July 31, 2019 / 7:37 AM / 4 months ago

FTSE 100 suffers worst day in two months on poor earnings reports

(Reuters) - London’s FTSE 100 slipped on Wednesday from this week’s 11-month high, as wealth manager St. James’s Place, homebuilder Taylor Wimpey and mortgage lender Lloyds fell on the back of results, overshadowing an upbeat forecast from clothing retailer Next.

FILE PHOTO: Signage is seen outside the entrance of the London Stock Exchange in London, Britain. Aug 23, 2018. REUTERS/Peter Nicholls

The main index .FTSE lost 0.8%, its biggest one-day drop in two months, as exporter stocks also weighed after the pound recovered from a 28-month low.

The mid-cap FTSE 250 .FTMC fell 0.6% with losses led by mall operator Intu (INTUP.L) and carmaker Aston Martin (AML.L) following results.

The indexes underperformed their European and U.S. counterparts, which were supported by strong earnings readings from lenders BNP Paribas (BNPP.PA) and Credit Suisse (CSGN.S), as well as tech giant Apple (AAPL.O), ahead of a much-awaited U.S. Federal Reserve interest rate decision.

Wealth manager St. James’s Place (SJP.L) fell 5.6% on its worst day in more than three years after it missed forecasts for operating profit, as weaker client sentiment weighed on inflows of new money in the first half of the year.

Housebuilders .FTNMX3720, already under pressure due to heightened worries about a no-deal Brexit under new Prime Minister Boris Johnson, skidded nearly 2% after Taylor Wimpey (TW.L) forecast a fall in annual margins. Taylor Wimpey shares slumped 8.4%.

Lloyds Banking Group (LLOY.L), Britain’s biggest mortgage lender, slipped 3.1% after a further charge to meet claims for mis-sold insurance to consumers hit its earnings.

“The picture for Q2 was always likely to be much more tricky given that the UK economy slowed quite significantly during April and May, in the wake of the extension of the Brexit deadline at the end of March,” CMC Markets analyst Michael Hewson wrote.

Despite the session’s losses, the blue-chip index is set to post its second straight month of gains, mainly due to hopes among investors that the U.S. Federal Reserve and other central banks will cut interest rates.

“We also have to wonder just how much the Fed can deliver for the market now that so much is already expected of it,” Markets.com analyst Neil Wilson said.

The Fed is widely expected to pull the trigger on a 25 basis points rate cut later on Wednesday with future sentiment heavily relying on whether the central bank of the world’s biggest economy hints at any future policy easing.

The FTSE 100’s losses were kept in check by retailer Next (NXT.L), which jumped 8% to a more than one-year high after it raised its full-year sales and profit targets.

Among midcaps, Intu, whose shares have plummeted this year as it scrapped its dividend and changed management in the wake of failed takeover bids, lost nearly one third of its value after reporting a fall in first-half net rental income. The stock closed at a record low.

Aston Martin, whose shares debuted on the London markets last year, plunged 12.3% after posting a half-year loss.

Reporting by Shashwat Awasthi in Bengaluru; Editing by Anil D'Silva and Edmund Blair

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