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(Alliance News) - Stocks in London ended mixed on Wednesday with supermarkets and mining companies weighing on the FTSE 100 as the second half of the year officially got underway.
The FTSE 100 index closed down 11.78 points, or 0.2%, at 6,157.96. The FTSE 250 ended up 70.27 points, or 0.4%, at 17,189.43, while the AIM All-Share closed down 0.1% at 882.70.
The Cboe UK 100 ended down 94% at 614.06, the Cboe UK 250 closed up 0.1% at 14,640.63, and the Cboe Small Companies ended up 0.1% at 9,222.74, as per Cboe's website.
In Paris the CAC 40 ended down 0.2%, while the DAX 30 in Frankfurt ended 0.4% lower.
On the London Stock Exchange, Smith & Nephew ended as the best blue-chip performer, up 4.5% after the medical devices maker said it expects to slowly recover from the coronavirus crisis.
Smith & Nephew expects its trading margin for its first half of 2020 to be substantially lower than 2019 due to the negative impact of Covid-19. The group said it expects a second-quarter underlying revenue decline of around 29%. While performance has improved as the quarter progressed - with the year-on-year underlying revenue decline in June of 12% improving from a 27% decline in May and a 47% decline in April - the company said there continues to be significant uncertainty and geographical variation.
Smith & Nephew said the damage from the pandemic was most pronounced in its orthopaedic reconstruction, sports medicine and ENT businesses, caused by less elective surgery in the quarter as hospitals focused on Covid-19 patients. Its noted that its advanced wound management and trauma businesses have been more resilient.
"Encouragingly the statement notes improving performance through the period correlated with the easing of lock-downs," commented analysts at Shore Capital.
At the other end of the large-cap index, J Sainsbury closed down 2.5% after the supermarket chain reported double-digit sales growth over the first quarter of its current financial year, but said it remains cautious about the sales trajectory for the remainder of the year.
The FTSE 100-listed grocer said the Covid-19 pandemic continued to have a significant impact on its business in the 16 weeks to June 27. Grocery sales rose 11% year-on-year, with general merchandise - including Argos sales growing 11% - advancing 7.2%. Holding back group sales, however, was a 27% drop in clothing sales.
As a result, total retail sales in the first quarter were 8.5% higher, with like-for-like sales growing 8.2% - both excluding fuel.
Sainsbury's noted that its operating costs remain high, reflecting the costs of keeping customers and colleagues safe, significantly higher online participation, including prioritisation of elderly, disabled and vulnerable customers, and weak sales of fuel, clothing and general merchandise within Sainsbury's stores.
Rivals Tesco and WM Morrison Supermarkets closed down 2.1% and 1.0% in a negative read-across.
In addition, miners were weighing on the large-cap index, with Anglo American, Glencore, Rio Tinto and BHP ending down 2.4%, 2.2%, 2.2% and 1.6% respectively.
IG Group's Chris Beauchamp said: "Supermarkets and miners sit at the bottom of the FTSE 100 today, a slightly unusual pairing. The former have failed to find much good news in Sainsbury's update, which like Tesco found increased costs ate away at potential profits from rising sales. Yet again the share price for the UK's second supermarket chain has found the 215p level too rich for its liking, the firm being unable to find a catalyst that can offset expectations of higher costs in the medium term. UK mining stocks have also failed to continue their recent move higher, worrying that the huge rallies in their share prices since March now leave them fully-valued and at risk of a downturn in data."
The pound was quoted at USD1.2459 at the London equities close, up from USD1.2384 at the close Tuesday, after data from IHS Markit showed the UK manufacturing sector stabilised in June, following recent steep downturns caused by the Covid-19 pandemic.
The IHS Markit/CIPS purchasing managers' index rose to 50.1 in June from 40.7 in May, which followed a record low of 32.6 in April. June's flash reading had been 50.1. Any reading above 50.0 indicates expansion in the sector.
June's rise marked a record jump, IHS Markit noted, with manufacturing production growing for the first time in four months.
"We mentioned in our previous note that as the lockdown measures are eased across the UK and even globally, we would expect to see a rebound/recovery. We continue to believe as the restrictions are further eased (eg from the 4th July in the UK), we should continue to see some form of recovery," Shore Capital analyst Akhil Patel said.
The euro stood at USD1.1260 at the European equities close, up from USD1.1246 late Tuesday, after data from IHS Markit showed the eurozone's manufacturing sector continued to improve in June as national lockdowns across the globe continued to ease, but remained under contraction levels.
The seasonally adjusted IHS Markit eurozone manufacturing PMI rose to a four-month high of 47.4, up from 39.4 in May, and the flash reading for June of 46.9, which was also FXStreet's consensus expectations. Still, the score was below the 50.0 mark that separates expansion from contraction.
Within the single-currency zone, manufacturing activity in Germany continued to improve, with its with the IHS Markit/BME Germany manufacturing PMI at 45.2 points, up from 36.6 in May.
Against the yen, the dollar was trading at JPY107.52, down from JPY107.77 late Tuesday.
Stocks in New York were higher at the London equities close as data showed US businesses added jobs in June, while a pharmaceutical venture announced positive preliminary data on a coronavirus vaccine.
The DJIA was up 0.2%, the S&P 500 index up 0.5% and the Nasdaq Composite up 0.6%.
US private sector employment increased by 2.4 million jobs in June, according to figures published by payroll processor ADP on Wednesday. Total US nonfarm private employment grew in June, but underperformed market consensus of 3.0 million adds, as cited by FXStreet.
In May, 3.1 million jobs were added, a revised figure that is a sharp improvement from the initial report of 2.8 million jobs being lost.
The ADP report preludes the closely watched US jobs report for June, which will be released on Thursday, with the US closed on Friday to commemorate Independence Day. Analysts expect that the US economy will have added 3 million payrolls in June and the employment rate to decline to 12.3%.
Further, investor sentiment was boosted by an announcement by Pfizer and its partner German biotech firm BioNTech of positive data from a preliminary study of a Covid-19 vaccine candidate. The companies described the early results as "encouraging". Pfizer was up 5.1% on Wall Street.
The research comes as the US sees a resurgence of coronavirus cases that has prompted some states and companies to reinstate restrictions to limit the spread of the virus.
Brent oil was quoted at USD41.80 a barrel at the London close, up from USD41.66 at the close Tuesday.
Crude oil rallied after inventories in the US shed 7.2 million barrels in the week to June 26, the Energy Information Administration reported. Analysts had expected an inventory decline of 710,000 barrels for the period, and the American Petroleum Institute had estimated an inventory draw, to the tune of 8.2 million barrels, the largest inventory draw so far this year.
Gold was quoted at USD1,764.23 an ounce at the London equities close, lower against USD1,782.27 late Tuesday.
The economic events calendar on Thursday has eurozone unemployment and producer prices at 1000 BST. In the afternoon, there is the US jobs report for June at 1330 BST.
The UK corporate calendar on Thursday has annual results from paper and packaging firm DS Smith and third-quarter earnings from Primark clothing chain owner Associated British Foods.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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