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(Alliance News) - Stocks in London ended lower on Monday, with the internationally-exposed FTSE 100 stifled by an appreciating pound, as the UK prepares for further easing of lockdown restrictions next week.
The Covid-19 alert level in the UK has been downgraded after a "consistent" fall in cases, hospital admissions and deaths.
The four chief medical officers of the UK have said the threat level should be lowered from "level 4" to "level 3", thanks to the success of the vaccination programme and social distancing restrictions.
This means that the epidemic is in general circulation, but transmission of the virus is no longer deemed to be high or rising exponentially.
It comes as experts said that the nation is in a "strong position" to press ahead with the easing of coronavirus restrictions.
The UK government will announce that people in England can take a step closer to normality from next week as more indoor mixing and hugging loved ones will be permitted once more.
The FTSE 100 index closed down just 6.03 points at 7,123.68. The FTSE 250 ended down 78.09 points, or 0.3%, at 22,697.19, and the AIM All-Share closed down 4.70 points, or 0.4%, at 1,257.90.
The Cboe UK 100 ended up 0.1% at 710.60, the Cboe UK 250 closed down 0.1% at 20,432.30, and the Cboe Small Companies ended up 0.8% at 15,149.70.
In Paris the CAC 40 ended flat, as did the DAX 30 in Frankfurt.
"Knocking on of the door of USD1.413, cable is now at its best price since the end of February and isn't far off the near-3-year peak struck during the month... These gains made it difficult for the FTSE to enjoy the reopening news, despite another strong session for its miners," said Spreadex analyst Connot Campbell.
In the FTSE 100, Berkeley Group ended the best performer, up 3.1%, after JPMorgan raised the housebuilder to Overweight from Neutral.
Lloyds closed up 2.8% after Sky News reported on Saturday that the lender is in talks to acquire savings and retirement products provider Embark Group for GBP400 million.
Miners Glencore, Rio Tinto, BHP, Anglo American and Antofagasta closed up 2.6%, 1.9%, 1.6%, and 0.4% respectively, tracking higher base metal prices.
Spot copper soared to USD10,361.15 a tonne from USD10,028.00, and spot aluminium leapt to USD2,540.48 a tonne from USD2,476.00.
Fresnillo ended up 1.0% after RBC upgraded gold and silver miner to Sector Perform from Underperform.
At the other end of the large-caps, Scottish Mortgage Trust ended the worst performer, down 6.2%, tracking falls in high-profile US tech stocks which it backs.
The trust has a 5.1% stake in Elon Musk's Tesla and a 5.9% holding in Jeff Bezos's Amazon. Shares in Tesla and Amazon were down 4.4% and 2.4% in New York respectively.
In the FTSE 250, Greggs ended the standout performer, up 10%, after the bakery chain said its profit for 2021 could reach pre-pandemic levels after a "strong recovery in sales", as lockdown restrictions are eased across the UK.
Greggs said like-for-like sales in the 18 weeks to May 8 were down 14% on the same period in 2019. In the ten weeks to March 13, sales were down 23% on two years ago, but this narrowed to a decline of just 3.9% in the eight weeks to May 8.
While there is still uncertainty over trading conditions, Greggs believes that 2021 profit is likely to be "materially higher" than previous expectations and could be around 2019 levels in the absence of further restrictions.
At the other end of the mid-caps, Provident Financial ended down 2.5%, after the subprime lender confirmed it plans to get out of the home credit business one way or another, placing the division into run-off and considering a sale.
Bradford-based Provident earlier this month had said its review of the business was nearing completion, following press reports that it would wind-up both the home credit unit and online lending arm Satsuma to focus on its credit card business, Vanquis Bank, and its car finance operation, Moneybarn.
Provident on Monday said it has decided to withdraw from the home credit market "entirely" and is considering a sale of the Consumer Credit division, which includes Satsuma.
The announcement came as Provident reported a swing to loss in 2020. The FTSE 250-listed company turned to a pretax loss of GBP113.5 million from a profit of GBP119.0 million driven by lower receivables and higher impairments as a result of Covid-19.
The pound hit its highest level in almost three months against the dollar on Monday after the Conservative party tightened its grip in local government elections and as concerns of a second Scottish independence vote eased.
UK Prime Minister Boris Johnson has invited SNP leader Nicola Sturgeon for crisis talks on the Union after the Scottish first minister warned he would be standing in the way of democracy if he denies Scotland a second independence referendum.
