London close: Stocks close off earlier lows amid inflation consternation

London stocks closed below the waterline on Thursday, having clawed back some earlier losses, as worries about rising inflation rattled investors again.
The FTSE 100 ended the session down 0.59% at 6,963.33, and the FTSE 250 was off 0.17% at 22,069.31.

Sterling was weaker as well, last trading 0.12% lower against the dollar at $1.4037, and losing 0.2% on the euro to 1.1620.

“At one point today European markets were down heavily, with the FTSE 100 and DAX hitting five-week lows, as inflation concerns once again weighed on sentiment,” said CMC Markets chief market analyst Michael Hewson.

“However these lows proved to be short-lived, with the rest of the day spent clawing the bulk of the losses back, with the FTSE underperforming due to its heavy basic resources weighting, where most of today’s losses have been concentrated.”

Hewson said in the current “extremely fickle” environment, markets were wrestling with the dilemma as to whether the current bout of rising inflation prints was transitory.

“US PPI for April only served to reinforce this inflationist narrative, however it is still very difficult to put aside how much base effects are exerting upward pressure on the overall numbers.

“The worst performers in the UK market have been energy and basic resources on the back of a slide in energy prices, and base metals prices.”

Across the pond, jobless claims fell again in the week ended 8 May, with the numbers from the Labor Department slipping from January’s peak of about 900,000 to a new pandemic-era low of 473,000.

The figure marked the lowest level for initial claims since 14 March 2020, when it was 256,000, while continuing claims came in at 3.65m, down from an upwardly-revised figure of 3.7m.

Closer to home, UK house price growth accelerated in April because of a shortage of homes in a market boosted by the response to the Covid-19 crisis.

Demand from new buyers was broadly unchanged with a net balance of +44% in April with demand positive in all regions for the first time in 2021, the Royal Institution of Chartered Surveyors said.

Supply, however, dropped sharply to -4% from +21% a month earlier.

Estate agents’ stock levels also fell with the average number of properties on their books down to 40 from 46 in December.

“Housing supply, or more pertinently, the shortfall in supply relative to demand is the key theme coming through loud and clear from respondents to the latest RICS survey,” said RICS chief economist Simon Rubinshohn.

“While it may be simplistic to assume that higher numbers alone can redress the affordability issue particularly in a low interest rate environment, an uplift in delivery does have a role to play.”

In corporate news, Burberry Group tumbled 4.18% after the luxury fashion brand reported a decline in full-year sales and operating profits, but took the decision to reinstate its dividend on the back of strong cash generation.

Hargreaves Lansdown was off 4.6% even after reporting that it achieved record new business in the first four months of 2021, as people invested savings amassed during the pandemic into the stock market.

Prudential was 3.25% weaker as it said it was pushing the demerger of its Jackson US business back to the second half of 2021 and reported an increase in sales at its Asia and Africa operations.

BT retreated 5.92% as the telecoms operator posted a 7% fall in revenue and a 6% fall in adjusted earnings for the year to end-March, reflecting the impact of Covid-19.

On the upside, 3i Group bucked the trend, rising 2.17% after well-received full-year results.

Elementis rose 5.42% after the specialty chemicals company said its full-year performance was set to be towards the top end of consensus expectations amid an improvement in demand.

NCC Group rallied 14.17% after announcing the planned acquisition of Iron Mountain’s intellectual property management business for $220m (£156m).

Market Movers

FTSE 100 (UKX) 6,963.33 -0.59%
FTSE 250 (MCX) 22,069.31 -0.17%
techMARK (TASX) 4,229.27 -0.10%

FTSE 100 – Risers

M&G (MNG) 229.00p 4.09%
SSE (SSE) 1,486.00p 2.66%
Pershing Square Holdings Ltd NPV (PSH) 2,570.00p 2.39%
3i Group (III) 1,224.00p 2.17%
Ashtead Group (AHT) 4,903.00p 2.12%
Scottish Mortgage Inv Trust (SMT) 1,100.00p 2.09%
London Stock Exchange Group (LSEG) 7,084.00p 1.61%
Aveva Group (AVV) 3,149.00p 1.35%
Ocado Group (OCDO) 1,962.50p 1.16%
Reckitt Benckiser Group (RKT) 6,327.00p 1.15%

FTSE 100 – Fallers

BT Group (BT.A) 159.05p -5.92%
Hargreaves Lansdown (HL.) 1,690.50p -4.60%
Anglo American (AAL) 3,250.00p -4.44%
Rio Tinto (RIO) 6,299.00p -4.20%
Burberry Group (BRBY) 2,016.00p -4.18%
BHP Group (BHP) 2,251.50p -3.97%
Prudential (PRU) 1,475.50p -3.25%
Fresnillo (FRES) 869.00p -3.10%
Glencore (GLEN) 324.40p -2.61%
Antofagasta (ANTO) 1,819.00p -2.23%

FTSE 250 – Risers

NCC Group (NCC) 290.00p 14.17%
Elementis (ELM) 147.70p 5.42%
Network International Holdings (NETW) 387.20p 4.11%
Watches of Switzerland Group (WOSG) 687.00p 3.78%
Allianz Technology Trust (ATT) 254.00p 3.25%
Bytes Technology Group (BYIT) 501.50p 3.02%
ITV (ITV) 126.95p 2.38%
4Imprint Group (FOUR) 2,300.00p 2.22%
Frasers Group (FRAS) 583.00p 2.19%
Greggs (GRG) 2,521.00p 2.06%

FTSE 250 – Fallers

Wood Group (John) (WG.) 267.20p -6.31%
Cineworld Group (CINE) 84.00p -6.00%
Hochschild Mining (HOC) 191.50p -4.44%
Redde Northgate (REDD) 375.00p -3.85%
Hammerson (HMSO) 34.84p -3.76%
Ferrexpo (FXPO) 484.00p -3.39%
Tullow Oil (TLW) 52.92p -3.36%
TUI AG Reg Shs (DI) (TUI) 404.80p -3.27%
Rank Group (RNK) 180.40p -3.22%
Grainger (GRI) 286.00p -3.05%

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