FTSE 100 watch: Footsie fails to gain momentum

on Jun 11, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Wednesday, June 11: Britain’s blue-chip index has lost ground today, following quiet sessions in the US and Asia, and after the World Bank cut its global growth outlook.

Shares in British Airways parent International Consolidated Airlines Group (LON:IAG) have posted a hefty fall today dragged down by rival Lufthansa’s (ETR:LHA) profit warning.
**World Bank downgrade pressures Footsie**
As of 12:47 BST, the FTSE 100 index had lost 45.23 points to be 0.66 percent lower at 6,828.32. The Footsie has been struggling to gain momentum following lacklustre leads from both the US and Asia.

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The World Bank yesterday cut its global growth outlook, saying that tensions in Ukraine and bad weather in the US had impacted economic expansion in the first half of the current year.
“The World Bank downgrade of global growth, due to weaker outlook from the US and BRICs, is disappointing,” Lena Komileva, chief economist at G Plus Economics Ltd, told Bloomberg. “It raises questions over whether the low interest-rate environment creates enough real income growth in real economies to justify the degree of risk-taking taking place in financial markets.”

Reuters quoted analysts as saying that investors were losing faith in the idea that the FTSE 100, which is just 1.3 percent off its December 1999 record, would climb to new highs in the near term.
“We think the FTSE 100 feels quite toppy up here – we are bullish in the medium term but at the moment, with summer approaching and volumes continuing to be light, we feel as if there could be some profit-taking around these levels,” Mark Ward, Sanlam Securities’ head of trading, told Reuters.

**FTSE 100 winners and losers**
Shares in IAG have been under pressure today after Lufthansa warned that it would not reach its profit targets for the next two years.
David Battersby, investment manager at Redmayne-Bentley, told Reuters that airlines were “going to face a tough time as competition in the sector is increasing”.
“Lufthansa’s profit warning is a reminder that the situation is not going to improve in the near future and their margins might come under further pressure,” he added.

IAG’s share price has lost 4.53 percent to 393.90p so far today. Lufthansa’s profit warning has also weighed on easyJet (LON:EZJ) whose shares are currently trading 3.89 percent lower at 1,531.00p.

Rolls-Royce Holding Plc (LON:RR) has also slipped into the red after saying that its order book would shrink by £2.6 billion following the Emirates’ cancellation of an order for Airbus Group NV’s (EPA:AIR) A350 aircraft powered by the FTSE 100 company’s engines. (Rolls-Royce share price: Order book hit as Emirates cancel Airbus order) Rolls-Royce’s share price currently stands 2.33 percent lower at 1,050.90p.
On a brighter note, shares in J Sainsbury (LON:SBRY) have advanced today after the supermarket’s quarterly like-for-like (LFL) sales drop was not as bad as analysts had feared. (Sainsbury’s share price: Supermarket chain reports Q1 sales fall)
“Whilst negative LFL is never good news there are signs that Sainsbury’s is re-establishing its lead over its quoted peers,” The Telegraph quoted Oriel Securities analysts as saying. As of 13:05 BST, Sainsbury’s share price had climbed two percent to 336.40p.
Shares in National Grid (LON:NG) are also trading in positive territory after HSBC upgraded its rating on the utility to ‘overweight’.
The Telegraph quoted the broker as explaining that National Grid was “delivering value creation and regulatory outperformance in its regulated UK transmission and distribution businesses”. National Grid’s share price has gained 0.24 percent to 833.00p.
**The FTSE 100 was 0.56 percent down at 6,834.90p as of 13:31 BST on June 11, 2014.**


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