FTSE posts worst quarter since 2011

Melrose’s successful bid for GKN helped the UK’s top share index finish the month on a positive note on Thursday and gave a mildly upbeat end to the FTSE 100’s worst quarter since 2011.

The blue-chip FTSE 100 (FTSE) was up 0.17 percent on the day at 7,056.61 points as traders prepared for a market holiday.

GKN (L:GKN) surged about 9 percent in late trading after Melrose Industries (L:MRON) announced it had narrowly clinched an 8 billion pound ($11 billion) takeover of the British engineering firm after a three-month battle for control.

The FTSE 100 ended the first three months of 2018 with a loss of 8.2 percent, its worst quarter since 2011 and making it the weakest-performing major European market so far this year. It was closely followed by Germany’s exporter-heavy DAX (GDAXI), which lost 6.3 percent over the same period.

British stocks had a bumpy first-quarter ride, marred by a spate of profit warnings and trouble in the retail and outsourcing sectors as Brexit uncertainty hangs over equities.

“There’s been negative sentiment towards UK equities for a significant period now, stemming all the way back to the EU referendum,” Laith Khalaf, senior analyst atHargreaves Lansdown (LON:HRGV), said.

“What we’ve had in 2018 is more of a global phenomenon, so we’ve had a bit of volatility returning to markets,” said Khalaf, adding that this is a more normal state of affairs for markets.

On the domestic front, high street stalwarts such as Debenhams (L:DEB), Mothercare (L:MTC) and Moss Bros (L:MOSB) have tumbled after profit warnings, examples of retailers struggling in a digital age.

The collapse of outsourcer Carillion (L:CLLN) has further dented confidence in UK domestic stocks, while peer Capita (L:CPI) has slashed profit forecasts and made plans to raise cash to avoid a similar fate.

The outlook is uncertain not just for UK domestics, however. A resurgent pound has reduced the forex-related boost enjoyed by big, international FTSE companies that benefited from an accounting boost following sterling’s slump in the immediate aftermath of the June 2016 Brexit vote.

A spike in volatility in February rattled global stock markets, which have also been hit by concerns over the prospect of a global trade war and a tumble in the U.S. tech sector.

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