Burberry falls as US debt worries hit UK’s FTSE
Britain's top share index fell today, with luxury goods group Burberry among the worst performers, as the political stalemate over the US debt ceiling hit equity markets.
The blue-chip FTSE 100 index was down 0.9%, or 54.24 points, at 6,399.64 points in early session trade.
Burberry was among the hardest-hit shares, declining by around 2% which traders attributed to cautious comments from its chief executive in French newspaper Les Echos over a slowdown in its sales in the important China market.
The FTSE 100 has risen by roughly 9% since the start of 2013, but has edged lower over the last two weeks due to disagreements over the US budget that last week prompted a partial shutdown of the government in the United States.
The budget deadlock has in turn led to concerns about the US$16.7 trillion (RM52.4 trillion) US debt ceiling, which Treasury Secretary Jack Lew has said the government will hit no later than October 17.
Yet the majority of long-term investors still felt a deal would eventually be reached, which would ensure that any equity market pullback in October would then be followed by a rebound.
Cavendish Asset Management fund manager Paul Mumford said uncertainty over when US politicians would reach a deal was weighing on the market in the near-term, even though most investors expected an eventual resolution to the matter.
"The market doesn't like the uncertainty, but I think the US debt situation will be resolved," he said.
Mumford said he had been using sessions when the market fell to add to holdings in mining stocks such as Antofagasta , BHP Billiton and Rio Tinto.
Logic Investments' trading director Darren Easton said he was also trying to trade around the FTSE's recent tight range.
"We got in last week at 6,400 points and got out at around 6,450. We'll look to go back in again if the FTSE falls to 6,380 points," he said. – Reuters, October 7, 2013.