LONDON (Alliance News) - Stocks in London ended mixed on Monday, as sharp falls from
Royal Mail, airlines and housebuilders stocks saw the FTSE 100 slip below the 7,500 mark.The FTSE 100 index closed down 0.2%, or 14.53 points at 7,495.67. The FTSE 250 ended up 0.5%, or 94.17 points, at 20,401.21, and the AIM All-Share closed up 0.3%, or 3.11 points, at 1,101.61.The Cboe UK 100 ended down 0.3% at 12,727.98, the Cboe 250 closed up 0.4% at 18,514.60, and the Cboe Small Companies ended 0.1% lower at 12,135.16.On the London Stock Exchange,
Rentokil Initial ended up 3.6% as the pest control firm acquired outsourcer Mitie Group's pest control unit for GBP40 million in cash.
RSA Insurance closed up 2.8% after Berenberg raised the insurer to Buy from Hold, believing there was an "over-reaction" to last week's weather-battered trading update.Languishing at the other end of the large cap index, Royal Mail ended the the worst performer down 18% after the postal operator forecast lower full-year profit amid challenging conditions in the UK. Royal Mail revised its adjusted operating profit before transformation costs down to between GBP500 million and GBP550 million for its full financial year ending March. This compares to a GBP694 million adjusted operating profit the year before.Royal Mail's UK productivity performance was "significantly below plan" at just 0.1% in the first half of its financial year with full year performance expected to be "significantly below target" at the upper end of the 2% to 3% range.As such, cost savings targets have subsequently been dropped to GBP100 million from GBP230 million with plans to implement "a range of short-term cost actions" being enacted."This is a cause for concern for many investors despite the fact that management have stated that the attractive dividend will be unaffected. We would hope that the parcels and GLS business can continue with their rapid growth. A stalling here, caused by perhaps industrial action or competitive pressures, will surely result in further troubles for the group," said Share Centre analyst Helal Miah.Blue chip airlines were also reeling in the wake of a profit warning from Irish carrier
Ryanair Holdings, which cut its forecast for full-year profit, citing rising oil prices and the impact of recent coordinated strikes across Europe.Ryanair shares closed down 13% while peers
easyJet and British Airways parent
International Consolidated Airlines Group ended down 7.0% and 2.6% respectively. Ryanair's profit guidance for the year to the end of March 31, 2019, was lowered to a range of EUR1.10 billion to EUR1.20 billion, from EUR1.25 billion to EUR1.35 billion. For 2018 financial year, pretax profit increased 10% year-on-year to EUR1.61 billion from EUR1.47 billion in 2017 financial year. The Irish budget airline also attributed the cut in profit guidance to increased care and re-acommodation expenses as a result of strikes and fall in forward bookings. In addition, Ryanair said it could not rule out further disruptions in the third quarter ending December, which could see its profit guidance lowered even more.In addition, housebuilders also ended among the worst blue chip performers after UK Prime Minister Theresa May over the weekend announced plans for a stamp duty surcharge of between 1% and 3% to be imposed on sales of property to foreign nationals who do not pay UK tax.
Berkeley Group closed down 3.4%,
Persimmon down 1.9%,
Barratt Developments down 1.6%,
Taylor Wimpey down 2.0%. The capital raised would go towards measures to tackle rough sleeping, and is designed to ease pressure on the housing market and make homes more affordable. Analysts at Shore Capital called the idea "ill-judged" and a move that plays on the idea that overseas house buyers leave the properties empty.The pound was quoted at USD1.3040 at the London equities close, compared to USD1.3048 at the close on Friday, despite data showing that UK manufacturing sector activity saw an unexpected upturn in the month of September.The UK manufacturing sector expanded at a faster pace in September, survey data from IHS Markit and Chartered Institute of Procurement & Supply showed. The manufacturing Purchasing Managers' Index rose to 53.8 in September from 53.0 in August, which was revised up from 52.8. Any reading above 50 indicates expansion in the sector."The reaction in the forex market has been very much mute as the bigger focus remains on the Brexit related issues. But the silver lining is that the manufacturing data is still above the critical level of 50 which shows expansion but the net lending numbers are dropping and this shows that credit conditions are not becoming better in the country," said ThinkMarkets analyst Naeem Aslam.As the Conservative Party conference rolled on in Birmingham, UK Chancellor of the Exchequer Philip Hammond used his keynote speech as a rallying cry to urge fellow party members to "stand together" as Prime Minister Theresa May seeks to secure a Brexit deal based on her Chequers plan.The chancellor promised he would maintain "enough fiscal firepower" to support the economy in the case of a no-deal Brexit.Declaring that the Conservatives remained "the party of business", Hammond announced reforms of the apprenticeship levy to meet companies' concerns as well as a GBP125 million package to boost the number of well-paid jobs across the UK.Hammond could not resist making a few jibes at the Labour party's expense as he denounced the opposition as a "backward-looking party" which is "totally unfit to govern", he said.The Runnymede and Weybridge MP won applause from activists as he declared: "Jeremy Corbyn boasts that Labour are a government-in-waiting. Well, I say let's keep him waiting, this year, next year and every year".In Paris the CAC 40 ended up 0.2%, while the DAX 30 in Frankfurt ended up 0.8%. The euro stood at USD1.1566 at the European equities close, against USD1.1619 late Friday, despite the jobless rate in the eurozone falling to its lowest level in a decade. Unemployment in the eurozone dropped to 8.1% in August, the lowest rate since November 2008, according to data from the EU's statistics agency Eurostat.Across the 19-country currency bloc, 13.2 million people were without a job in August, according to the figures from Eurostat. The figure represents a fall of 0.1 percentage point from July.Stocks in New York were higher at the London equities close amid optimism over US and Canadian officials agreeing a trade deal to replace the North American Free Trade Agreement shortly before a midnight deadline.The DJIA was up 1%, the S&P 500 index up 0.7% and the Nasdaq Composite up 0.5%.The new trade deal, called the US-Mexico-Canada Agreement, or USMCA, will reportedly provide more market access to US dairy farmers and effectively cap Canadian automobile exports to the US.In a joint statement US Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said the agreement will "strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home".US President Donald Trump, a harsh critic of NAFTA, praised the USMCA as a "historic transaction" in a post on Twitter on Monday.The leaders of the US, Canada, and Mexico are expected to sign the new agreement before the end of November, although it will still need to be approved by Congress.Elsewhere, US Federal Chair Jerome Powell will speak at the National Association for Business Economics' annual meeting on Tuesday at 1745 BST. Brent oil was higher quoted at USD84.70 a barrel at the London equities close from USD82.85 at the close Friday, its highest level since November 2014. Investors widely expect the North Sea benchmark to hit USD100 per barrel for the first time since 2015's crash amid rising geopolitical risks, including looming US sanctions on Iran, which will come into effect on November 4.The sanctions would squeeze Iranian crude exports, hitting the market despite other exporters increasing supply.Oil prices also remain supported by supply disruptions in places such as Venezuela and the recent decision of the Organization of the Petroleum Exporting Countries and its allies to leave production steady.Gold was quoted at USD1,188.75 an ounce at the London equities close against USD1,192.70 late Friday.The economic events calendar on Tuesday has UK Nationwide house price index and construction PMI data at 0700 BST and 0930 BST respectively. There are also eurozone producer prices at 1000 BST. Stock markets in China are closed for the National Day Golden Week holiday. The UK corporate calendar on Tuesday has full year results from plumbing and heating products supplier Ferguson, bar and restaurant operator Revolution Bars and from furniture and floorings retailer ScS Group.
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