The FTSE 100 followed US equities into the red on Thursday as excitement over Donald Trump’s expected tax cuts started to wane.
London’s top tier index nudged back below the 7,300 mark, backing away from one month highs to end the day down 0.3% or 24.49 points at 7,277.92 points.
It came as major US indices including the Dow, S&P 500 and NASDAQ Composite dipped into the red following a multi-day record-breaking streak, with analysts suggesting that enthusiasm for Mr Trump’s fiscal policies was fading.
“At some points investors need to ask themselves how much the ‘Trump Trade’ is actually worth,” Michael Hewson, chief market analyst at CMC Markets UK, said.
“The US President has promised financial markets something phenomenal in the next couple of weeks; however the big question is will he be able to deliver what the market is pricing in? This may help explain why markets in Europe are starting to slide back.”
London’s blue-chip index was also bearing the brunt of hefty falls after AstraZeneca, BP and Royal Dutch Shell turned ex-dividend, meaning new shareholders are no longer entitled to the latest payout.
AstraZeneca fell 159.5p to 4,524.5p, Royal Dutch Shell’s ‘B’ dropped 49p to 2,225.5p, while BP fell 9.15p to 448.4p.
The index received minimal support from the pound, which rose 0.1% against the US dollar to 1.246 and fell 0.5% against the euro to 1.169.
The FTSE 100’s multinational firms tend to benefit when foreign currencies are stronger than the pound, with the potential to boost earnings.
Across Europe, the French Cac 40 and German Dax dropped 0.5% and 0.3%, respectively.
In oil markets, Brent crude prices fell 0.7% to 55.27 US dollars per barrel (£44.21), as some technical investment positions started to unwind.
In UK stocks, Shire shares rose 174p to 4,763p after reporting a rise in sales on the back of its Baxalta acquisition.
Cobham shares fell 20.7p to 114.7p after the struggling aerospace and defence firm issued another profit warning, revealing that it would book a mammoth £574 million writedown and take a £150 million hit from a US military contract.
Drax shares plunged 20p to 359p after the energy group revealed that underlying pre-tax profit more than halved to £21 million last year, pinning the fall on challenging commodity markets and the government’s removal of Climate Change Levy exemptions.
The biggest risers on the FTSE 100 were Coca-Cola HBC up 89p at 1,912p, Shire up 174p to 4,763p, Smurfit Kappa Group up 44p at 2,203p, and Capita Group up 8.5p at 516p.
The biggest fallers on the FTSE 100 were AstraZeneca down 159.5p to 4,524.5p, Royal Dutch Shell’s ‘A’ shares down 47.5p to 2,123p, Royal Dutch Shell’s ‘B’ shares down 49p at 2,225.5p, and Antofagasta down 17.5p at 848.5p.