(Alliance News) - London stocks started the week on a soft note in the wake of concerning data from the eurozone economy.
However, gains for rival tour operator stocks following the collapse of Thomas Cook helped to soften the blow for the FTSE 100 relative to the steeper losses seen elsewhere in European stock indexes.
The FTSE 100 index closed down 18.84 points, or 0.3%, at 7,326.08. The FTSE 250 ended down 125.61 points, or 0.6%, at 20,043.79, and the AIM All-Share closed closed down 1.44 points, or 0.2%, at 885.04.
The Cboe UK 100 ended down 0.1% at 12,436.71, the Cboe UK 250 closed down 0.8% at 17,920.07, and the Cboe Small Companies ended down 0.2% at 10,937.51.
"The markets spent the day in various shades of red, the tone set by the morning's alarming Eurozone flash PMIs," said Connor Campbell at Spreadex.
"The FTSE was in an interesting situation this Monday," he added. "The overall tone of the markets ensured it spent most of the session at a loss. However, its decline was capped at around 0.2%, thanks to both the pound's losses - Brexit anxiety sent it 0.4% lower against the dollar and 0.1% against the euro - and movements in its travel sector."
The pound was quoted at USD1.2440 at the London equities close Monday, lower compared to USD1.2490 at the close on Friday.
The Supreme Court will decide on Tuesday on whether British Prime Minister Boris Johnson acted unlawfully in shutting down parliament in the run-up to the country's scheduled EU exit next month.
Britain's highest court will rule on the legality of Johnson's advice to Queen Elizabeth II to prorogue parliament for five weeks until October 14 – just a fortnight before Brexit day on October 31. After three days of hearings last week, a spokeswoman said the decision would be made at 0930 GMT, with seven of the 11 judges who were involved in the case set to attend.
A ruling in Johnson's favour would uphold the long-held principle that prorogation is solely a decision for the prime minister, not the courts. But many fear that, in a country without a formal written constitution, it would establish a precedent that premiers could suspend parliament for long periods. If Johnson loses, it is likely to prompt demands for parliament to be immediately recalled.
The euro, meanwhile, stood at USD1.1000 at the European equities close Monday, against USD1.1007 at the same time on Friday.
The eurozone flash composite purchasing managers' index fell to 50.4 in September from 51.9 in August, marking a six-year low, preliminary figures from Eurostat showed on Monday.
The services reading fell to 52.0 from 53.5 in August, an eight-month low, while manufacturing slumped to 46.0 from 47.9. Any reading under 50 indicates contraction in the sector, while one above signals expansion.
The manufacturing slowdown was driven by new orders for goods and services falling for the first time since January, dropping at the steepest rate since 2013.
"We've become accustomed to seeing weak manufacturing PMIs, not just in the euro area but across the globe as slower growth and the trade war takes their toll. The numbers this morning though were particularly poor and the services sector may now be getting caught up in it all which doesn't bode well," commented Craig Erlam at Oanda.
"A reluctance to loosen the fiscal purse-strings, particularly in Germany, isn't giving investors any confidence that the situation is going to improve any time soon," Erlam added.
In European equities on Monday, the CAC 40 in Paris ended down 1.1%, while the DAX 30 in Frankfurt ended 1.0% lower.
Data out the US was slightly better than the downbeat scene cast by the European figures, with the private sector experiencing a modest rebound in September.
Flash data from IHS Markit on Monday showed the US composite purchasing managers' index rose to 51.0 points in September from 50.7 in August. This was after the services PMI reading rose to 51.0 points in September from 50.3 in August, hitting a two-month high. Meanwhile, the manufacturing PMI strengthened to a five-month high of 51.7 points in September.
Stocks in New York were flat at the London equities close, with the Dow Jones, the S&P 500 index and the Nasdaq Composite all unchanged.
In London, travel operators saw strong share price gains following the collapse of peer Thomas Cook.
Thomas Cook has ceased trading after failing to secure a last-ditch rescue deal, leaving an estimated 150,000 Britons abroad awaiting repatriation.
The venerable company was unable to secure the extra GBP200 million needed to keep the business afloat following a full day of crucial talks with its major shareholder and creditors on Sunday.
"The demise of Thomas Cook has encouraged traders to buy into reputable travel companies in addition to airline groups," explained David Madden at CMC Markets.
"The travel sector has seen squeezed margins recently, caused by competitive pricing, a weaker consumer climate, plus an increase in so-called staycations. Now that Thomas Cook are out of the picture, it is likely to remove some of the pressure from the companies that are still in operation as fewer competitors should equate to healthier margins," he said.
TUI shares gained 6.9%, while shares in Jet2 owner Dart Group finished 4.0% higher and On The Beach up 9.2%.
Ryanair shares ended up 1.4% and easyJet climbed 4.6% higher, the latter also helped by HSBC upgraded the low-cost airline to Buy from Hold.
Elsewhere in the FTSE 100, Fresnillo ended 3.5% higher as it tracked the price of gold upwards.
Gold was quoted at USD1,523.83 an ounce at the London equities close Monday, up against USD1,503.40 at the close on Friday.
"Gold is pushing higher as uncertainty about the health of the European economy combined with US-China trade woes has prompted traders to seek out assets that are deemed to be safe havens. Traders' risk-off strategy is lifting gold. If gold continues to hold above the USD1,500 mark, the wider bullish trend should continue," said David Madden at CMC Markets.
In other commodities, Brent oil was quoted at USD64.42 a barrel at the London equities close Monday from USD64.72 late Friday.
Marks & Spencer started its first day in the FTSE 250 on a downbeat note, falling 3.5% after reporting Chief Financial Officer Humphrey Singer has decided to leave M&S having spent just over a year in the role.
Marks & Spencer lost its FTSE 100 listing in the latest quarterly index review, its relegation to the FTSE 250 effective from Monday.
A succession process is now underway, during which Singer will continue with his responsibilities, and work with Chief Executive Officer Steve Rowe to ensure an orderly transition. Singer has been part of clothes, homewares and food retailer M&S since 2018, joining from electricals and telecommunications retailer Dixon Carphone, where he was finance director for four years.
In Tuesday's corporate calendar, there are interim results from retailer Card Factory, water firm Pennant International, soft drinks maker AG Barr, cinema operator Everyman Media and Hotel Chocolat.
In the economic calendar on Tuesday, Japan's manufacturing PMI is at 0130 BST and UK public sector net borrowing at 0930 BST. US consumer confidence is at 1500 BST.
By Lucy Heming; lucyheming@alliancenews.com
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