U.K. stocks ended a volatile trading session slightly lower, as so-called bond proxies fell after hawkish comments from the new U.S. Federal Reserve boss sent bond yields rallying. In the rising camp, Sky PLC shares soared after Comcast Corp. offered roughly $30 billion to buy the British broadcaster. The FTSE 100 index fell 0.1% to close at 7,282.45, pulling back from its highest close since Feb. 16 reached on Monday. The pound fetched $1.3899, down from $1.3966 late Monday in New York. Sky PLC was front of mind for the U.K. market, after Comcast Corp made a tentative £22.1 billion ($30.9 billion) offer for the British broadcaster. The U.S. company’s bid represents a 16% premium on 21st Century Fox Inc.’s buyout offer, which is linked to a Walt Disney Co. deal for Fox assets. Sky’s shares rose 21%, the biggest gain since December 2016. More broadly,stocks in London turned negative as new Fed boss Jerome Powell in his maiden testimony on Capitol Hill said the economic outlook has strengthening since the December. The comment was seen as hawkish and could indicate the central bank may raise interest rates four times in 2018, instead of three, as the central bank previously has signaled.
That pushed up yields in the U.S. and Europe, consequently driving investors out of bond proxies. Bond proxies are stocks such as consumer staples and utilities that offer predictable returns, much like the bond market. When yields rise, investors looking for a stable income might as well move into bonds, rather than the proxy stocks. The yield on 10-year U.S. Treasury notes rose 5 basis points to 2.912%.Among those equities in London on Tuesday, shares of Unilever dropped 2.1%, British American Tobacco fell 1.5% and Reckitt Benckiser Group lost 2.3%. Equity markets have recently been swayed by concerns that a faster pace of U.S. inflation could prompt the Fed to ramp up the pace of interest rate rises. Global investors focus on U.S. yields and Fed-rate policy, as higher U.S. interest rates tend to drive financial markets globally and as many companies do business in the U.S. Shares of gained 1% after the news of Comcast’s broadcaster ITV offer for Sky. Persimmon PLC climbed 4.7%. The home builder posted a 25% rise in 2017
pretaxprofit after selling more houses at higher prices. The company named Nigel Mills, a senior independent director, as acting chairman. Fresnillofell 4.4% even after the silver and gold miner said net profit in 2017 rose 31% and forecast further increases to silver production in 2018.
DOWNLOAD FULL DOCUMENT