Election anxiety caused an eighth day of declines on the S&P 500 and it has spread to Europe on Friday where stocks are lower across the board.
The FTSE 100 dropped to fresh six-week lows as the British pound maintained its strength amid uncertainty over the timing of Britain’s exit from the European Union. Basic Materials, the highest beta sector of the index led the declines.
IAG shares dipped after the owner of BA, Aer Lingus and Iberia downgraded its 2016 profit forecast for the second time since the EU referendum vote. IAG reports in euros so it doesn’t feel the benefit of a weaker pound via the translation of its Aer Lingus and Iberia sales. It is on the wrong end of the Sterling drop, forecasting lower BA passenger numbers from the weaker pound hitting UK tourism abroad. The timing of the Aer Lingus acquisition couldn’t have been much worse as the falling pound adds to the threat of terror attacks in Europe on passenger numbers.
A slide in the shares Commerzbank after the German lender swung to a third quarter loss hurt British banking shares including RBS which fell 2%
The only riser of note on the main index is Paddy Power Betfair after it raised its profit forecast on the back of higher than expected revenues. The combination of the Paddy Power and Betfair gambling assets is now starting to bear fruit. An increase in sports stakes during Euro 2016 football and the benefits of a lower pound on foreign earnings have added some sugar on top.
Stocks in the US look set for a lower open with investors fretting over the election ahead of the October non-farm payrolls report that could act to confirm a move to higher interest rates in December.
There is some selling-exhaustion in US equities so the unemployment figures could help form a short-term base before the election next week. The market is assigning an 80% chance the Fed will hike rates in December so it would take a huge labour market downturn for a single unemployment report to change the course of monetary policy.
USA pre-opening levels
S&P 500: 1 point lower at 2,087
Dow Jones: 21 points lower at 17,909
Nasdaq 100: 8 points lower at 4,671
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