London close: Stocks weighed down by Fedspeak and jump in pound
London stocks fell on Thursday, after two top US central bank officials poured cold water on expectations for further policy easing.
Speaking ahead of the US Federal Reserve's Jackson Hole central banking symposium, the heads of the Kansas City and Philadelphia Fed banks, Esther George and Patrick Harker, respectively, said they did not see a need for further rate cuts at present; indeed, the former had voted against a reduction when policymakers last met at the end of July.
Yet heading into a key speech by Fed chairman Jerome Powell the next day, markets had priced-in at least three more 25 basis point cuts by April 2020.
Harker did not wield a vote on the Federal Open Market Committee but - by his own admission - in July had offered his "tepid support".
The FTSE 100 was down 1.05% at 7,128.18, with ex-dividend stocks also proving a drag as is often the case on a Thursday.
Also weighing on the pound, German Chancellor Angela Merkel and French President Emmanuel Macron appeared to leave the door open - if only just a small crack - to trying to find a practical solution to the Irish Backstop question over the next month.
"The fact that Johnson needs all 27 EU nations onboard means that very little has changed in reality," said IG's Josh Mahony.
"One notable area of progress comes from the fact that talks are even taking place, with Macron’s promise to continue exchanges throughout September pointing towards potential developments in the month ahead."
In currency markets, sterling was 1.04% firmer against the US dollar at 1.22541 and up by a similar amount versus the euro at 1.1055.
On the data front, figures from the Confederation of British Industry showed retail sales in the UK fell at their fastest rate since the financial crisis in the year to August.
The balance of retailers reporting year-on-year growth in sales volumes tumbled to -49 this month from -16 in July, massively undershooting expectations for an improvement to -11. This was the fastest drop since December 2008 and the second weakest reading since records began in 1983.
CBI deputy chief economist Anna Leach said: "Sentiment is crumbling among retailers, and unexpectedly weak sales have led to a large overhang of stocks. With investment intentions for the year ahead and employment down, retailers expect a chilly few months ahead.
"It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon. But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy. Businesses will be looking for government action at the Budget in the coming months to alleviate some of these pressures."
In equity markets, ex-dividends weighed, with Prudential, Schroders, Berkeley, CLS Holdings, Carnival, Croda, Hikma Pharmaceuticals, Imperial Brands, Reckitt Benckiser and Stagecoach all in the frame.
Elsewhere, Chilean copper miner Antofagasta lost ground as it posted a rise in first-half profit but warned that the outlook for the copper market remains uncertain amid the ongoing Sino-US trade spat.
Online supermarket Ocado was in the red as it said a "small fire" reported at its customer fulfilment centre in Erith, southeast London, on Wednesday evening, had been extinguished. Back in February, the company's warehouse in Andover, Hampshire, suffered a huge fire that was later found to have been sparked by an electrical fault that set a robot on fire.
John Laing was under the cosh as it posted a slump in half-year pre-tax profit and highlighted challenges in the renewable energy market.
On the upside, UAE-based healthcare provider NMC Health surged to the top of the FTSE 100 following a Reuters report that two groups, including one backed by China's Fosun, have made competing offers to buy a 40% stake in the company worth up to $1.9bn. The group also released its half-year results, which showed an increase in profit, and announced a share buyback.
Premier Oil was a high riser as it launched a formal process to sell its stake in an undeveloped project off the coast of Mexico and posted a 24% increase in first-half profit.
FTSE 100 - Risers
NMC Health (NMC) 2,296.00p 18.60%
ITV (ITV) 114.65p 3.66%
Marks & Spencer Group (MKS) 191.75p 2.51%
Persimmon (PSN) 1,902.50p 2.34%
Sainsbury (J) (SBRY) 199.70p 1.99%
TUI AG Reg Shs (DI) (TUI) 803.40p 1.83%
Standard Life Aberdeen (SLA) 243.80p 1.67%
Kingfisher (KGF) 193.90p 1.62%
British Land Company (BLND) 496.00p 1.16%
Aviva (AV.) 362.30p 1.06%
FTSE 100 - Fallers
Burberry Group (BRBY) 2,122.00p -3.72%
Scottish Mortgage Inv Trust (SMT) 521.00p -3.43%
Ocado Group (OCDO) 1,204.50p -3.06%
Aveva Group (AVV) 3,826.00p -2.99%
Rolls-Royce Holdings (RR.) 761.40p -2.91%
BAE Systems (BA.) 549.80p -2.69%
Imperial Brands (IMB) 2,048.50p -2.59%
CRH (CRH) 2,603.00p -2.51%
Anglo American (AAL) 1,680.60p -2.46%
Prudential (PRU) 1,382.50p -2.40%
FTSE 250 - Risers
Premier Oil (PMO) 78.98p 9.30%
Rank Group (RNK) 166.20p 9.20%
TI Fluid Systems (TIFS) 177.00p 8.72%
Clarkson (CKN) 2,525.00p 5.65%
Hammerson (HMSO) 219.00p 4.78%
Contour Global (GLO) 184.60p 4.77%
NewRiver REIT (NRR) 161.00p 4.68%
Sirius Minerals (SXX) 9.73p 4.62%
Woodford Patient Capital Trust (WPCT) 43.90p 4.52%
Royal Mail (RMG) 198.75p 4.00%
FTSE 250 - Fallers
Ferrexpo (FXPO) 202.60p -6.12%
John Laing Group (JLG) 359.20p -5.67%
Tritax Big Box Reit (BBOX) 137.90p -4.90%
Intu Properties (INTU) 32.32p -4.58%
Plus500 Ltd (DI) (PLUS) 711.00p -4.49%
Ted Baker (TED) 931.00p -3.02%
Network International Holdings (NETW) 587.00p -2.98%
PureTech Health (PRTC) 276.00p -2.82%
JPMorgan Indian Investment Trust (JII) 698.20p -2.76%
Computacenter (CCC) 1,399.00p -2.71%