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(Alliance News) - With the coronavirus crisis looking far from over as the UK marked the anniversary of the first national lockdown, stocks in London fell with airlines and oil majors acting as the biggest drags.
The FTSE 100 index closed down 26.91 points, or 0.4%, at 6,699.19. The FTSE 250 ended down 124.13 points, or 0.6%, at 21,331.76, and the AIM All-Share closed down 2.75 points, or 0.2%, at 1,200.21.
The Cboe UK 100 ended down 0.4% at 668.06, the Cboe UK 250 closed down 0.6% at 18,995.79, and the Cboe Small Companies ended down 0.6% at 13,736.79.
In European equities on Tuesday, the CAC 40 in Paris ended down 0.4%, while the DAX 30 in Frankfurt finished flat. The euro stood at USD1.1861 at the European equities close, down against USD1.1936 at the same time on Monday.
A resurgence of coronavirus cases in Europe and further lockdown restrictions weighed on markets.
Germany will enter a strict shutdown for five days over Easter as it fights soaring infection rates fuelled by variants in a "new pandemic", Chancellor Angela Merkel said Tuesday after marathon talks with regional leaders. This followed other countries in Europe over the weekend, such as France, Poland and Ukraine, introducing new lockdown measures.
Meanwhile, a US health agency raised concerns that AstraZeneca may have included out-of-date information during trials of its Covid-19 vaccine, the day after the company said its drug was highly effective in preventing the disease.
The news comes as Europe continues to wrangle over supplies of the jab, and after weeks of uncertainty centred on fears it was linked to an increased risk of blood clots.
"The mood isn't awful, traders aren't running for the hills but there is a sense of fatigue that the restrictive climate will drag on a bit longer," said David Madden, market analyst at CMC Markets.
London's FTSE 100 failed to get much cushioning from a weaker pound on Tuesday.
The pound was quoted at USD1.3778 at the London equities close, sliding from USD1.3860 at the close on Monday even as the UK unemployment rate unexpectedly fell in January.
In the three months to January, the UK unemployment rate was 5.0%, lower from 5.1% in the three months to December. The January reading beat the market forecast, cited by FXStreet, of 5.2%.
The domestic labour market continues to be supported by the UK government's furlough scheme which was extended until the end of September by Chancellor Rishi Sunak at the budget statement earlier this month. Under the scheme, the UK government will pay 80% of wages for hours not worked, up to GBP2,500 a month.
The FTSE 100 was dragged down as shares in jet engine maker Rolls-Royce fell 5.9% and British Airways parent International Consolidated Airlines slipped 4.4%.
The new regulations for the coming months, covering the Prime Minister's "road map" out of lockdown for England, include a ban on leaving the country without a valid reason. Under the rules, people leaving England for a foreign holiday could face a GBP5,000 fine.
"Oil majors and airlines are among the steepest decliners as the likes of BP trace oil prices lower, while investors ditch airlines following the government's latest travel restrictions. With no end in sight to the 'illegal' holiday restriction, it's difficult to be bullish on airlines," said Sophie Griffiths, market analyst at Oanda.
BP shares closed down 3.7%, while Royal Dutch Shell 'A' and 'B' stock fell 3.3% and 3.1%, respectively. Mid-cap Tullow Oil fell 8.5%.
Brent oil was quoted at USD62.09 a barrel at the London equities close Tuesday, tumbling from USD64.21 late Monday with the commodity hit by news of further lockdowns in Europe.
CMC's Madden commented: "Just over two weeks ago, the energy market racked up a 14 month high. Restricted output by OPEC+ was a factor in the rally but so were hopes that western economies would ease up on restrictions, and in turn, that should lift demand. Now it seems that several large economies in Europe might not experience economic lift-off for a few more months, so dealers have been dumping oil as a result."
Elsewhere in London, Bunzl rose 2.4% after RBC raised the distribution firm to Sector Perform from Underperform.
Housebuilder Crest Nicholson rallied 6.4% after guiding to annual profit ahead of consensus expectations following a good trading performance and resilient market conditions.
For its current financial year to date, the Chertsey, Surrey-based housebuilder reported a private sales outlet per week of 0.81, reflecting an improvement from 0.59 for the prior year in full.
Crest said the UK housing market has remained resilient despite the damage caused by Covid-19 and the sector is set to benefit from the measures recently outlined in the UK budget statement earlier this month. These include the extension of the Stamp Duty holiday and the introduction of the government-backed 95% mortgage guarantee scheme.
For the year ending October 31 Crest expects adjusted pretax profit to be GBP85 million, up 14% from consensus expectations of GBP74.3 million, and also 85% higher from GBP45.9 million the year before.
Other housebuilders in London rose on a positive read-across from Crest, with blue-chip stocks Taylor Wimpey and Barratt Development both advancing 1.9%.
Stocks in New York were posting modest losses at the London equities close, with the Dow Jones down 0.1%, the S&P 500 index flat, and the Nasdaq Composite down 0.3%.
Safe havens were mixed, with the Japanese yen nudging up but gold succumbing to a stronger dollar. Against the yen, the dollar was trading at JPY108.67, down a touch compared to JPY108.69 late Monday. Gold was quoted at USD1,727.16 an ounce at the London equities close against USD1,738.99.
The UK corporate calendar on Wednesday has half-year results from housebuilder Bellway and IT infrastructure firm Softcat and a trading statement from seal and cables maker Diploma.
The economic calendar on Wednesday has UK inflation at 0700 GMT and followed by a PMI for March at 0930 GMT. There are also PMIs from Germany and the eurozone at 0830 GMT and 0900 GMT respectively, while there is a US PMI at 1345 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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