London close: Stocks manage positive finish after wayward session

London stocks managed a positive finish on Tuesday, having bobbed above and below the waterline throughout a session that saw them struggle for direction.

The FTSE 100 ended the day up 0.24% at 7,125.78, and the FTSE 250 was ahead 0.61% at 23,886.01.

Sterling was in the red, meanwhile, last trading 0.03% weaker on the dollar at $1.3715, and slipping 0.06% against the euro to €1.1675.

“The FTSE 250 has managed to outperform, making another new record high, however the FTSE 100 has lagged, along with the rest of Europe’s stock markets,” said CMC Markets chief market analyst Michael Hewson.

“We’re seeing some decent gains in airlines, with easyJet leading the gainers, with the calculation appearing to be that as vaccines get set to receive approvals from various regulators, it will then make it easier to oblige or compel people to have the jab, and thus make a return to some semblance of normal that much easier.

“In all honesty this seems to be a bit of a stretch, given the other challenges in a return to normal, however for now investors don’t seem that bothered.”

Hewson noted that with a more buoyant airline sector, Rolls-Royce shares also moved higher, hitting their best levels in five months.

“Investor sentiment around the business [is] starting to become more positive as maintenance revenues start to show signs of picking up, along with a broader focus on other areas of its business, namely defence and the power business which have continued to look resilient.”

On the economic front, UK retail sales grew at the fastest pace since December 2014 in August, while orders growth hit a survey record high.

According to the latest survey from the Confederation of British Industry, the volume of sales rose to +60 from +23 in July, versus expectations for a drop to +20.

The survey found that average selling prices in August increased at the fastest pace since November 2017, with respondents expecting this picture to remain broadly similar in the month ahead.

It said stock levels in relation to expected sales hit a record low across retail and the distribution sector as a whole.

That marked the fifth consecutive month in which a record low has been reached in distribution sector stock levels.

“A ramping-up in retail sales growth in the year to August shows just how much consumer demand continues to spur economic recovery,” said CBI lead economist Alpesh Paleja.

“While sales growth is set to remain strong, a more definitive shift in household spending towards consumer services is anticipated later in the year - leading to greater normalisation of growth in the retail sector.”

Paleja said that there were also signs of operational challenges still biting, with stock levels reaching another record low and import penetration falling.

“Disruption is being exacerbated by continued labour shortages, with many retailers reliant on younger employees currently awaiting their jab.”

The latest residential property data from HMRC, meanwhile, showed an “expected by noticeable” fall in provisional transaction numbers in July as the first stage of winding down the stamp duty holiday took effect, following a surge in ‘forestalling’, or completing transactions earlier, in June.

According to the tax collector’s provisional numbers, a total of 73,740 residential transactions took place in the UK in July, which was 4.2% higher than a year ago, but 62.8% lower than in June.

The provisional seasonally-adjusted estimate of UK non-residential transactions for July was 9,760, which was 21% higher than July 2020 and 5.9% lower than June.

Paul Stockwell, chief commercial officer at Gatehouse Bank, said it was “no surprise” that July saw a big slump in transactions compared to June’s “spectacular” highs.

“A record number of buyers had been eager to complete their sale before the stamp duty deadline,” he said.

“Transactions may creep up again in August, and we can expect another flurry of activity in September as buyers try to complete sales before the final stamp duty savings are removed.

“This wave is unlikely to match June’s in scale, but the effect of the cliff-edge will still be in attendance.”

In equity markets, J Sainsbury slid 4.85% after surging on Monday, following a report that US private equity firm Apollo was considering making a £7bn offer for the supermarket chain.

Banks were also under the cosh, with HSBC down 1.23% and Lloyds Banking Group 0.44% weaker.

Wood Group declined 0.21% after it reported a rise in interim profit as trading momentum improved in the second half but said revenue fell 22.9%.

NCC Group was pushed 3.33% lower after a downgrade to ‘hold’ from ‘buy’ on valuation grounds at Canaccord Genuity.

On the upside, travel and leisure stocks were in the green, with Premier Inn owner Whitbread up 4.53%, British Airways parent IAG ahead 2.67%, engine maker Rolls-Royce 3.99% firmer, Cineworld adding 5.11%, and easyJet ascending 5.32%.

Marks & Spencer racked up gains of 4.15% after a positive Times 'Tempus' write-up and following an upbeat note by Berenberg.

Spectris rose 1.32% after agreeing to sell its NDC Technologies business to Nordson for $180m (£130m).

Rio Tinto gained 2.97% after the miner said it had resumed operations at Richards Bay Minerals (RBM) in South Africa.

Mining operations at RBM were stopped in June due to safety concerns following the fatal shooting of a senior manager.

Market Movers

FTSE 100 (UKX) 7,125.78 0.24%
FTSE 250 (MCX) 23,886.01 0.61%
techMARK (TASX) 4,812.24 0.00%

FTSE 100 - Risers

Whitbread (WTB) 3,183.00p 4.53%
Rolls-Royce Holdings (RR.) 118.28p 3.99%
Evraz (EVR) 578.00p 3.21%
Taylor Wimpey (TW.) 178.75p 3.03%
Antofagasta (ANTO) 1,476.50p 3.01%
Rio Tinto (RIO) 5,410.00p 2.97%
Informa (INF) 541.20p 2.93%
Anglo American (AAL) 2,991.50p 2.77%
Barratt Developments (BDEV) 729.00p 2.70%
International Consolidated Airlines Group SA (CDI) (IAG) 164.74p 2.67%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 323.50p -4.85%
Imperial Brands (IMB) 1,524.50p -2.18%
B&M European Value Retail S.A. (DI) (BME) 572.20p -1.79%
Kingfisher (KGF) 355.50p -1.52%
Avast (AVST) 598.00p -1.52%
Hikma Pharmaceuticals (HIK) 2,530.00p -1.29%
SEGRO (SGRO) 1,274.00p -1.24%
GlaxoSmithKline (GSK) 1,483.80p -1.24%
HSBC Holdings (HSBA) 389.65p -1.23%
Burberry Group (BRBY) 1,854.50p -1.20%

FTSE 250 - Risers

Petropavlovsk (POG) 20.64p 8.36%
Harbour Energy (HBR) 366.40p 6.70%
easyJet (EZJ) 843.40p 5.32%
TUI AG Reg Shs (DI) (TUI) 324.30p 5.29%
Carnival (CCL) 1,554.40p 5.18%
Cineworld Group (CINE) 66.12p 5.11%
Fidelity China Special Situations (FCSS) 345.00p 4.83%
Trainline (TRN) 349.00p 4.80%
Vistry Group (VTY) 1,237.00p 4.64%
Marks & Spencer Group (MKS) 170.70p 4.15%

FTSE 250 - Fallers

Volution Group (FAN) 504.00p -4.00%
NCC Group (NCC) 319.50p -3.33%
Dechra Pharmaceuticals (DPH) 5,295.00p -2.50%
Hays (HAS) 154.80p -2.09%
Greencoat UK Wind (UKW) 129.60p -1.52%
Serco Group (SRP) 132.80p -1.48%
Airtel Africa (AAF) 92.45p -1.33%
Indivior (INDV) 193.70p -1.33%
Convatec Group (CTEC) 223.50p -1.28%
TI Fluid Systems (TIFS) 309.00p -1.28%