LONDON MARKET CLOSE: Tepid start to busy week as retailers end lower

(Alliance News) - Equities in London made a lacklustre start to the week, with share price gains for financials unable to offset declines for leisure and retail stocks which wavered despite large swathes of high street businesses in England reopening for the first time in months.

"It's been a lacklustre start to the week for UK markets despite rising optimism over the prospects for the UK economy," CMC Markets analyst Michael Hewson noted.

"Both the FTSE 100 and FTSE 250 have slipped back from last week's peaks, with some profit taking coming through in the retail sector after several weeks of gains, while markets in France and Germany have been similarly subdued as investors take a pause in a week that will see some important economic reports out of China and the US."

The FTSE 100 index lost 26.63 points, or 0.4%, to close at 6,889.12 on Monday. The mid-cap FTSE 250 ended the session 97.71 points, or 0.4%, lower at 22,153.55. The AIM All-Share index closed 1.81 points, 0.2%, lower at 1,234.69.

The Cboe UK 100 index ended down 0.4% at 686.86. The Cboe 250 closed down 0.5% at 19,761.25. The Cboe Small Companies closed down 0.4% at 14,238.74.

Both the CAC 40 in Paris and the DAX 30 in Frankfurt ended 0.1% lower.

London-listed high street retailers ended lower on Monday. The stocks were hit by profit taking after investors had bought shares in the firms in advance of Monday's lockdown ease.

Among the blue-chips, B&Q owner Kingfisher fell 2.7%, homewares and clothing retailer Next lost 2.1% and athleisure firm JD Sports fell 0.4%. Associated British Foods, whose Primark retail unit trades only on the high street and has no online offering, gave back 0.9%.

Among the mid-caps, Sports Direct owner Frasers Group fell 2.4%, while pub firms JD Wetherspoon and Mitchells & Butlers lost 1.9% and 1.4%.

AO World dropped 5.2%, among the worst mid-cap performers. The online electronics retailer ended lower as bricks and mortar counterparts lifted shutters again.

Elsewhere, easyJet and Ryanair shed 3.2% and 2.6% after HSBC cut the budget carries to Hold from Buy.

Banking stocks meanwhile, were boosted after Deutsche Bank raised Lloyds to Buy from Hold. Lloyds ended up 2.6%.

Barclays gained 1.3% and NatWest climbed 1.1%. Deutsche Bank lifted its price targets for the duo.

US indices retreated from record highs on Monday, amid trepidation ahead of key US data this week and before banks kick off the Wall Street first-quarter earnings season. The Dow Jones Industrial Average and the S&P 500 were 0.2% lower at the time of the closing bell in London. The Nasdaq Composite was down 0.5%.

JPMorgan Chase, Wells Fargo and Goldman Sachs all report first-quarter numbers on Wednesday.

IG Markets analyst Joshua Mahony commented: "Whilst the incessant rise in US markets would ordinarily indicate outperformance for the investment banks, we are instead focusing on the likes of Goldman Sachs and Morgan Stanley for a very different reason. While initial accounts highlight a swift and clean exit from their Archegos Capital Management positions, there will be plenty of interest in just how well they have managed to avoid the kind of losses seen at the likes of Nomura and Credit Suisse.

"Banks are progressively likely to garner the interest of investors as we move through this crisis, with expectations of rising interest rates and economic rebound meaning that we could see an increasing interest in the pro-cyclical sector."

Trade in New York was also cautious after US Federal Reserve Chair Jerome Powell over the weekend said the US economy was "at an inflection point" and that growth and employment would accelerate in the coming months. However, he once again insisted that the Covid-19 pandemic continued to present a risk and could impede the recovery.

The pound was quoted at USD1.3746 at the London equities close on Monday, up from USD1.3723 on Friday. The euro was priced at USD1.1911, up from USD1.1886.

Eurozone retail sales demonstrated a recovery in February on a monthly basis, beating market estimates, the latest figures from Eurostat showed.

On an annual basis, retail sales in the eurozone shrank 2.9% in February, easing from a 5.2% decline in January. The latest print beat the market forecast, cited by FXStreet, for a 5.4% fall.

Retail sales grew 3.0% month-on-month in February, rebounding from a 5.2% slump in January. The reading beat market expectations for 1.5% growth.

Against the yen, the dollar was trading at JPY109.40 late Monday, down from JPY109.69 at the same time on Friday.

Brent oil fetched USD63.58 a barrel at the London equities close on Monday, up from USD63.13 late Friday. Gold was trading at USD1,734.45 an ounce, down from USD1,743.30.

Tuesday's economic calendar has UK gross domestic product data at 0700 BST, before US consumer price index figures at 1330 BST. A busy week for economic data continues with a eurozone industrial output on Wednesday, US jobless claims on Thursday and China GDP data on Friday.

Tuesday's corporate calendar has annual results from retailers JD Sports and French Connection, as well as first-quarter updates from food delivery firm Just Eat Takeaway.com and online trading services provider Plus500.

By Eric Cunha; ericcunha@alliancenews.com

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