LONDON MARKET CLOSE: FTSE 100 shakes off travel sector weakness

Tue, 29th Jun 2021 16:55

(Alliance News) - The mood was brighter in London on Tuesday, but weakness in gold miners and travel stocks meant the FTSE 100's performance paled in comparison to the DAX 30's surge in Frankfurt.

The FTSE 100 index closed up 14.58 points, or 0.2%, at 7,087.55. The FTSE 250 ended up just 8.75 points at 22,542.17, and the AIM All-Share closed up 4.82 points, or 0.4%, at 1,256.06.

The Cboe UK 100 ended up 0.2% at 705.46, the Cboe UK 250 finished flat at 20,214.76, and the Cboe Small Companies ended down 0.2% at 15,334.70.

In European equities on Tuesday, the CAC 40 in Paris ended up 0.2%, while the DAX 30 in Frankfurt jumped 0.9%.

"European markets have had an altogether more positive tone after yesterday's declines; however, the shadow of Delta continues to overshadow wider sentiment," said Michael Hewson, chief market analyst at CMC Markets.

Covid-19 infections are rising again in Europe after falling for two and a half months, mainly because of the Delta variant in the UK and Russia, according to a tally Tuesday by AFP.

The two countries have experienced not only the most new cases in Europe, but also the most rapid spread among those that have recorded more than 1,000 cases per day.

In the UK, there has been a near-doubling of new deaths in two weeks, from around ten daily to 17 last week. But the number is still far below levels during the peak in January when nearly 1,250 people died every day.

The travel sector extended losses on Tuesday, with British Airways parent International Consolidated Airlines finishing 1.4% lower and jet engine maker Rolls-Royce slid 1.9%. Anglo-German tour operator Tui fell 5.1% in the FTSE 250 and central and eastern Europe-focused airline Wizz Air fell 3.1%.

UK Transport Secretary Grant Shapps has cast doubt on a quick resolution to allow transatlantic travel given "complexities" linked to the Oxford/AstraZeneca jab and US vaccine status checks.

He told MPs that talks between the UK and US have begun and "progress is being made" to reopen travel between the countries. But he cautioned that there are a "whole series of complexities to resolve" before an agreement can be reached.

Virgin Atlantic has previously warned the restriction of transatlantic links with the US is costing the UK economy GBP23 million each day.

Finishing at the bottom of the FTSE 100 was Polymetal International, down 3.3%, while precious metals mining peer Fresnillo shed 1.8%.

Gold was quoted at USD1,760.21 an ounce at the London equities close Tuesday, falling from USD1,779.56 at the close on Monday.

"The dollar has been driving FX market volatility, with GBPUSD falling back two-month lows. That dollar strength has in turn hit precious metals, with declines in gold and silver sending the likes of Fresnillo and Polymetal lower," said Joshua Mahony, senior market analyst at IG.

The pound was quoted at USD1.3840 at the London equities close Tuesday, down compared to USD1.3884 at the close on Monday. The euro fell to USD1.1908 at the European equities close from USD1.1932 at the same time on Monday.

However, the dollar pulled back against the safe haven Japanese yen. Against the yen, the dollar was trading at JPY110.48, soft compared to JPY110.53 late Monday.

Elsewhere in the commodity space, Brent oil was quoted at USD75.11 a barrel at the London equities close Tuesday from USD75.32 late Monday. Traders have their eyes on Thursday's OPEC+ meeting of oil-producing countries, with analysts pencilling in a production increase of 500,000 barrels per day in August.

The top performer in the FTSE 100 on Tuesday was Just Eat Takeaway.com, rallying 3.9%.

"Just Eat Takeaway appears to be getting a lift due to the resilience in the tech sector, as well as its position as perhaps being considered recession proof, given its dominant position in UK, US and European markets," said CMC's Hewson.

Also ending in the green were blue-chip housebuilders, with Persimmon advancing 1.6% and Taylor Wimpey rising 1.1%. Figures from Nationwide showed UK house prices continued to surge in June with the highest rate of annual growth since November 2004.

On an annual basis, the Nationwide house price index jumped 13% in June, picking up from 11% growth in May. The average UK house price stood at GBP245,432 in June, up from GBP242,832 in May.

Further, Bank of England data showed UK mortgage activity remained robust in May as government support measures continue to support the housing market. Mortgage approvals were 87,500 in May, up slightly from 86,900 in April, but lower than the recent peak of 103,200 in November.

In the FTSE 250, IWG got a boost, gaining 2.5%, even after CC Capital Partners said it doesn't intend to make a takeover offer for the office space provider.

The announcement came in response to a Sky News story late Monday that said IWG has held secret talks with the New York-based private equity firm over a GBP4 billion buyout.

Elsewhere in London, Lamprell shares dived 32% after the oil rig construction firm cautioned that it faces "severe liquidity constraints" and is deferring creditor payments to manage the problem.

Lamprell has been assessing its funding options, it said, and must complete a new funding arrangement of between USD120 million and USD150 million by the end of the third quarter.

Negotiations with banks are in "advanced stages" to secure working capital of up to USD90 million. To raise the remaining funding, or if negotiations with banks fall through, Lamprell will raise capital through equity to plug the USD120 million to USD150 million hole. If it fails to raise the needed funds there is a "significant risk" the group will be unable to meet contractual obligations and uncertainty exists as to whether the company can continue to trade.

Stocks in New York were posting modest gains at the London equities close, with the DJIA up 0.3%, the S&P 500 index up 0.1%, and the Nasdaq Composite flat.

The international economic events calendar on Wednesday has Japanese industrial production overnight, Chinese manufacturing and non-manufacturing PMIs for June at 0200 BST and then UK GDP at 0700 BST. German unemployment is at 0855 BST and eurozone inflation at 1000 BST, with US ADP employment at 1315 BST.

The UK corporate calendar on Wednesday has full-year results from electricals retail Dixons Carphone, public transport operator Stagecoach and advertising agency M&C Saatchi. Outsourcer Serco puts out a trading statement.

By Lucy Heming; lucyheming@alliancenews.com