FTSE 100 falls but Wetherspoon boosted by profits rise

In the year to 30 July, profits before exceptional items rose 27.6% to £102.8m with total sales up 4.1% to £1.66bn.

Like-for-like sales – which strip out the impact of pub openings and closures – rose 4%, and are up 6.1% since the start of August.

However, Wetherspoon chairman Tim Martin said the recent pace of sales growth would not continue.

“Comparisons will become more stretching – and sales, which were very strong in the summer holidays, are likely to return to more modest levels,” he said.

Wetherspoon was the biggest riser on the FTSE 250, although the index was down 0.84% or 164.60 points at 19,359.34 by the close.

The benchmark FTSE 100 index ended the week down 84.49 points, or 1.16%, to 7,210.90 on the day, as shares were hit by the continued rise in the value of the pound.

Shares often fall when sterling rises, as the stronger currency cuts the value of companies’ overseas earnings when they are brought back to the UK and converted back into pounds.

Sterling rose above $1.36 at one point to its highest level since the Brexit vote after Bank of England official Gertjan Vlieghe fuelled speculation that UK interest rates could rise in the coming months.

The pound had slipped back slightly to $1.3585, while against the euro it was up by more than 1% at 1.1353 euros.

FTSE 100 sinks as pound jumps on Bank comments

The Monetary Policy Committee (MPC) kept UK rates unchanged at 0.25% after its latest meeting, as expected.

But the pound jumped by more than a cent and a half against the dollar to $1.3391 as markets digested the minutes of the MPC’s meeting.

The FTSE 100 share index fell 84.31 points to 7,295.39.

The FTSE often falls when the pound rises, as the stronger currency cuts the value of companies’ overseas earnings when they are brought back to the UK.

“The prospect of a November rate hike is now a real possibility, in our view,” said Kathleen Brooks, research director at City Index.

As well as surging against the dollar, the pound also jumped against the euro, rising by about one and half euro cents to 1.1269 euros.
Next shares jump

On the stock market, shares in Morrisons were one of the biggest fallers in the FTSE 100, down 5.1%, even though its latest results indicated that the recent revival at the UK’s fourth largest supermarket was continuing.

Like-for-like sales climbed 3% in the six months to 30 July, while underlying profit rose almost 13% to £177m.

But shares in Next jumped 13% after the High Street fashion chain raised its full-year sales and profit outlook thanks to “encouraging” trading in the past three months. The news overshadowed a near 10% drop in half-year profit.

In the FTSE 250, shares in Spire Healthcare sank 18.6% after its half-year profits were hit by the legal settlement to compensate victims of rogue breast surgeon Ian Paterson.

On Wednesday, the company said it had agreed to pay £27.2m into a £37m fund for the victims. The payment contributed to a 75% drop in in Spire’s half-year profits to £8.9m.

Sterling slips against dollar on weak pay data

The pound fell 0.5% against the dollar to $1.3212, as traders bet against the chance of interest rate rise when policymakers meet on Thursday.

However, it rose 1% against the euro to 1.1110 euros.

The FTSE 100 was also down, slipping 21 points, or 0.28%, to 7,379.7. The FTSE 250 fell 0.4% to 19,590.

Analysts said currency traders appeared cautious after the publication of latest unemployment and wages data.

The Bank of England’s Monetary Policy Committee will announce its decision on Thursday, with some economists having predicted that more policy makers could vote for a hike.

However, Ed Monk, of fund manager Fidelity International, said: “Lagging wages makes it more likely the Bank of England will look through rising inflation when it decides on interest rates.

“Prices are rising above target, which creates the case for raising rates, but today’s wage data suggests all is still not right in the economy.”
Shares slip

On the share markets, lender Provident Financial, which made a management change last month, was the main FTSE 100 gainer, rising 1.32%

Miners were hit as the price of copper slipped, with Glencore and Anglo American each falling by more than 1%.

Tesco fell 2.3% after broker Exane cut its rating on the stock to “underperform”.

Outside the top flight, Dunelm was the biggest gainer among the FTSE 250 mid-caps. The retailer’s shares jumped 8% despite posting a fall in profits and warning about “challenging” trading conditions.