London close: FTSE up on weak pound as new Covid rules revealed

London’s top-flight index closed firmly in the black on Wednesday, despite disappointing news on the Covid vaccine front, helped along by a weaker pound.

The FTSE 100 ended the session up 1.39% at 6,012.84, while the FTSE 250 lost 0.17% to 17.594.93.

Sterling was in a mixed state at the end of the trading day, last gaining 0.18% on the dollar to $1.3005, but weakening 0.06% against the euro to €1.1015.

“Stock markets are back in rally mode as investors look to get back to their ‘buy the dip’ ways that proved so successful over the past few months,” said IG chief market analyst Chris Beauchamp.

“While the pullback has only really lasted a few days, that is the norm for this rally since March.

“The drop in early June was swift and brutal, but short-lived.”

Beauchamp said the early September version appeared to be heading in the same direction.

The moves in London came as the UK was set to publish its new internal market bill, which will set out how trade operates across the UK after Brexit.

Sterling had faced pressure earlier, following confirmation that the government was planning to backtrack on the Brexit agreement on Northern Ireland, in a move that would break international law.

The weaker pound helped to offset news that AstraZeneca and Oxford University's Covid-19 vaccine trial has been put on hold after a participant in the UK had a suspected adverse reaction.

Late in the afternoon, prime minister Boris Johnson confirmed new restrictions on social gatherings in England, amid a sustained spike in new Covid-19 cases in recent days.

From 14 September, a limit of six people will apply to social gatherings, both indoors and outdoors, down from the current limit of 30 people outdoors and “up to two households” indoors.

In equity markets, dollar-earners gained amid sterling’s earlier weakness, with Ashtead up 5.33%, BP rising 1.45%, Shell ahead 1.76%, British American Tobacco adding 3.63% and Unilever ahead 3.29%.

Avon Rubber rallied 6.33% after announcing the acquisition of US-based military helmet maker Team Wendy for $130m (£100m), as it maintained full-year guidance.

On the downside, travel-related stocks were hit, partly on the vaccine news and partly amid fears around further quarantine restrictions.

British Airways parents IAG was off 3.56%, Premier Inn owner Whitbread lost 3.55%, InterContinental Hotels was off 2.7%, easyJet descended 2.11%, and Upper Crust owner SSP was 6.33% weaker.

Pub chain Wetherspoon was also under the cosh by 9.46%.

IG analyst Joshua Mahony said the fear is that the ban on bigger gatherings is "just the tip of the iceberg as the government begins to ramp up tightening measures first in a list of potential actions that could ultimately hit businesses".

"The fact that the likes of JD Wetherspoon, easyJet, and Cineworld are leading the FTSE 350 declines does highlight the fact that further growth in UK Covid cases will likely lead to restrictions on travel and social interactions.

“From an airline perspective, the fear is that it will soon be a case of other nations imposing quarantines on the UK as the shoe is placed on the other foot.”

Market Movers

FTSE 100 (UKX) 6,012.84 1.39%
FTSE 250 (MCX) 17,594.93 -0.17%
techMARK (TASX) 3,845.87 0.65%

FTSE 100 - Risers

BT Group (BT.A) 110.00p 5.62%
Ashtead Group (AHT) 2,844.00p 5.33%
Unilever (ULVR) 4,743.00p 3.83%
British American Tobacco (BATS) 2,668.50p 3.63%
Standard Chartered (STAN) 386.70p 2.96%
Reckitt Benckiser Group (RB.) 7,504.00p 2.85%
JD Sports Fashion (JD.) 817.80p 2.76%
GlaxoSmithKline (GSK) 1,532.60p 2.67%
Imperial Brands (IMB) 1,360.50p 2.56%
Scottish Mortgage Inv Trust (SMT) 907.50p 2.54%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 210.70p -3.75%
International Consolidated Airlines Group SA (CDI) (IAG) 200.40p -3.56%
Whitbread (WTB) 2,364.00p -3.55%
ITV (ITV) 62.60p -2.89%
InterContinental Hotels Group (IHG) 4,356.00p -2.70%
Legal & General Group (LGEN) 198.35p -2.34%
Ocado Group (OCDO) 2,302.00p -2.00%
M&G (MNG) 157.00p -1.91%
Taylor Wimpey (TW.) 112.85p -1.70%
Persimmon (PSN) 2,479.00p -1.63%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 59.15p 6.58%
Avon Rubber (AVON) 3,950.00p 6.33%
Micro Focus International (MCRO) 290.30p 4.20%
Computacenter (CCC) 2,282.00p 4.13%
Investec (INVP) 146.20p 4.09%
Mediclinic International (MDC) 269.80p 2.98%
Future (FUTR) 1,768.00p 2.79%
Dechra Pharmaceuticals (DPH) 3,332.00p 2.78%
Derwent London (DLN) 2,718.00p 2.57%
Dixons Carphone (DC.) 81.90p 2.44%

FTSE 250 - Fallers

Wetherspoon (J.D.) (JDW) 947.00p -9.46%
Watches of Switzerland Group (WOSG) 312.00p -7.83%
Rank Group (RNK) 124.60p -7.70%
Cineworld Group (CINE) 52.78p -7.44%
SSP Group (SSPG) 236.60p -6.33%
FirstGroup (FGP) 43.30p -6.28%
Carnival (CCL) 1,101.00p -6.09%
TUI AG Reg Shs (DI) (TUI) 342.40p -4.97%
Trainline (TRN) 396.00p -4.72%
Renishaw (RSW) 5,020.00p -4.47%