London close: Stocks end last day of turbulent month in the red

by | Sep 30, 2021

London stocks slipped below the waterline to close in the red on Tuesday amid weakness in the travel sector, as investors digested the latest UK GDP data.
The FTSE 100 ended the session down 0.31% at 7,086.42, and the FTSE 250 was 0.52% weaker at 23,031.29.

Sterling was heading the other way, last trading 0.31% stronger against the dollar at $1.3468, and gaining 0.47% on the euro to €1.1632.

“We’ve seen swings in both directions as we look set to finish what has been a mixed month very much on the back foot, as the FTSE 100 has managed to shrug off most of its losses to finish close to where it was at the end of August,” said CMC Markets chief market analyst Michael Hewson.

“Whether it is as fortunate in October remains to be seen, given that the FTSE 250 also suffered its worst month this year, with the FTSE 100 benefitting from the outperformance of companies like Rolls Royce which is up over 20%, and decent gains from the likes of BP, Royal Dutch Shell, and British Airways owner IAG.”

Figures released earlier by the Office for National Statistics showed that the UK economy grew more than initially estimated in the second quarter, expanding by 5.5% between April and June on a quarterly basis, up from a preliminary estimate of 4.8% growth.

That left GDP 3.3% below pre-pandemic levels, up from a previous estimate of 4.4% below.

The ONS said that in output terms, the largest contributors to the increase were from wholesale and retail trade, accommodation and food service activities, education and human health, and social work activities.

According to the figures, household spending jumped 7.9% to £24.6bn.

“Overall, while the upward revisions to GDP are welcome, the recovery appears to have faltered since July,” said Capital Economics economist Ruth Gregory.

“As a result, we have not changed our view that the economy will regain its pre-virus level in November this year.

“But the risk is that interest rates rise sooner than we think.”

Annual house price growth, meanwhile, eased in September according to data from lender Nationwide, as affordability became more stretched.

On an annual basis, growth fell back to 10% in September from 11% in August with the average price of a home “little changed” at £248,742, compared to £248,857.

As a result, house prices remained about 13% higher than before the Covid-19 pandemic began in early 2020.

Looking at the third quarter as a whole, Nationwide said Wales and Northern Ireland were the strongest performing regions, with London the weakest.

“House prices have continued to rise more quickly than earnings in recent quarters, which means affordability is becoming more stretched,” said Nationwide chief economist Robert Gardner.

“Raising a deposit remains the main barrier for most prospective first-time buyers.

“A 20% deposit on a typical first-time buyer home is now around 113% of gross income – a record high.”

Data from the auto industry showed UK car production fell 27% in August, making for the second consecutive month of decline, as the global chip shortage continued to have an effect.

According to the Society of Motor Manufacturers and Traders (SMMT), 37,246 cars were made in the UK in the month, with the shortage of semiconductors leading to production stoppages, as well as the timing and length of some manufacturers’ summer factory shutdowns.

But despite those challenges, production of battery electric (BEV), plug-in hybrid (PHEV) and hybrid (HEV) cars surged to a new high, representing 27.6% of all cars made, or 10,274 vehicles.

Finally, on the energy crisis front, it was reported that Ofgem had enlisted the expertise of City advisory firm Teneo to step in as a special administrator in case a larger retailer goes under.

The report from Sky News suggested that in such an event, it might not be possible for the company’s customers to be transferred to a competitor through the Supplier of Last Resort (SOLR) scheme.

It came as rocketing wholesale prices for gas have caused five retailers, with an aggregate of 1.7 million customers, to go under in the last two weeks.

This week, Igloo, Enstroga and Symbio ceased to trade, adding to the failures of Avro Energy and Green Supplier last week.

In equity markets, Diageo rose 1.25% after saying it made a strong start to the financial year, with “organic net sales momentum across all regions” despite supply chain problems.

The distilling giant’s North American business was performing strongly based on resilient consumer demand, robust off-trade activity and good momentum in the on-trade business. Africa, Asia Pacific and Latin America are performing well, the company said.

