London’s FTSE 100 hit its lowest level in around a fortnight on Thursday, with shares in Royal Mail particularly suffering after the group reported mixed figures for the crucial Christmas period.
In mid-morning trading, the UK’s benchmark index of blue chip stocks was down around 0.5 per cent, its lowest level in around two weeks, as the pound added around 0.5 per cent against the dollar to trade at $1.2318.
In recent months sterling and the FTSE 100 have tended to move in opposite directions. Sterling’s relentless fall since the June Brexit referendum has helped the index score an historical series of record closes because so many of its constituents generate the vast majority of their revenue overseas.
A weaker pound means that income that is generated overseas is worth more when brought home.
Royal Mail was the biggest laggard on the FTSE 100 on Thursday with shares down close to 5 per cent after the group posted a sharp drop in letter mailing in the lead up to Christmas, citing “overall business uncertainty” in the wake of the Brexit vote.
The company said that the number of addressed letters slipped 6 per cent in the nine months leading up to 25 December, which follows a 4 per cent decline in the previous six months.
Analysts at Liberum said that although Royal Mail’s overall trading figures were in-line with expectations, economic uncertainty is still plaguing the business.
They said that the company’s share price is still assuming long-term growth of the group, which they “do not consider plausible.”
Burberry was one of the biggest gainers on the index, with shares up close to 1.5 per cent.
The luxury fashion group, which is famous for its iconic trench coats, earlier in the day said that sales over the festive period had surged 40 per cent thanks to booming tourism.
Burberry said the UK performance contributed to a 3 per cent rise in overall comparable sales across the group in the three months to 31 December, with an improvement in some under-pressure markets including Hong Kong and France.
