Pound slides as UK rate hike prospect dims; US stocks fall

Recent economic data have undermined the case for British monetary policy tightening

New York (AFP) – Worries about higher US interest rates and Apple’s prospects weighed on Wall Street equities Friday, while the British pound retreated following dovish comments from the head of the Bank of England.

US stocks ended decisively lower as the yield on the 10-year US Treasury rose ever closer to 3.0 percent, reigniting fears that Federal Reserve interest rate increases will dent the economy.

Adding to the angst were a series of pessimistic analyst reports on Apple expressing doubts about iPhone sales. Canaccord Genuity cut its estimate for iPhones and predicted low sales would persist until new products are launched.

Apple, the biggest company by market capitalization, tumbled 4.1 percent, weighing especially hard on the tech-rich Nasdaq, which finished 1.3 percent lower.

Equity markets elsewhere were mixed, with Paris edging higher and Frankfurt and Tokyo notching modest declines.

– Pound retreats –

London’s FTSE 100 rose 0.5 percent after the British pound suffered another drop on dimming expectations the Bank of England will hike interest rates following remarks from Governor Mark Carney.

Markets had been widely pricing in a quarter-point interest rate hike in May, to 0.75 percent, amid a pick-up in UK wage growth, but British economic data this week, including a sharp drop in retail sales, had started to dampen those expectations.

“Prepare for a few interest rate rises over the next few years,” Carney told the BBC. “I don’t want to get too focused on the precise timing, it is more about the general path.”

“While Carney did not deviate from the view that gradual rate hikes are going to be necessary, he did cast doubt on whether the next will come in May, which was heavily being priced in earlier this week,” said OANDA analyst Craig Erlam.

Oil prices pushed higher as key producers, including Saudi Arabia and Russia, signaled plans to continue to limit production to defend higher oil prices at a meeting in Jeddah. That was despite criticism on Twitter by President Donald Trump of oil prices that are “artificially Very High.”

Among individual companies, slumping industrial giant General Electric jumped 3.9 percent despite reporting a $1.2 billion first-quarter loss on a large legal charge. Some key divisions posted strong results, and analysts said GE’s report avoided fresh negative surprise announcements that have plagued recent results.

Mattel tumbled 3.6 percent after announcing its fourth new chief executive in four years, with Ynon Kreiz, the former head of Maker Studios, replacing Margo Georgiaidis.

Shire Pharmaceuticals fell 3.9 percent as fellow Irish drugmaker Allergan ruled out a takeover bid to rival an offer by Japan’s Takeda, having earlier said it was mulling such a move.

– Key figures around 2100 GMT – 

New York – Dow: DOWN 0.8 percent at 24,462.94 (close)

New York – S&P 500: DOWN 0.9 percent at 2,670.14 (close)

New York – Nasdaq: DOWN 1.3 percent at 7,146.13 (close)

London – FTSE 100: UP 0.5 percent at 7,368.17 (close)

Frankfurt – DAX 30: DOWN 0.2 percent at 12,540.50 (close)

Paris – CAC 40: UP 0.4 percent at 5,412.83 (close) 

EURO STOXX 50: UP 0.2 percent at 3,494.20 (close)

Tokyo – Nikkei 225: DOWN 0.1 percent at 22,162.24 (close)

Hong Kong – Hang Seng: DOWN 0.9 percent at 30,418.33 (close)

Shanghai – Composite: DOWN 1.5 percent at 3,071.54 (close)

Euro/dollar: DOWN at $1.2286 from $1.2346 at 2100 GMT

Dollar/yen: UP at 107.62 yen from 107.37

Pound/dollar: DOWN at $1.4014 from $1.4087

Oil – Brent North Sea: UP 28cents at $74.06 per barrel

Oil – West Texas Intermediate: UP 9 cents at $68.38 per barrel