The Scottish National Party fell one seat short of an overall majority in the Scottish parliament elections, securing 64 seats, but the final result still leaves Holyrood with a pro-independence majority.
In her victory speech, Sturgeon told supporters the result proved a second independence vote was the "will of the country" and said any Westminster politician who stood in the way was "picking a fight with the democratic wishes of the Scottish people".
But Johnson, in a letter to Sturgeon, argued the UK was "best served when we work together" and called for a conversation about "our shared challenges" in recovering from the pandemic.
In addition, a key ally of the PM refused to rule out the prospect that the UK government could take the Scottish government to court if Sturgeon tries to press ahead with a second independence referendum.
UK Cabinet Office Minister Michael Gove was asked to make clear if Westminster had explicitly ruled out going to the Supreme Court, should Sturgeon bring forward legislation for a referendum without the consent of Tories in the UK government.
Gove insisted the priority must be on the country's coronavirus recovery, branding any talk of a second referendum as a "distraction" and a "diversion" from that.
The dispute over a follow-up referendum came as Labour recriminations began over its poor showing in the Super Thursday elections on Thursday.
Deputy Labour leader Angela Rayner was sacked on Saturday from her role as chair and national campaign coordinator.
It comes after the Opposition outfit lost the Hartlepool by-election - with the North East town voting for a Tory MP for the first time in 60 years - and incurring a net loss of six councils and more than 200 seats in the local elections as voters in its traditional heartlands deserted the party.
Further, Labour endured a dismal performance in other parts of England. The party lost control of Durham Council for the first time in a century, saw its leader deposed by the Greens in Sheffield, and also witnessed heavy defeats in Rotherham and Sunderland at local authority level.
But there were successes elsewhere, with the party dominating in the mayoral elections, claiming 11 of the 14 posts contested in cities and metropolitan regions across England.
Labour secured shock victories in the West of England and Cambridgeshire and Peterborough, while banking comfortable wins in Greater Manchester and Liverpool City Region, and holding on to London and Bristol.
Greater Manchester Mayor Andy Burnham said it had been a "difficult time" for leader Keir Starmer to take over leadership of the party, but urged him to "pick up what the public are saying".
The pound was quoted at USD1.4130 at the London equities close, up sharply from USD1.3995 at the close Friday - trading at its highest level since late February.
"Sterling jumped to its strongest since late February as the dust settled over the spate of UK elections on Thursday and a weaker dollar resulted from the nonfarm payrolls miss. Boris Johnson's position looks secure, Labour is in disarray and Nicola Sturgeon has regained control of the Scottish parliament. Near-term worries about a second referendum on Scottish independence appear to have retreated somewhat. The SNP are biding their time not pressing ahead immediately on a referendum (even most pro-indy voters don't think it's the most pressing matter)," Markets.com analyst Neil Wilson said.
"The current Conservative government will not sanction a referendum. It's likely to end up in court and see a major constitutional battle before there is even a vote. For now, sterling traders can afford to ignore the noise and focus on the near-term economic trends," added Wilson.
The euro stood at USD1.2156 at the European equities close, unchanged from late Friday. Against the yen, the dollar was trading at JPY108.75, up from JPY108.52 late Friday.
Wall Street was mixed at the London equities close following record closes for the Dow and S&P 500 on Friday, while the rotation out of tech stocks continued.
The DJIA was up 0.7% - breaching the 35,000 mark for the first time, but the S&P 500 index and the Nasdaq Composite were down 0.2% and 1.7% respectively.
Major stock indices closed at records Friday following a disappointing April US jobs report that bolstered expectations the Federal Reserve will keep interest rates low for a long period of time to support the economic recovery.
Brent oil was trading at USD67.71 a barrel at the London close, down from USD68.20 at the close Friday.
Gold was quoted at USD1,837.81 an ounce at the London equities close, higher against USD1,834.71 late Friday.
The economic events calendar on Tuesday has China inflation readings overnight and the Germany ZEW economic sentiment indicator at 1000 BST. In addition, Bank of England Governor Andrew Bailey speaks at Alternative Reference Rates Committee webinar at 1530 BST.
The UK corporate calendar on Tuesday has first-quarter results from grocer Wm Morrison Supermarkets and a trading statement from Morgan Advanced Materials.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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