London close: Stocks weaker as investors digest Fed tapering timeline

by | Aug 19, 2021

London stocks closed well below the waterline on Thursday, having spent the session in the red after minutes from the latest US Federal Reserve meeting signalled that tapering was on the cards this year.
The FTSE 100 ended the session down 1.54% at 7,058.86, and the FTSE 250 was 0.96% weaker at 12,606.87.

Sterling was also down, last trading 0.61% weaker on the dollar at $1.3672, and retreating 0.46% from the euro to €1.1692.

“The dollar continues to be the big winner from last night’s minutes, with markets continuing to expect a more benign environment for the greenback as the Fed slowly begins its move towards tapering,” said IG chief market analyst Chris Beauchamp.

“Those expecting a rising dollar to unhinge the equity rally will likely be disappointed, since a reviving global economy will, by its very nature, continue to make equities attractive.

“But such regime shifts are never easy, and it makes sense to expect the bumps in the road to continue.”

Beauchamp noted that the week’s low in the VIX volatility index was a warning of sorts, and was likely to be repeated “at least a couple of times” before the end of the year.

In data from across the pond during the afternoon, Manufacturing activity in the US mid-Atlantic region slowed in August as firms ran down their inventory levels.

The Federal Reserve Bank of Philadelphia’s factory sector index slipped from a reading of 21.9 for July to 19.4 – consensus had been for a print of 24.2.

Dragging the headline index lower was a sub-index for inventories, which dropped from -4.0 to 18.1.

On home shores, the Competition Appeal Tribunal earlier approved a £10bn class action against Mastercard that could entitle 46 million British adults to around £300 each if successful.

The tribunal had been expected to certify the UK’s first mass consumer class action, brought by former financial ombudsman Walter Merricks, after the Supreme Court overruled objections to it in December.

The move to finally approve the five-year case as a collective action would also likely set a precedent for a series of additional proposed class action suits that had been stalled in its wake.

“Mastercard has thrown everything at trying to prevent this claim going forward, but today its efforts have failed,” Merricks said.

“The tribunal’s ruling heralds the start of an era of consumer-focused class actions which will help to hold big business to account in areas that really matter.”

In equity markets, miners were once again among the leading losers, with Anglo American down 10%, Antofagasta off 4.45%, Rio Tinto off 2.74%, and Glencore 3.5% weaker.

Anglo American was also hit by the fact that it went ex-dividend, joined in that status by Abrdn, M&G, Phoenix Group and Dixons Carphone, which lost 4.29%, 5.28%, 5.24% and 3.41%, respectively.

Telecommunications infrastructure company Helios Towers slid 5.76% after reporting that revenue rose in the first half of the year, but operating profit fell, partly due to increased deal costs.

Gambling operator Rank Group was also down, closing 4.48% weaker, after it reported a £93m operating loss as Covid restrictions closed its venues.

The company said annual net gaming revenue almost halved to £329.6m, from £629.7m, with its losses compared with a profit of £21.5m a year ago.

Ultra Electronics lost 1.66% after UK Business Secretary Kwasi Kwarteng ordered an inquiry into the proposed takeover of the company by Cobham.

Luxury fashion brand Burberry slid 6.62% after Chinese Premier Xi Jinping threatened to cap high incomes and redistribute wealth.

Burberry is heavily dependent on demand from China.

Broadcaster ITV was 4.15% weaker as it said it had concluded an investment in Feel Holdings, a UK-based digital health start-up.

ITV agreed to subscribe for up to £3m convertible loan notes in Feel in three tranches, and said Feel will begin its tailored media campaign across the broadcaster’s channels later this year.

On the upside, OSB Group pushed 1.22% higher after it said pre-tax profits had more than doubled in the six months ended 30 June.

Landscape products company Marshalls rallied 3.97% after it lifted its expectations for 2021 and 2022, reporting strong growth in the first half amid supportive market conditions.

Polymetal was buoyant, closing ahead 1.64% as gold prices gained.

Market Movers

FTSE 100 (UKX) 7,058.86 -1.54%
FTSE 250 (MCX) 23,606.87 -0.96%
techMARK (TASX) 4,804.90 -0.28%

FTSE 100 – Risers

Just Eat Takeaway.Com N.V. (CDI) (JET) 6,777.00p 2.36%
Polymetal International (POLY) 1,515.50p 1.64%
Bunzl (BNZL) 2,691.00p 1.20%
Smith & Nephew (SN.) 1,410.00p 1.04%
National Grid (NG.) 978.30p 0.98%
Rentokil Initial (RTO) 577.80p 0.91%
Ocado Group (OCDO) 1,896.50p 0.85%
Fresnillo (FRES) 835.80p 0.58%
Avast (AVST) 596.80p 0.57%
SSE (SSE) 1,646.50p 0.43%

FTSE 100 – Fallers

Anglo American (AAL) 2,912.00p -10.00%
Burberry Group (BRBY) 1,811.50p -6.62%
M&G (MNG) 209.90p -5.28%
Phoenix Group Holdings (PHNX) 632.60p -5.24%
BP (BP.) 287.75p -4.92%
Antofagasta (ANTO) 1,406.00p -4.39%
Imperial Brands (IMB) 1,520.50p -4.31%
Abrdn (ABDN) 263.10p -4.29%
ITV (ITV) 115.55p -4.15%
Informa (INF) 534.60p -3.98%

FTSE 250 – Risers

Genuit Group (GEN) 707.00p 4.59%
Marshalls (MSLH) 786.50p 3.97%
Renishaw (RSW) 5,225.00p 2.55%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,777.00p 2.36%
Indivior (INDV) 190.00p 2.20%
Computacenter (CCC) 2,852.00p 2.00%
OSB Group (OSB) 498.00p 1.43%
Softcat (SCT) 2,086.00p 1.26%
Capita (CPI) 50.44p 1.24%
AO World (AO.) 229.20p 1.15%

FTSE 250 – Fallers

Harbour Energy (HBR) 315.00p -7.13%
Helios Towers (HTWS) 159.20p -6.46%
Restaurant Group (RTN) 122.00p -5.28%
Tullow Oil (TLW) 42.02p -5.04%
Rank Group (RNK) 175.00p -4.48%
Carnival (CCL) 1,424.40p -4.38%
C&C Group (CDI) (CCR) 249.00p -4.08%
Discoverie Group (DSCV) 1,014.00p -3.98%
Hammerson (HMSO) 32.57p -3.95%
Watches of Switzerland Group (WOSG) 982.00p -3.94%

Related articles

Trending stories

Join our mailing list

Subscribe to our mailing list to receive regular updates!

x