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(Alliance News) - Stocks in London ended mostly lower on Monday as a fall in travel stocks offset a rise in gold miners after the precious metal surged to record highs.
The FTSE 100 index closed down 18.94 points, or 0.3%, at 6,104.88. The FTSE 250 ended down 106.90 points, or 0.6%, at 17,157.94, and the AIM All-Share closed up 5.49 points, or 0.6%, at 889.25.
The Cboe UK 100 ended down 0.2% at 609.12, the Cboe UK 250 closed down 0.7% at 14,588.46, and the Cboe Small Companies ended up 0.8% at 9,070.69.
In Paris the CAC 40 ended down 0.3%, while the DAX 30 in Frankfurt ended flat.
"European markets have also added to gains, and in the case of the FTSE 100 has managed to move back to flat for the day. But while a softer dollar helps US firms it hinders performance for European names, providing another reason to stay cautious on the outlook for European stocks. While the gold miners have led the way higher in London, other mining names have been strong performers, again thanks to the weaker US dollar pushing up commodity prices generally," said IG Group's Chris Beauchamp.
On the London Stock Exchange, gold miners ended as the best blue-chip performers, with Fresnillo and Polymetal International both closing up 7.1% after bullion skyrocketed to all-time highs.
Gold blasted past its longstanding record on Monday with the dollar taking a battering against counterparts, as concerns about the global economy boosted demand for safe-havens.
Recently, investors have flocked to gold as the coronavirus pandemic's damage to global growth underpinned bullion's status as the premier safe-haven asset.
Further, the precious metal has been getting support from a long list of factors. These include rising Covid-19 infection rates, heightened political tensions between the US and China and as world governments and central banks unleash vast stimulus measures to try and boost economies - hitting the dollar in the process.
Relations between the world's two superpowers took another negative turn when a US mission in Chengdu was ordered to shut in retaliation for the forced shutdown of the Chinese consulate in Houston, Texas.
Gold was priced at USD1,937.08 an ounce at the London equities close, up sharply from USD1,900.17 late Friday. The precious metal hit an all-time high of USD1,945.57 in early trade.
"Gold had an easy time rising above record-high territory and it could continue as the Fed will likely signal more accommodation is needed. The bullish case for gold's checklist has almost every box checked off: No end in sight for stimulus is in place, the dollar is in freefall, real rates slide deeper into negative territory, virus uncertainty will remain elevated the consensus is a fresh wave will happen in Autumn, and as geopolitical tensions from Beijing to Washington DC show no signs of easing," said OANDA analyst Edward Moya.
Further, eyes are on the Federal Reserve's policy meeting this week, with some analysts predicting further measures to boost the economy - possibly negative interest rates - that could put more pressure on the dollar and send gold above USD2,000.
Miners Antofagasta, BHP and Rio Tinto closed up 3.6%, 2.3% and 1.9% respectively, as dollar weakness boosted commodity prices.
At the other end of the large-cap index, British Airways parent International Consolidated Airlines Group closed down 5.7% following the UK government's sudden decision to reimpose strict quarantine rules at short notice on travellers returning from Spain.
Ministers announced on Saturday that holidaymakers who had not returned from Spain and its islands by midnight would be forced to quarantine for 14 days after Covid-19 second wave fears saw the popular holiday destination struck off the UK's safe list.
The Foreign Office guidance advising against all but essential travel to mainland Spain does not include the islands, but ministers opted to apply blanket quarantine arrangements across the Spanish territories.
The government's decision to reimpose restrictions on Spain left holidaymakers frustrated, with some saying they would not have travelled if they knew they would have to spend a fortnight self-isolating afterwards.
Further, there are fears more European holidays could be thrown into disarray. The Telegraph reported that officials in both France and Germany have warned of possible new lockdowns as parts of Europe braced for a second wave of Covid-19 infections.
In the FTSE 250, TUI closed down 11% and easyJet ended down 8.0% in the wake of the UK's travel restrictions on Spain. TUI has cancelled all holidays to mainland Spain up to and including August 9.
Compounding the travel sector's woes, Ryanair Holdings closed down 3.9% after the Irish carrier turned to a loss in the first quarter due to travel restrictions put in place because of the Covid-19 pandemic.
Ryanair swung to a loss of GBP185 million in the first quarter ended June 30 from a net profit of GBP243 million a year ago. The company saw 99% of its fleet grounded from mid-March to the end of June due to travel restrictions caused by Covid-19. Passengers fell to 500,000 in the quarter from 41.9 million a year ago.
"The past quarter was the most challenging in Ryanair's 35 year history. Covid-19 grounded the group's fleet for almost 4 months as EU governments imposed flight or travel bans and widespread population lockdowns," Ryanair said. Ryanair implemented an 85% reduction in costs during the quarter which it said was not enough to offset the heavy revenue losses.
The pound was quoted at USD1.2888 at the London equities close, up sharply from USD1.2786 at the close Friday.
The euro stood at USD1.1775 at the European equities close, sharply higher from USD1.1635 late Friday. The single currency hit its highest dollar value since September 2018.
Against the yen, the dollar was trading at JPY105.15, down from JPY105.85 late Friday.
"The US dollar continues to lose ground to other major currencies, dropping to USD1.17 against the euro for the first time since September 2018. A sense of anticipation is growing amongst investors that the Fed could adopt an even more dovish monetary policy. With several American states struggling to contain a resurgence of the coronavirus and a swift economic recovery looking increasingly less likely, many market operators now expect the Federal Reserve to provide an outlook entailing further easing measures when it meets later this week," said analysts at ActivTrades.
Stocks in New York were higher at the London equities close as US earnings season shifts into high gear this week.
The DJIA was up 0.5%, the S&P 500 index up 0.6% and the Nasdaq Composite up 1.2%.
Tech shares rallied early Monday at the start of what's set to be an eventful week that includes a high-profile congressional antitrust once-over with the sector's giants.
The leaders of tech giants Apple, Amazon, Facebook and Google are scheduled to appear Wednesday for a hearing that will look at whether the companies have attained too much dominance as they have become more central to the global economy.
The companies are also scheduled to report earnings this week, making for a major week of results that includes reports from fast-food chain McDonald's, aerospace firm Boeing, alongside oil majors Exxon Mobil and Chevron.
Brent oil was quoted at USD42.47 a barrel at the London close, down from USD43.06 at the close Friday.
In the economic events calendar on Tuesday the US Federal Reserve's two-day meeting gets underway.
The UK corporate calendar on Tuesday has interim results from wealth manager St James's Place, Fresnillo, bakery chain Greggs and from household goods maker Reckitt Benckiser.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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