(Alliance News) - Worries over tighter monetary policy as the US rebounds from the coronavirus crisis coupled with concerns over a third wave of infections in Europe ensured the mood in London was risk-off on Thursday.
BP and Royal Dutch Shell slid as oil prices pulled back from recent gains, while Burberry shares fell along with other clothing companies such as Nike and H&M amid a spat in China.
The FTSE 100 index closed down 38.06 points, or 0.6%, at 6,674.83. The FTSE 250 ended down 124.70 points, or 0.6%, at 21,277.84, and the AIM All-Share closed down 14.46 points, or 1.2%, at 1,184.59.
The Cboe UK 100 ended down 0.7% at 665.26, the Cboe UK 250 closed down 0.4% at 19,009.91, and the Cboe Small Companies ended down 0.7% at 13,778.92.
In European equities on Thursday, the CAC 40 in Paris and the DAX 30 in Frankfurt ended up 0.1%.
Markets shrugged off some upbeat US data to focus on comments from Federal Reserve Chair Jerome Powell, said Edward Moya at Oanda.
"After months of reiterating that Fed is not ready to start talk about tapering, an early morning NPR interview delivered a candid comment led everyone to think we are a few months away from hearing how the Fed will gradually change policy," said Moya. "The timing of Powell's comments and better-than-expected jobless claims data and fourth quarter GDP painted a picture that the economy is about to see substantial progress with employment and pricing pressures."
US fourth quarter economic growth was upwardly revised on Thursday while data also showed a fall in new weekly unemployment claims.
The US Bureau of Economic Analysis, in its third gross domestic product estimate, said the US economy rounded off 2020 with 4.3% quarter-on-quarter economic growth. This followed a 33% surge in the third quarter.
The second estimate had said US GDP growth was 4.1% quarter-on-quarter in the final months of 2020.
Like the upwardly revised GDP figure, the latest initial jobless claims data from the US Department of Labor were similarly cheery.
New claims for the week ended March 19 amounted to 684,000, lower than consensus estimates of 730,000. The figure for the prior week was revised up to 781,000.
The dollar rose on the back of the data, but Wall Street was subdued.
"The improvement in the [jobless claims] numbers could somewhat perversely hit sentiment further if markets start to price in the paring back of monetary support sooner rather than later," commented Michael Hewson, chief market analyst at CMC Markets.
The euro stood at USD1.1778 at the European equities close Thursday, falling from USD1.1834 at the same time on Wednesday as the eurozone faces a third coronavirus wave.
Amid a stuttering vaccination campaign, the EU on Wednesday tightened vaccine export controls. Under the EU's new rules, the bloc's European Commission executive will weigh how needy countries are as well as how readily they export doses to the EU before approving shipments.
With Britain seen as one of the main targets of the EU's new export rules, London and Brussels issued a joint statement Wednesday saying the neighbours were "working on specific steps... to create a win-win situation and expand vaccine supply".
A European diplomat told reporters that the UK and the Commission are negotiating how to better share AstraZeneca doses, and that the EU must not shoulder the shortfall alone.
The pound was quoted at USD1.3727 at the London equities close Thursday, flat compared to USD1.3728 at the close on Wednesday.
Against the yen, the dollar was trading at JPY109.15, up compared to JPY108.77 late Wednesday.
Stocks in New York were muted at the London equities close, with the DJIA flat, the S&P 500 index up 0.1%, and the Nasdaq Composite down 0.1%.
In London, oil majors finished in the red, pulling back from gains in the previous session as oil prices softened.
Brent oil was quoted at USD61.61 a barrel at the London equities close Thursday, down from USD63.98 late Wednesday. BP shares ended down 2.6% while shares in Royal Dutch Shell 'A' fell 2.9% and 'B' fell 2.6%.
Oil prices had rallied after a skyscraper-sized cargo ship became wedged across Egypt's Suez Canal.
The Ever Given, a Panama-flagged ship that carries cargo between Asia and Europe, ran aground on Tuesday in the narrow, man-made canal dividing continental Africa from the Sinai Peninsula. In the time since, efforts to free the ship using dredgers, digging and the aid of high tides are yet to push the container vessel aside.
"After yesterday's rebound reversed Tuesday's big falls, oil prices are now lower on the day, and still lower on the week, as recovery concerns outweigh the impact of the Suez blockage," said CMC's Hewson.
Gold was quoted at USD1,732.44 an ounce at the London equities close Thursday against USD1,736.33 at the close on Wednesday.
Finishing at the bottom of London's FTSE 100 was Burberry, tumbling 4.6%. China on Thursday launched a PR war on Western brands critical of rights abuses against Uyghurs and other minorities in Xinjiang, with celebrities severing ties to Nike and Adidas, H&M facing a boycott and Burberry dumped from a deal with a gaming giant.
On Thursday celebrities, tech brands and state media – aided by outrage on China's tightly-controlled social media – piled in on several global fashion brands, as China's vast consumer market was mobilised against critics of Beijing's actions in Xinjiang.
Chinese TV stars Wang Yibo and Tan Songyun said they would end all promotional partnerships with Nike, after a year-old company statement was regurgitated online noting it was "very concerned" by the allegations of forced labour. Gaming giant Tencent pulled a new "skin" project linked with Burberry on avatars in the Glory of Kings game, while Swedish clothing giant H&M's products vanished from shopping sites in apparent retaliation for its decision to no longer source cotton from Xinjiang.
Nike shares were down 3.7% in New York and H&M shares fell 1.8% in Stockholm.
In the FTSE 250, Cineworld shares slumped 7.6% after the movie theatre operator posted a USD3 billion loss in 2020, a year battered by major film delays, Covid-19 restrictions and prolonged closures of its cinema chains globally.
Revenue during 2020 plunged 81% to USD852.3 million from USD4.37 billion. The west London-based firm swung to a pretax loss of USD2.65 billion from a USD180.3 million profit in 2019.
Tui slipped 4.7% as it said summer holiday bookings have been "encouraging" though still massively below pre-pandemic levels, and the tour operator has nudged down its capacity forecasts for the upcoming peak season.
Anglo-German Tui said group-wide bookings for summer 2021 are at an "encouraging" level of 2.8 million. This is down 60% from summer 2019, however. The company added that overall capacity for summer 2021 has been nudged down to 75% of 2019's levels, from the previous forecast of 80%.
Ending in the green was CMC Markets, up 2.9% on expectations of beating market expectations for annual income amid a high number of active customers.
CMC said it expects net operating income in the financial year that ends on March 31 to be slightly above the upper end of the current range of market consensus, which it put at GBP387.5 million to GBP399.6 million. It also raised its guidance for net operating income in financial 2022 to in excess of GBP330 million.
In financial 2020, CMC reported net operating income of GBP252.0 million, so the guidance on Thursday suggests an increase of at least 59% in the current year.
The UK corporate calendar for Friday has half-year results from engineering business Smiths Group.
The international economic calendar has UK retail sales at 0700 GMT, the German Ifo index at 0900 GMT and US personal income and consumption expenditures at 1230 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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