London stocks managed to keep their heads above the waterline by the close on Monday, ahead of an announcement from Prime Minister Boris Johnson, in which he is expected to confirm widely-circulated reports that the next phase of lockdown easing in England will be delayed.
The FTSE 100 ended the session up 0.18% at 7,146.68, and the FTSE 250 was 0.05% firmer at 22,744.51.
Sterling was in a mixed state, last trading 0.04% on the dollar at $1.4112, while it weakened 0.15% against the euro to change hands at 1.1640.
Johnson is set to front media at 1800 BST, where it is understood he will confirm that ministers have agreed to a four-week delay to the last phase of the government’s lockdown easing roadmap.
Under the plans, almost all Covid-19 restrictions were set to be lifted on 21 June, but a rise in cases of the ‘Delta’, or Indian, variant of the disease has seen experts urge ministers to delay that move for now.
“The FTSE 100 moved higher, hitting its best levels this year, and its highest levels since 24 February 2020, before drifting back as US markets opened,” said CMC Markets chief market analyst Michael Hewson.
“The resilience in oil prices may well be helping here with prices hit two-year highs providing a tail wind for the likes of Royal Dutch Shell, which is leading the gainers on the FTSE, though today’s boost for Shell may have more to do with reports it is considering the sale of shale assets in Texas, in a move that could offer proceeds of $10bn.
“On the downside, travel and leisure stocks have continued the underperformance we saw at the end of last week, ahead of this evening’s likely extension of some restrictions beyond next Monday’s 21 June lockdown easing deadline.”
On the economic front, footfall across UK retail destinations fell last week, with retail analyst Springboard reporting that it declined 6.7% from the week before.
That was a marked contrast from the 11.6% jump seen in the previous week, which was boosted by the bank holiday and warmer weather.
All three types of destinations saw a dip, with footfall on high streets down 9% versus a 17.4% surge the week before, while shopping centres saw a 7.5% drop following an 8.7% jump a week earlier.
At retail parks, footfall slipped 0.9% after a 2.3% gain the week before.
Footfall across destinations was 18.4% below 2019 levels, having been 14.5% below the week before.
“UK retail destinations suffered post-bank holiday blues last week, with footfall dropping back by around half of the uplift recorded in the week before, when the school half term holiday coincided with the spring bank holiday and amazing weather,” said Diane Wehrle, insights director at Springboard.
Elsewhere, data showed that the UK’s manufacturing sector saw output surge in the second quarter, fuelled by a strong recovery in domestic and international orders.
According to the latest quarterly survey from industry body Make UK and accountants BDO, the balance in output improved from 9% in the first quarter to 36%, the highest in the survey’s 30-year history.
Output was expected to continue growing in the third quarter, with a forecast balance of +46%, also a record high.
The surge in output was fuelled by significant growth in total orders, which improved to 34% from 9% three months earlier.
Domestic orders increased to 27% from 6%, while export orders returned to a positive balance, at 22% compared to the first quarter’s -8%.
“Manufacturing growth is now firmly accelerating as restrictions have been eased and economies around the globe have started to open up,” said Fhaheen Khan, senior economist at Make UK.
“Looking forward, there seems no reason to believe that this will not continue, assuming the shackles come off firmly in the second half of the year.”
In equity markets, Shell gushed 2.5% higher following a report it is considering the sale of its Texas shale assets.
Tullow Oil and Cairn Energy were also trading up, by 8.65% and 2.52%, respectively.
“Despite ongoing restrictions to global travel, there is a growing belief that energy demand will outstrip supply as major firms are pushed by shareholders into shunning their traditional oil and gas business,” said IG market analyst Joshua Mahony.
“Should that shareholder pressure drive down production levels, we could face a shortfall in supply as the world continues its drawn out transition away from carbon.”
Serco rallied 4.64% as the outsourcer lifted its full-year guidance, boosted by strong demand for test and trace services, and announced defence contract wins worth potentially £3.4bn.
On the downside, travel and leisure stocks retreated on those reports of a delay to lockdown lifting, with British Airways parent IAG down 4.17%, engine maker Rolls-Royce off 4.09%, and InterContinental Hotels losing 1.6%.
Joining them were Premier Inn owner Whitbread, budget airlines easyJet and Wizz Air, and pub group JD Wetherspoon, which lost a respective 1.81%, 2.69%, 1.8% and 3.96%.
Market Movers
FTSE 100 (UKX) 7,146.68 0.18%
FTSE 250 (MCX) 22,744.51 0.05%
techMARK (TASX) 4,452.48 0.06%
FTSE 100 – Risers
Royal Dutch Shell ‘A’ (RDSA) 1,458.40p 2.68%
Royal Dutch Shell ‘B’ (RDSB) 1,393.60p 2.50%
Intermediate Capital Group (ICP) 2,340.00p 2.23%
Halma (HLMA) 2,791.00p 2.05%
BP (BP.) 330.40p 1.88%
Smurfit Kappa Group (CDI) (SKG) 3,959.00p 1.64%
Sage Group (SGE) 670.80p 1.52%
Auto Trader Group (AUTO) 630.00p 1.45%
Admiral Group (ADM) 3,110.00p 1.40%
SEGRO (SGRO) 1,096.00p 1.34%
FTSE 100 – Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 194.72p -4.17%
Rolls-Royce Holdings (RR.) 107.36p -4.09%
Associated British Foods (ABF) 2,292.00p -2.76%
Informa (INF) 530.00p -2.43%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,329.00p -2.00%
Johnson Matthey (JMAT) 3,078.00p -1.88%
Whitbread (WTB) 3,255.00p -1.81%
InterContinental Hotels Group (IHG) 5,038.00p -1.60%
Flutter Entertainment (CDI) (FLTR) 13,680.00p -1.58%
Ocado Group (OCDO) 1,893.50p -1.46%
FTSE 250 – Risers
Tullow Oil (TLW) 64.84p 8.65%
Serco Group (SRP) 142.00p 4.64%
Volution Group (FAN) 410.00p 4.06%
SSP Group (SSPG) 318.60p 3.54%
Petropavlovsk (POG) 26.24p 3.39%
Oxford Biomedica (OXB) 1,288.00p 3.37%
Assura (AGR) 77.15p 3.00%
Cairn Energy (CNE) 170.70p 2.52%
Capital & Counties Properties (CAPC) 175.70p 2.39%
Virgin Money UK (VMUK) 209.30p 2.35%
FTSE 250 – Fallers
Restaurant Group (RTN) 123.40p -4.34%
Wetherspoon (J.D.) (JDW) 1,244.00p -3.96%
CMC Markets (CMCX) 468.50p -3.90%
Network International Holdings (NETW) 381.00p -3.67%
Genuit Group (GEN) 624.00p -3.56%
easyJet (EZJ) 932.60p -2.69%
Capita (CPI) 39.65p -2.63%
AO World (AO.) 244.20p -2.55%
Mitie Group (MTO) 74.20p -2.37%
TUI AG Reg Shs (DI) (TUI) 413.20p -2.30%
