London close: FTSE claws back most losses as sterling flies

Market Close Report
15:03, 26th July 2021

(Sharecast News) - London stocks finished in a mixed state on Monday, with the top-flight index managing to claw back most of its losses by the close, after a session where dollar-earners paced the decline amid a rally for the pound.
The FTSE 100 ended the session down just 0.03% at 7,025.43, while the FTSE 250 advanced 0.22% to 22,933.19.

Sterling remained strong, last trading 0.59% stronger against the dollar at $1.3829, as it gained 0.24% on the euro to €1.1709.

"European stocks initially started the week on a softer note, largely due to a weak lead from Asia markets which fell back sharply as Chinese regulators continued their crackdown on the tech sector, as well as broadening their gaze towards the private education sector," said CMC Markets chief market analyst Michael Hewson.

"As the day progressed and we got closer to the US open, the losses have slowly started to diminish with the basic resource sector helping to pull the FTSE 100 off its intraday lows, although the DAX is underperforming after the latest IFO survey appeared to suggest that the German economy is starting to slow in the wake of rising costs and Delta variant infections."

The FTSE started the session on the back foot after a weak session in Asia overnight, where the Hang Seng slumped more than 3% and the Shanghai Composite fell more than 2% as Beijing continued its crackdown on technology companies.

China announced strict new restrictions on education tech firms, while Tencent was ordered to give up its exclusive music licensing rights and fined for anti-competitive behaviour.

Back in Britain, overall retail footfall rose by 3.3% last week with increases across all three destination types, although a 4.1% increase in shopping centres compared to 3.3% in high streets suggested shoppers were seeking a respite from the heatwave in covered, climate-controlled environments.

Footfall surged by 16.5% on Monday 19 July, when all remaining pandemic restrictions were lifted in England for 'Freedom Day', but from Tuesday onwards the uplift from the prior week was more modest as the heatwave intensified, averaging 1.7%.

The effect of the intense heat, the end of the school summer term on Tuesday, and apparent nervousness among shoppers created by the 'pingdemic', in which hundreds of thousands are being alerted to close contacts by NHS tracking apps, was evident in the results, according to Springboard.

"Following an above average start to the week as a result of 'Freedom Day' on Monday 19 July, the growth in footfall in UK retail destinations slowed considerably from Tuesday onwards," said Springboard insights director Diane Wehrle.

"This is likely to be driven by a combination of the extreme heat, the start of the school summer break, and an increased nervousness amongst shoppers in visiting potentially crowded areas created by the growing 'pingdemic' which could force them to self-isolate."

Meanwhile, a top Bank of England official pushed back on calls for the monetary authority to dial back on stimulus earlier, arguing that inflationary pressures in the UK were transitory, while the pandemic remained a threat.

In remarks prepared for a speech at the London School of Economics, Gertjan Vlieghe said: "For all these reasons, I think it will remain appropriate to keep the current monetary stimulus in place for several quarters at least, and probably longer."

Even when it came time to tighten policy "I suspect not much of it will be needed, given the low level of the neutral rate," the rate-setter added.

On the corporate front investors were eyeing a busy corporate calendar, with earnings due this week from the likes of Barclays, Lloyds, NatWest, GlaxoSmithKline, AstraZeneca, Shell and ITV, among others.

At the end of the day on Monday, dollar-earners were among the worst performers thanks to sterling's rally, with Unilever down 2.73%, Pearson losing 2.17%, and Vodafone Group on the back foot by 1.04%.

Discount retailer B&M European Value Retail was knocked 2.42% lower by a downgrade to 'sector perform' from 'outperform' at RBC Capital Markets, which argued there was more valuation upside for several other general retailers.

Water utilities dipped into negative territory as well, with Pennon Group down 0.8%, United Utilities off 0.76%, and Severn Trent losing 0.29%, after the water regulator said it would permit water suppliers to raise prices for businesses and other non-household customers from next year, in a bid to offset the costs of higher amounts of bad debt amid the Covid-19 pandemic.