Miners were also strong, with Anglo American up 2.58%, BHP ahead 1.42%, and Rio Tinto 1.92% firmer.

IP Group racked up gains of 2.94% after saying it had realised around £84m through the initial public offering of Oxford Nanopore.

On the downside, travel and airline stocks slumped, with British Airways and Iberia owner IAG falling 4.38%, Wizz Air off 4.71%, easyJet descending 2.53% and TUI down 4.03%.

Traders pointed to news that 16 major airlines had committed to better information and timely reimbursement of passengers in case of flight cancellations following dialogues with the European Commission and national consumer protection authorities.

EasyJet, British Airways, Iberia and Wizz were reported to be among those involved.

Elsewhere, Barratt Developments lost 1.46%, British American Tobacco slid 4.84%, Hays tumbled 6.8%, Travis Perkins was 4.42% weaker, TP ICAP slipped 3.9%, and LXi REIT was on the back foot by 3.92%, as they all traded without entitlement to the dividend.

Virgin Money UK lost 4.13% after saying it would close almost one-fifth of its branches and cut office space as customers increasingly move online during the pandemic.

Market Movers

FTSE 100 (UKX) 7,086.42 -0.31%
FTSE 250 (MCX) 23,031.29 -0.52%
techMARK (TASX) 4,625.25 -0.68%

FTSE 100 – Risers

Evraz (EVR) 595.60p 3.26%
Anglo American (AAL) 2,622.50p 2.58%
Polymetal International (POLY) 1,260.50p 2.23%
Fresnillo (FRES) 782.20p 2.22%
Smiths Group (SMIN) 1,450.50p 2.08%
Rio Tinto (RIO) 4,913.50p 1.93%
BHP Group (BHP) 1,895.40p 1.80%
Intertek Group (ITRK) 4,996.00p 1.46%
Glencore (GLEN) 352.80p 1.44%
AstraZeneca (AZN) 8,958.00p 1.42%

FTSE 100 – Fallers

British American Tobacco (BATS) 2,604.00p -4.84%
International Consolidated Airlines Group SA (CDI) (IAG) 179.50p -3.85%
Royal Mail (RMG) 421.20p -3.62%
Rolls-Royce Holdings (RR.) 140.14p -3.08%
Flutter Entertainment (CDI) (FLTR) 14,700.00p -3.00%
Associated British Foods (ABF) 1,861.50p -2.95%
Melrose Industries (MRO) 174.55p -2.78%
Kingfisher (KGF) 336.50p -2.75%
InterContinental Hotels Group (IHG) 4,761.00p -2.52%
Whitbread (WTB) 3,309.00p -2.27%

FTSE 250 – Risers

Trustpilot Group (TRST) 385.60p 7.95%
Oxford Biomedica (OXB) 1,546.00p 5.17%
Syncona Limited NPV (SYNC) 170.40p 3.27%
Wood Group (John) (WG.) 232.00p 3.07%
IP Group (IPO) 140.00p 2.94%
Auction Technology Group (ATG) 1,338.00p 2.92%
Mitie Group (MTO) 71.00p 2.90%
Ferrexpo (FXPO) 327.20p 2.89%
Centamin (DI) (CEY) 95.62p 2.82%
Vistry Group (VTY) 1,224.00p 2.81%

FTSE 250 – Fallers

Hays (HAS) 161.70p -6.80%
Wizz Air Holdings (WIZZ) 5,012.00p -4.75%
Travis Perkins (TPK) 1,535.00p -4.42%
XP Power Ltd. (DI) (XPP) 5,140.00p -4.28%
Virgin Money UK (VMUK) 204.40p -4.13%
GCP Infrastructure Investments Ltd (GCP) 100.40p -4.02%
Moonpig Group (MOON) 319.00p -3.97%
TP Icap Group (TCAP) 159.66p -3.90%
Cineworld Group (CINE) 79.32p -3.88%
TUI AG Reg Shs (DI) (TUI) 322.60p -3.82%

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