London stocks had fallen into the red by midday on Thursday as sterling rallied, with Barclays leading the banking sector lower after the release of its full-year results.
The FTSE 100 was down 0.9% at 6,653.53, while sterling was 0.6% higher against the dollar at 1.3940.
A stronger pound tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.
Spreadex analyst Connor Campbell said: “Without much data on the agenda – it’s all saved for tomorrow, with UK retail sales and the flash PMIs for February.
“Though tomorrow will be indicative of how the UK economy has held up under this latest set of restrictions, and therefore will impact the performance of the FTSE and pound, the next big moment for the pair is Monday, when the government reveals its road out of Lockdown 3.0.”
In equity markets, Barclays was in the red even after it reinstated its dividend and said it would buy back up to £700m of shares as the bank 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. Analysts had on average expected £2.8bn annual profit.
Russ Mould, investment director at AJ Bell, said: “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.
“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 and NatWest both lower. The latter is also due to report full-year earnings on Friday.
Smith & Nephew lost ground 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 as their stock went ex-dividend.
On the upside, miners were the standout gainers, with Rio Tinto, Glencore, Antofagasta and BHP all higher as copper prices advanced.
Equipment rental firm Ashtead was the top performer on the FTSE 100 after an initiation at ‘buy’ by Goldman Sachs.
Moneysupermarket and Hochschild Mining were both higher after full-year results.
Market Movers
FTSE 100 (UKX) 6,653.53 -0.85%
FTSE 250 (MCX) 21,091.02 -0.28%
techMARK (TASX) 4,091.07 -1.06%
FTSE 100 – Risers
Ashtead Group (AHT) 3,975.00p 2.66%
Rio Tinto (RIO) 6,361.00p 2.02%
Evraz (EVR) 539.40p 1.93%
Glencore (GLEN) 293.35p 1.79%
Antofagasta (ANTO) 1,739.00p 1.43%
BHP Group (BHP) 2,275.00p 1.36%
Kingfisher (KGF) 278.60p 1.16%
Sage Group (SGE) 602.40p 1.04%
WPP (WPP) 839.20p 1.04%
Avast (AVST) 494.00p 0.86%
FTSE 100 – Fallers
Imperial Brands (IMB) 1,428.00p -5.12%
Smith & Nephew (SN.) 1,487.50p -5.10%
Lloyds Banking Group (LLOY) 37.35p -4.03%
Barclays (BARC) 148.20p -3.99%
Rolls-Royce Holdings (RR.) 98.82p -3.40%
GlaxoSmithKline (GSK) 1,237.60p -3.04%
NATWEST GROUP PLC ORD 100P (NWG) 173.85p -2.41%
HSBC Holdings (HSBA) 421.95p -2.38%
Melrose Industries (MRO) 167.35p -2.36%
Royal Dutch Shell ‘A’ (RDSA) 1,406.40p -2.24%
FTSE 250 – Risers
Moneysupermarket.com Group (MONY) 287.20p 7.16%
Ferrexpo (FXPO) 349.40p 4.74%
Plus500 Ltd (DI) (PLUS) 1,455.00p 2.83%
Premier Foods (PFD) 91.90p 2.68%
Helios Towers (HTWS) 172.40p 2.62%
Future (FUTR) 1,880.00p 2.40%
Polypipe Group (PLP) 570.00p 2.15%
Trainline (TRN) 486.80p 1.84%
Inchcape (INCH) 713.50p 1.64%
Vivo Energy (VVO) 88.70p 1.60%
FTSE 250 – Fallers
Meggitt (MGGT) 400.50p -2.98%
Euromoney Institutional Investor (ERM) 939.00p -2.90%
Grainger (GRI) 264.80p -2.79%
Hammerson (HMSO) 21.32p -2.65%
Fidelity China Special Situations (FCSS) 486.00p -2.41%
St. Modwen Properties (SMP) 388.50p -2.39%
GCP Student Living (DIGS) 150.20p -2.34%
OSB Group (OSB) 416.20p -2.16%
Greggs (GRG) 2,102.00p -2.14%
Cineworld Group (CINE) 78.86p -2.04%
