London close: Stocks follow European markets, Treasury yields lower

(Sharecast News) - London stocks had slipped below the waterline by the close on Tuesday, having started the day on a rosier note following solid manufacturing and mortgage borrowing data.
The FTSE 100 ended the session down 0.67% at 6,923.17, and the FTSE 250 was off 0.74% at 22,330.04.

Sterling was in a mixed state, last trading 0.14% weaker against the dollar at $1.3891, while strengthening 0.19% on the euro to €1.1553.

Markets turned weaker earlier in the afternoon, following declines in Germany's DAX as well as US Treasury bond yields.

"The decline in Treasury yields does provide the basis for further caution in the reflation trade, cooling expectations of a major pro-cyclical outperformance as vaccines take effect," said IG senior market analyst Joshua Mahony.

"Interestingly, the 2% collapse in the DAX failed to really highlight any particular focus of selling pressure, with companies across manufacturing, banking, technology, and real estates all losing ground.

"From a German perspective, we had seen a ramp-up in vaccinations of late, bringing increased hope for a catch-up after stuttering efforts led by the European Commission."

Mahony noted that the European Commission had been laying the groundwork for a resumption of tourist activity, boosting expectations that the region could receive a tourism boost over the summer.

"Airlines have received a welcome lift as Europe moves closer to resuming non-essential travel, with the UK government expected to spell out exactly what countries fall into each category of the traffic light system.

"Nonetheless, the resumption of flights does bring its risks, with more infectious and evasive variants from around the world likely to grow in numbers once travel restarts."

On the data front, a survey showed the UK manufacturing sector surged in April, although disruptions to the supply chain continued to cast a shadow.

The IHS Markit/CIPS purchasing managers' index rose to 60.9 in April from 58.9 in March.

That was marginally above both consensus and the flash estimate, for 60.7, and the highest reading since a record 61.0 in July 1994.

Both output and new orders improved in April as lockdown restrictions eased and demand picked up, which in turn boosted employment.

However, supply chain issues continued to dampen progress in some areas.

"The sector remained beset by supply-chain delays and input shortages, which contributed to increased purchasing costs and record selling price inflation," IHS noted.

In equity markets, precious metals miners Fresnillo and Polymetal rose 3.38% and 3.11%, respectively.

Travel stocks were mixed, having rocketed earlier in the session after the EU said on Monday that it will allow holidaymakers from countries with low coronavirus infections, such as the UK, as well as fully-vaccinated tourists from June.

British Airways and Iberia owner IAG was up 0.42%, with the added boost of an upgrade to 'overweight' from 'neutral' at JPMorgan Cazenove.

The bank said that while 2021 was expected to remain very challenging, the prospects for 2022 onwards "look promising as global air travel starts to normalise".

"We anticipate turbulence on this journey but consider IAG an attractive long-term investment," JPMorgan said.

Budget airline easyJet closed up 0.34%, while Premier Inn owner Whitbread was down 1.08% and travel company TUI slipped 1.37%.

Shopping centre owner British Land was up 1.04%, and Land Securities advanced 1.44%, amid brightening prospects after the reopening of non-essential stores.

Elsewhere, Mike Ashley's Frasers Group gained 5.72% after saying it was starting a share buyback of up to £60m to reduce its share capital.

On the downside, online supermarket Ocado lost 4.43%, online electricals retailer AO World slid 6.91%, and Just Eat Takeaway fell 3%.

All three stocks had benefited greatly from Covid-19 restrictions and lockdowns, as demand for home-delivered goods surged.

Doorstep lender Provident Financial slumped 2.78% as it said a review of its consumer credit division was nearing completion, with the outcome to be announced with its full-year results next week.

Market Movers

FTSE 100 (UKX) 6,923.17 -0.67%
FTSE 250 (MCX) 22,330.04 -0.74%
techMARK (TASX) 4,301.86 -1.34%

FTSE 100 - Risers

Fresnillo (FRES) 848.80p 3.38%
Polymetal International (POLY) 1,542.00p 3.11%
BP (BP.) 309.75p 2.36%
Imperial Brands (IMB) 1,537.00p 1.96%
BT Group (BT.A) 167.20p 1.82%
Next (NXT) 7,934.00p 1.69%
Land Securities Group (LAND) 730.40p 1.44%
British American Tobacco (BATS) 2,715.00p 1.23%
Royal Dutch Shell 'A' (RDSA) 1,381.60p 1.22%
British Land Company (BLND) 523.80p 1.04%

FTSE 100 - Fallers

Intermediate Capital Group (ICP) 2,079.00p -5.03%
Ocado Group (OCDO) 2,004.00p -4.43%
Pearson (PSON) 792.80p -4.41%
3i Group (III) 1,223.50p -4.37%
Aveva Group (AVV) 3,330.00p -4.31%
Scottish Mortgage Inv Trust (SMT) 1,210.50p -3.85%
Flutter Entertainment (CDI) (FLTR) 14,325.00p -3.47%
Weir Group (WEIR) 1,852.50p -3.36%
Taylor Wimpey (TW.) 173.65p -3.31%
Hikma Pharmaceuticals (HIK) 2,360.00p -3.28%

FTSE 250 - Risers

Frasers Group (FRAS) 541.50p 5.72%
Vectura Group (VEC) 117.00p 3.91%
Workspace Group (WKP) 850.00p 3.66%
Convatec Group (CTEC) 225.40p 3.30%
Cairn Energy (CNE) 175.30p 3.24%
Syncona Limited NPV (SYNC) 244.00p 2.95%
UDG Healthcare Public Limited Company (CDI) (UDG) 882.50p 2.74%
ITV (ITV) 124.30p 2.73%
Great Portland Estates (GPOR) 711.50p 2.67%
Centamin (DI) (CEY) 110.25p 2.65%

FTSE 250 - Fallers

Network International Holdings (NETW) 390.50p -7.00%
AO World (AO.) 258.80p -6.91%
Baillie Gifford US Growth Trust (USA) 310.50p -6.05%
Edinburgh Worldwide Inv Trust (EWI) 338.00p -5.59%
Elementis (ELM) 141.40p -5.48%
Micro Focus International (MCRO) 490.00p -5.41%
Investec (INVP) 277.90p -4.53%
Allianz Technology Trust (ATT) 286.00p -4.51%
Carnival (CCL) 1,608.60p -4.50%
Just Group (JUST) 104.20p -4.49%