales of catalysts in Europe.

But some analysts are concerned about its debt levels while others said they were trimming their forecasts in view of the fact that the company is disposing of its research chemicals unit and booking higher pension service charges, while its metals unit has been weak.

Britain’s FTSE 100 was down 90.77 points or 1.3 per cent at 6,859.69 by 0813 GMT, and is now 3.8 per cent off of an all-time high hit in late April.

Many of the top fallers were “ex-dividend’’, with National Grid, WPP and AB Foods trading without entitlement to their latest dividend payout, trimming 5.69 points off the index.

Utilities were also under pressure from a sell-off in bonds, which reduces the relative appeal of high-yielding stocks and raises debt costs for indebted companies.

Commodity stocks were also weaker, even as copper held at the $6,000 level, with gold pinned near a three year low and further downside to metal prices seen.

UBS trimmed its full year target for the FTSE 100 to 7,200 from 7,300, saying weakness in commodity stocks would hinder performance, even as it raised its target price for the STOXX Europe 600.

“We see FTSE 100 earnings falling 8 per cent this year (in the main, due to the fall in commodity prices), but rebounding 10 percent in 2016,’’ analysts at UBS said in a note.

The sell-off on the FTSE was broad based, with all sectors in negative territory.

One of few gainers, budget airline easyJet rose 0.8 per cent, after reporting traffic figures that traders said were solid.

“Shares in easyJet are outperforming blue-chip rivals after monthly traffic statistics pointed to monthly passenger growth... coupled with load factors up 1 to 2 percentage points to exceed 91 per cent,’’ said Mike van Dulken, head of research at Accendo Markets.

“May’s passenger growth represents a bounce from a slower April and brings the budget airline’s growth back to the levels last seen in Feb/March.’’

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Published on June 04, 2015
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