U.K. stocks got a modest boost Thursday as investors wrap up what’s set to be a losing month and quarter for blue-chip equities.
But the pound was looking at cementing its strongest quarter in nearly three years before investors head out for the long holiday weekend.
How markets are moving
The FTSE 100 index UKX, +0.27% gained 0.4% to 7,071.15, led by the consumer goods and industrial groups. But the health care and utility groups were down by the most. On Wednesday, the index finished up by 0.6%.
The blue-chip benchmark was poised to fall 2.3% for March, which would be the third-straight monthly decline. Also, it’s on course to drop 8% for the first quarter of 2018, which would be the worst performance since the third quarter of 2011, according to FactSet data.
See: Brace for more ‘poor’ action by U.K. stocks, says world’s largest asset manager
The pound GBPUSD, -0.1421% on Thursday was changing hands at $1.4067, down from $1.4076 late Wednesday in New York. But sterling looked set to lock in a 4.1% rise for the first quarter, the biggest gain against the buck since the second quarter of 2015.
The midcap FTSE 250 Index MCX, +0.40% was up 0.3% on Thursday, and was looking at a 6.3% decline for the first quarter.
The yield on the 10-year gilt TMBMKGB-10Y, -0.24% was down less than 1 basis point at 1.359%, according to Tradeweb.
U.K. financial markets will be closed Friday and on Monday as investors observe the Easter and Passover holidays.
Read: Which markets are closed on Good Friday?
What’s driving markets
Mining stocks helped buoy the FTSE 100 as prices for some metals advanced, with copper futures HGK8, +1.08% rising more than 1%.
But mining stocks have taken a hit alongside broader equity markets in recent weeks, buffeted by fears of global trade war and a possibly stepped-up pace of interest rate rises by the U.S. Federal Reserve. U.S. President Donald Trump’s tone on trade has helped drive some investor concerns, after his administration slapped tariffs on steel and aluminum imports, and considered taking aim at Chinese imports via similar duties.
The FTSE 100 was also hit this quarter by a climb in the pound against the dollar, and by a roughly 1.5% advance against the euro GBPEUR, -0.1312% A stronger value of sterling can hurt shares of multinational companies that are heavily weighted on the FTSE 100, as revenue and earnings for those companies can be reduced by pound strength.
The pound has stepped higher on expectations the Bank of England will raise interest rates again this year, possibly in May. It’s also benefited from quarterly losses for the dollar DXY, -0.08%
Sterling is still below the $1.50 area it traded at just before Britain voted to leave the European Union in a June 2016 referendum. Thursday marked one year to go before Brexit, although Britain and the EU last week agreed to a two-year transition deal.
Data docket
The U.K.’s gross domestic product in the fourth quarter of 2017 was unchanged by the Office for National Statistics. Quarter-over-quarter GDP growth was confirmed at 0.4%, meeting expectations, and year-over-year growth remained at 1.4%.
Read: U.K. economy lags with a year to go to Brexit
New borrowing by U.K. households rose in February to its highest level since September as Britons borrowed an additional £5.4 billion ($7.6 billion) during the month, driven by new mortgage borrowing, according to Bank of England data.
Stock movers
Compass Group PLC CPG, -2.49% shares fell 2.5% after French food services rival Sodexo SW, -14.19% cut its fiscal 2018 financial outlook after a disappointing quarter. Sodexo shares sank 14% in Paris trade.
Topping advancers on the FTSE 100, shares of Mediclinic International PLC MDC, +4.20% turned higher and British Airways parent International Consolidated Airlines Group SA IAG, +2.61% was 2.6% higher.
Off the main benchmark, NEX Group PLC NXG, +0.10% shares added 0.1% after the London-based financial-technology company agreed to a takeover by CME Group Inc. CME, -0.10% in a deal worth $5.4 billion. Nex shares jumped 9.8% on Wednesday on news of a pending deal.
Apparel and accessories retailer Ted Baker PLC TED, -4.21% fell 4% on the FTSE 250 after a ratings downgrade to hold from buy at Jefferies.
“[G]iven the near-term unseasonal weather in the U.S. [and] Europe and management’s cautious guidance, we believe the historical sales momentum underpinning the equity story will prove more elusive in the near term,” said analyst Niraj Amin in a note.