From next April, non-household customers will bear three-quarters of the costs of bad debt where those costs are more than 2% of non-household revenue, Ofwat said on Monday, with the water companies themselves shelling out for the remaining quarter.

Ofwat added that the price cap allowances would be implemented for at least two years.

Going the other way, food producer Cranswick rose 2.45% after it reported a jump in first-quarter revenue, driven by strong retail demand and increased poultry sales.

Budget airline Ryanair ascended 4.04% after it reported a widening of its first-quarter losses as it continued to be impacted by Covid restrictions, but lifted its traffic forecast as bookings have surged in recent weeks.

British Airways and Iberia owner IAG and fellow budget carrier easyJet followed suit, rising 4.59% and 3.93%, respectively.

Elsewhere, Antofagasta was lifted 4.07% by an upgrade to 'hold' from 'sell' at Deutsche Bank.

Market Movers

FTSE 100 (UKX) 7,025.43 -0.03%
FTSE 250 (MCX) 22,933.19 0.22%
techMARK (TASX) 4,454.37 -0.86%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 175.76p 4.33%
Antofagasta (ANTO) 1,495.50p 4.07%
Glencore (GLEN) 326.20p 3.31%
Anglo American (AAL) 3,058.50p 3.19%
Rio Tinto (RIO) 6,110.00p 3.10%
BHP Group (BHP) 2,328.00p 3.10%
BP (BP.) 292.25p 2.87%
Royal Dutch Shell 'A' (RDSA) 1,400.20p 2.56%
Royal Dutch Shell 'B' (RDSB) 1,375.20p 2.52%
Evraz (EVR) 622.00p 2.50%

FTSE 100 - Fallers

B&M European Value Retail S.A. (DI) (BME) 561.80p -2.70%
London Stock Exchange Group (LSEG) 7,424.00p -2.62%
Unilever (ULVR) 4,036.50p -2.59%
AstraZeneca (AZN) 8,292.00p -2.22%
Smith & Nephew (SN.) 1,520.50p -2.19%
Pearson (PSON) 838.60p -2.17%
Flutter Entertainment (CDI) (FLTR) 12,615.00p -2.02%
Intertek Group (ITRK) 5,486.00p -1.90%
Just Eat Takeaway.Com N.V. (CDI) (JET) 5,991.00p -1.82%
Berkeley Group Holdings (The) (BKG) 4,848.00p -1.76%

FTSE 250 - Risers

Cineworld Group (CINE) 66.78p 5.33%
Trainline (TRN) 322.60p 5.22%
Tullow Oil (TLW) 48.67p 5.16%
easyJet (EZJ) 846.80p 4.06%
Ferrexpo (FXPO) 459.00p 3.75%
Tyman (TYMN) 449.00p 3.46%
Diversified Energy Company (DEC) 103.40p 3.40%
Oxford Instruments (OXIG) 2,475.00p 3.34%
Wood Group (John) (WG.) 216.10p 3.25%
FirstGroup (FGP) 84.75p 3.16%

FTSE 250 - Fallers

Ultra Electronics Holdings (ULE) 3,148.00p -3.73%
Fidelity China Special Situations (FCSS) 359.50p -3.10%
Genesis Emerging Markets Fund Ltd Ptg NPV (GSS) 886.00p -2.32%
Dr. Martens (DOCS) 460.40p -2.00%
Just Eat Takeaway.Com N.V. (CDI) (JET) 5,991.00p -1.82%
Britvic (BVIC) 955.00p -1.80%
JPMorgan Emerging Markets Inv Trust (JMG) 129.60p -1.67%
Templeton Emerging Markets Inv Trust (TEM) 192.00p -1.64%
Elementis (ELM) 150.30p -1.64%
Dechra Pharmaceuticals (DPH) 4,838.00p -1.55%

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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