European markets slip back amid worries over US debt ceiling

London’s top index moved 0.34%, or 26.62 points, lower to finish at 7,751.08 on Tuesday.

Henry Saker-Clark
Tuesday 16 May 2023 17:20 BST
(Yui Mok/PA)
(Yui Mok/PA) (PA Archive)

London stocks slid on Tuesday afternoon as concerns over the US debt ceiling spilled over into Europe.

The FTSE 100 kept it head above water during morning trading but dropped into the red as Janet Yellen, secretary to the US Treasury, met President Joe Biden and Republican speaker of the House of Representatives Kevin McCarthy.

US traders were shaken after Ms Yellen told banking industry leaders a failure by politicians to raise the debt ceiling would cause an “economic and financial catastrophe” and Mr McCarthy cautioned over slow progress.

London’s top index moved 0.34%, or 26.62 points, lower to finish at 7,751.08.

Michael Hewson, chief market analyst at CMC Markets UK, said: “Markets in Europe tried to move higher in early trade, but turned lower during the afternoon session, with today’s weakness coinciding with comments from Kevin McCarthy that no progress had been made on some of the key issues with respect to the debt ceiling.

“Coming on the back of disappointing Chinese retail sales numbers which are weighing on luxury retail and basic resources, there’s been little reason to buy stocks today, with the FTSE underperforming.”

The downturn in sentiment was similar in France and Germany, with multinational firms performing particularly weakly.

The Dax fell by 0.12% and the Cac 40 decreased by 0.16% at the close as a result.

Meanwhile, sterling slipped after the latest UK labour market figures showed a surprise increase in the unemployment rate to 3.9% over the three months to March.

The pound was down 0.25% to 1.249 US dollars and by 0.18% to 1.149 euros at market close in London.

In company news, Boohoo gave shareholders reason to cheer as bosses said they expect to stem falling sales and improve profitability this year.

Shares jumped by 2.6p to 41.05p on the outlook for next year, despite the company slipping from profit into a £91 million loss.

Shoppers were put off buying more clothes from the retailer as the prices they paid to eat, cook and heat their homes soared.

Shares in Greggs dipped despite the company unveiling a 17% rise in sales in the first three months of the financial year.

The business said that its chicken goujons, wedges and pizzas were selling well. Shares ended down 92p to 2,752p.

The worst performer on the FTSE 100 was Vodafone, which announced it planned to slash 11,000 jobs over the next few years.

New chief executive Margherita Della Valle said the company “must change” to “consistently deliver”.

However investors did not express much confidence in the company’s plan, sending shares crashing by 6.7p to 83.33p during the day.

The price of oil increased after the International Energy Agency lifted its demand forecast, offsetting the impact of weaker-than-predicted economic data from China.

Brent crude oil increased by 0.5% to 73.87 US dollars per barrel.

The biggest risers on the FTSE 100 were DCC, up 131p to 4,785p, Land Securities, up 14.6p to 634.6p, Rolls-Royce, up 3.05p to 148.15p, Centrica, up 2.1p to 119.65p, and Compass Group, up 33p to 2,200p.

The biggest fallers were Vodafone, down 6.7p to 83.33p, Ocado, down 16.8p to 414.2p, Kingfisher, down 7.6p to 242.3p, JD Sports, down 4.4p to 170.25p, and Admiral Group, down 54.0p to 2,193p.

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