London close: Stocks finish weaker with travel sector under pressure

London stocks closed in negative territory on Tuesday, with travel and leisure issues under pressure ahead of tighter border restrictions, while concerns about a third coronavirus wave in Europe and tensions between China and the West also weighed on sentiment.

The FTSE 100 ended the session down 0.4% at 6,699.19, and the FTSE 250 was 0.58% weaker at 21,331.76.

Sterling was in the red as well, last falling 0.66% on the dollar to $1.3773, and weakening 0.06% against the euro to trade at €1.1611.

“UK markets are weakening amid a push away from value today, with fears over future restrictions denting sentiment around the reflation trade,” said IG senior market analyst Joshua Mahony.

“While vaccination efforts continue to push ahead, easing treasury yields have ensured outperformance for tech over pro-cyclical stocks.

“Meanwhile, EU efforts to limit vaccine exports to the UK also threaten to set back a successful vaccine programme.”

Mahony said that with the UK government implementing a £5,000 fine for unjustified foreign travel, there was “clearly” a growing concern that summer could be heavily as a result of the growing number of Brazil variant Covid-19 cases across Europe.

“While the vaccination may significantly reduce the hospitalisations and extreme cases of Manaus Covid, the government seems likely to play it safe given the fear of further mutations if cases rise.”

Tensions between China and the West were also in focus after the UK, the EU, the US and Canada all imposed sanctions on senior Chinese officials involved in the mass internment of Uighur Muslims in Xinjiang province.

In retaliation, China slapped sanctions on several EU officials for "harming" the country’s sovereignty.

On home shores, figures released earlier by the Office for National Statistics showed the unemployment rate unexpectedly ticked lower in the three months to January.

The unemployment rate fell to 5% from 5.1% the month before, versus expectations of 5.2% as the government’s furlough scheme continued to protect jobs during the pandemic.

Still, the rate remained 1.1 percentage points higher than a year ago and 0.1 percentage points higher than the previous quarter.

"Further restrictions and national lockdowns recently have had an impact on vacancies in some industries more than others, most notably the accommodation and food services industry," the ONS said.

The data showed the number of job vacancies in December 2020 to February 2021 was 26.8% lower than a year ago.

That was an improvement on summer 2020, when vacancies were down nearly 60% year-on-year, although the rate of improvement had slowed in the past few months.

“We still expect the unemployment rate to rise further to a peak of 6.0% by early 2022, but that would be a much better result than most feared only a few months ago,” said Ruth Gregory, senior UK economist at Capital Economics.

In equity markets, travel and leisure stocks slumped as the foreign travel ban was extended until July, with anyone attempting to leave England facing a £5,000 fine as of next week.

British Airways owner IAG was down 4.39%, engine maker Rolls-Royce was off 5.9%, and Upper Crust and Ritazza owner SSP lost 4.88%.

Cruise operator Carnival was down 5.57%, easyJet descended 3.27%, TUI was 6.11% weaker, and WH Smith was 0.82% lower.

Cineworld fell 5.71% after saying its US Regal theatres chain would reopen from Covid lockdown in April for the first time in six months, with a UK restart slated for May as it announced a screening deal with Warner Bros.

Energy shares were also on the back foot, with BP down 3.74%, Shell off 3.11% and Tullow Oil 8.5% weaker, as oil prices slid.

Elsewhere, B&Q owner Kingfisher was knocked 2.78% lower by a downgrade to ‘neutral’ at Goldman Sachs.

AstraZeneca lost 1.76% after a US health agency questioned the company’s efficacy data on its Covid-19 vaccine, with concerns raised that recently released results from clinical trials may include outdated information.

On the upside, Crest Nicholson rallied 6.4% after the housebuilder lifted its full-year profit expectations as it hailed a “resilient” UK housing market.

The company said it now expected full-year adjusted pre-tax profit of around £85m, ahead of consensus expectations of £74.3m.

Other housebuilders followed suit, with Barratt Developments up 1.91%, Taylor Wimpey rising 1.88%, Bellway ahead 2.83%, and Redrow 0.81% higher.

Market Movers

FTSE 100 (UKX) 6,699.19 -0.40%
FTSE 250 (MCX) 21,331.76 -0.58%
techMARK (TASX) 4,196.26 -0.36%

FTSE 100 - Risers

United Utilities Group (UU.) 910.80p 2.75%
Severn Trent (SVT) 2,295.00p 2.73%
Bunzl (BNZL) 2,353.00p 2.44%
BAE Systems (BA.) 500.00p 2.40%
BT Group (BT.A) 148.95p 2.23%
Ocado Group (OCDO) 2,104.00p 2.14%
Admiral Group (ADM) 3,046.00p 2.01%
Sage Group (SGE) 599.40p 2.01%
Barratt Developments (BDEV) 778.00p 1.91%
Taylor Wimpey (TW.) 183.85p 1.88%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 105.30p -5.90%
International Consolidated Airlines Group SA (CDI) (IAG) 187.35p -4.39%
BP (BP.) 295.75p -3.74%
Antofagasta (ANTO) 1,660.00p -3.57%
Royal Dutch Shell 'A' (RDSA) 1,436.20p -3.27%
JD Sports Fashion (JD.) 812.60p -3.20%
Royal Dutch Shell 'B' (RDSB) 1,368.60p -3.11%
Informa (INF) 572.60p -3.09%
Melrose Industries (MRO) 166.15p -2.84%
Standard Life Aberdeen (SLA) 286.00p -2.79%

FTSE 250 - Risers

Provident Financial (PFG) 215.40p 7.49%
Crest Nicholson Holdings (CRST) 399.20p 6.40%
Telecom Plus (TEP) 1,256.00p 5.55%
Helios Towers (HTWS) 166.40p 4.65%
Dr. Martens (DOCS) 495.00p 4.21%
JTC (JTC) 626.00p 2.94%
Gamesys Group (GYS) 1,642.00p 2.88%
Bellway (BWY) 3,499.00p 2.83%
888 Holdings (888) 378.00p 2.44%
Pennon Group (PNN) 996.20p 2.24%

FTSE 250 - Fallers

Tullow Oil (TLW) 48.95p -8.50%
TUI AG Reg Shs (DI) (TUI) 354.90p -6.11%
Cineworld Group (CINE) 104.95p -5.71%
Hochschild Mining (HOC) 199.90p -5.62%
Carnival (CCL) 1,567.50p -5.57%
SSP Group (SSPG) 323.40p -4.88%
AO World (AO.) 305.50p -4.68%
Aston Martin Lagonda Global Holdings (AML) 1,975.00p -4.59%
Avon Rubber (AVON) 3,075.00p -4.50%
C&C Group (CDI) (CCR) 280.50p -4.43%