London stocks finished Thursday’s session in negative territory as sterling tacked on further gains, with Barclays helping the banking sector remain below the waterline after the release of its full-year results.
The FTSE 100 ended the session down 1.4% at 6,617.15, and the FTSE 250 was 1.02% weaker at 20,933.87.
Sterling was in a strong position, by contrast, last gaining 0.71% on the dollar to trade at $1.3955, and advancing 0.36% against the euro to 1.1554.
A stronger pound tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.
“The FTSE 100 is underperforming the indices in continental Europe as the sell off in banking and oil stocks has weighed on the market,” said CMC Markets analyst David Madden.
“Barclays kicked off the reporting season for UK banks today – the slide in the stock price has set the tone for HSBC and Lloyds.
“BP and Royal Dutch Shell have relatively large weightings in the index, the retreat in the oil market has hurt the energy titans.”
Madden said sterling’s strength was an issue for the UK market, as internationally-focussed stocks including Imperial Brands, GlaxoSmithKline and British American Tobacco derived a relatively large amount of their revenue overseas.
“Sentiment in Europe was a little downbeat in the morning but selling pressure picked up as US index futures moved lower in the afternoon.”
In equity markets, Barclays was in the red by 4.44% even after it reinstated its dividend and said it would buy back up to £700m of shares, as it reported annual profit ahead of forecasts.
The bank said it would pay an annual dividend of 1p per share and that, including the buyback, the shareholder payout would be 5p per share.
Analysts had on average forecast a dividend of 3.5p per share.
Pre-tax profit for the year to the end of December fell 30% to £3.1bn from a year earlier as income rose 1% to £21.8bn.
On average, analysts had been expecting annual profit of £2.8bn.
“Shareholders seem a little underwhelmed – the headline profit figures were better than expected and the balance sheet looks robust, but the outlook statement is cautious and understandably packed with caveats,” said Russ Mould, investment director at AJ Bell.
“This may be why Barclays is taking baby steps when it comes to dividends and leaning towards a buyback.
“Starting or reining in a buyback programme is a much less dramatic statement of intent than increasing or cutting a dividend.”
Other banks followed suit, with Lloyds down 3.7% and NatWest 3.85% lower.
The latter was also due to report full-year earnings on Friday.
Smith & Nephew lost 5.9% after the medical technology business posted a fall in full-year profits as the Covid-19 pandemic forced the cancellation of elective procedures.
Elsewhere, Imperial Brands and GlaxoSmithKline were both weaker, by 2.47% and 1.15% respectively, as their stock went ex-dividend.
Miners were mixed by the end of trading, having pulled back from their earlier highs in afternoon trading.
Glencore was up 0.05% and Antofagasta eked out gains of 0.03%, while BHP was down 0.42% and Rio Tinto finished flat.
The sector saw strong gains earlier in the session, after a rise in copper prices overnight.
Equipment rental firm Ashtead also gave up earlier gains, but still closed 1.08% firmer after an initiation at ‘buy’ by Goldman Sachs.
Moneysupermarket rocketed 7.09%, while Hochschild Mining was 2.91% weaker, after both reported their full-year results.
Market Movers
FTSE 100 (UKX) 6,617.15 -1.40%
FTSE 250 (MCX) 20,933.87 -1.02%
techMARK (TASX) 4,070.68 -1.55%
FTSE 100 – Risers
Auto Trader Group (AUTO) 603.80p 1.79%
Kingfisher (KGF) 278.70p 1.20%
Ashtead Group (AHT) 3,917.00p 1.16%
Sage Group (SGE) 603.00p 1.14%
Barratt Developments (BDEV) 686.40p 0.94%
Rightmove (RMV) 647.60p 0.72%
Taylor Wimpey (TW.) 161.50p 0.59%
Persimmon (PSN) 2,774.00p 0.54%
Evraz (EVR) 532.00p 0.53%
Associated British Foods (ABF) 2,320.00p 0.52%
FTSE 100 – Fallers
Rolls-Royce Holdings (RR.) 93.34p -8.76%
Smith & Nephew (SN.) 1,475.00p -5.90%
Imperial Brands (IMB) 1,424.50p -5.35%
Barclays (BARC) 147.50p -4.44%
BP (BP.) 269.40p -3.99%
NATWEST GROUP PLC ORD 100P (NWG) 171.20p -3.90%
Melrose Industries (MRO) 164.80p -3.85%
Lloyds Banking Group (LLOY) 37.47p -3.73%
Royal Dutch Shell ‘A’ (RDSA) 1,387.00p -3.59%
Royal Dutch Shell ‘B’ (RDSB) 1,331.20p -3.31%
FTSE 250 – Risers
Moneysupermarket.com Group (MONY) 286.40p 6.87%
Greencore Group (GNC) 137.90p 2.91%
Vivo Energy (VVO) 89.60p 2.63%
Future (FUTR) 1,884.00p 2.61%
TP ICAP (TCAP) 217.00p 2.55%
PureTech Health (PRTC) 410.50p 1.99%
Watches of Switzerland Group (WOSG) 623.00p 1.96%
Howden Joinery Group (HWDN) 726.00p 1.82%
Sirius Real Estate Ltd. (SRE) 93.00p 1.42%
Trainline (TRN) 484.60p 1.38%
FTSE 250 – Fallers
Network International Holdings (NETW) 338.60p -6.52%
Indivior (INDV) 140.00p -6.04%
Hammerson (HMSO) 20.70p -5.48%
Meggitt (MGGT) 394.50p -4.43%
Pets at Home Group (PETS) 404.20p -4.35%
AO World (AO.) 296.00p -4.21%
Energean (ENOG) 903.70p -3.93%
HGCapital Trust (HGT) 335.50p -3.87%
St. Modwen Properties (SMP) 383.00p -3.77%
Chemring Group (CHG) 283.00p -3.74%
