The U.K.’s benchmark stock index declined on Friday, yanked lower by drops for Sage Group PLC and Rolls-Royce Holdings PLC after the companies spooked investors with downbeat news.
Most stocks in London, however, were trading in positive territory. Investors were watching for developments in the U.S.-China trade standoff and in the tensions around possible U.S. military strikes against Syria.
What are markets doing?
The FTSE 100 index UKX, -0.12% slipped 0.1% to 7,250.56, trimming its indicated weekly rise to 0.9%.
The pound GBPUSD, +0.4006% rose to $1.4257 from $1.4227 late Thursday in New York.
What is driving the market?
The FTSE 100 was driven lower primarily by a 16% tumble in Sage shares SGE, -13.51% . The accountancy software company cut its full-year forecast for revenue growth after a disappointing first half to fiscal 2018. If Sage shares close more than 14% lower, it’ll be their worst day since 1993.
Shares of Rolls-Royce RR., -2.38% RYCEY, +0.00% also weighed on the London index. They dropped 1.8% after the after aircraft engine maker said it needs to carry out additional inspections on some versions of its Trent 1000 engines, leading to higher costs than expected in 2018.
Without the declines in those stocks, the FTSE 100 would likely have traded in positive territory, alongside the rest of Europe’s equity markets.
Traders were cautiously optimistic after U.S. Defense Secretary Jim Mattis struck a note of caution over the potential for a strike on Syria, hinting the U.S. and its allies would need to take care not to spark a broader conflict with the country’s two biggest backers, Iran and Russia. His comments came after U.S. President Donald Trump also toned down his rhetoric, suggesting in a tweet Thursday that a strike might not be as imminent as thought.
Moreover, Trump suggested the U.S. could rejoin the Trans-Pacific Partnership, which also helped ease the market jitters, analysts said.
What are analysts saying?
“It would be naive in the extreme to suggest that the events of the last 24 hours means that the threat of an escalation of geopolitical factors has passed,” said Michael Hewson, chief market analyst at CMC Markets UK.
“But for now, while the background noise is driving the short-term direction as markets gyrate higher and lower, recent price action might suggest that we could look to head towards the upper end of the trading range in the coming days, particularly if U.S. earnings come in ahead of expectations, starting today with JP Morgan JPM, +2.49% and Citigroup C, +3.21% ,” he added in a note.
Which other stocks are in focus?
On the FTSE 250 MCX, +0.09% , shares of Hammerson PLC HMSO, -12.50% slid 12%. The move came after Klepierre SA LI, +2.15% said it no longer intends to make a takeover offer for the U.K. mall owner after its £5.04 billion ($7.17 billion) proposal was rejected.