London close: Markets finish red as sterling makes gains
London stocks finished in the red at the close on Wednesday amid low trading volumes, as investors continued to react to results from Sainsbury's, a trading update from Persimmon and the latest reading on the UK manufacturing sector.
The FTSE 100 was down 0.44% at 7,385.26, unable to hold on to modest opening gains made earlier in the morning, with volumes lower than usual as major Continental markets are closed for the May Day holiday.
At the same time, the FTSE 250 couldn’t quite make it back above the waterline despite a late afternoon rally, finishing the day off by 0.06% at 19,813.74.
Meanwhile, the pound was up 0.41% against the dollar at $1.3085 and 0.1% firmer versus the euro at €1.1636, even after some uninspiring manufacturing data.
“As the pound rose, the FTSE went the other way,” said Spreadex analyst Conor Campbell.
“Ramped up losses in its commodity sector - a 2.5% slide from copper led the miners lower, while BP and Shell fell 1.5% apiece - contributed to the UK index’s 0.4% decline, one that pushed it under 7390 for the first time in effectively a month.”
Figures released earlier showed that UK manufacturing growth slowed in April as the pace of Brexit stockpiling eased.
The IHS Markit/CIPS manufacturing purchasing managers' index fell to a two-month low 53.1 from a 13-month high of 55.1 in March.
Alongside weaker growth in production, new orders and stocks of purchases, the lower PMI level also reflected job losses in the sector.
The data showed that while Brexit stockpiling - the main theme in UK manufacturing in recent months - continued last month, the pace of stockpiling eased as the Brexit deadline was extended to 31 October
Capital Economics economist Andrew Wishart said that while the drop in the manufacturing PMI does not erase all of last month's three-point increase, it still suggested that the sector will slip back into stagnation now that the boost from no-deal Brexit preparations has passed.
Data from the Bank of England revealed that mortgage activity picked up in March as households borrowed an extra £4.1bn secured on property.
The level of lending in March followed a quiet February when additional lending was £3.3bn.
But the number of mortgages approved for buying a house fell by about 3,000 in March to 62,300, suggesting continued caution amid economic and political uncertainty.
Approvals for remortgaging rose slightly to 49,700 as homeowners snapped up low rates offered by banks and building societies.
Elsewhere, the latest survey from Nationwide showed that UK house price growth ticked up a touch in April but remained subdued.
Prices were up 0.4% on the month versus a 0.2% increase in March, and 0.9% on the year in April compared to a 0.7% jump the month before.
Sino-US trade relations were in focus again as US Treasury Secretary Steven Mnuchin tweeted that the latest round of talks between the two nations in Beijing had been productive, with more talks due in Washington next week.
Wall Street indices were starting off with a bang in their Wednesday sessions, with the Dow Jones Industrial Average up 0.27%, the S&P 500 rising 0.1%, and the Nasdaq 100 ahead 0.71% as London markets closed.
The next big focus was on the Fed's rate announcement, which was due later in the evening at 1900 BST.
“Don’t expect the Fed to tie its hands to anything conclusive right now - there are just too many moving parts and policymakers are split over where they think the economy is heading,” said Neil Wilson, chief market analyst at Markets.com.
“I would expect that the Fed retains its slight hiking bias - discussions around the possibility of cuts may take place but the Fed should stick to its patient, data dependent mantra.”
In UK equity markets, Just Eat was among the worst performers on the top-flight index as JPMorgan Cazenove downgraded the stock to 'underweight' from 'overweight' amid "ongoing weakness in the UK and market share losses".
Its shares were down 2.72% at the close.
Housebuilder Persimmon was also lower, falling 0.63% as it said forward sales revenue fell to £2.7bn from £2.8bn on the back of lower reservations in the year to date, adding that building costs would rise by 4%.
On the upside, Sainsbury’s - whose planned merger with Asda has been canned after being blocked by the Competition and Markets Authority - racked up strong gains as its underlying full-year pre-tax profits came in ahead of expectations, up 7.8% to £635m despite a £46m hit from the failure of the deal.
Shares in J Sainsbury finished the day ahead 3.91%
Lloyds Banking Group was 1.65% higher as it cut its target for its Common Equity Tier 1 ratio, while London Stock Exchange Group gained 3.43% as it posted an increase in quarterly income.
Next nudged up 0.97% as the retailer reported a 4.5% rise in first-quarter total full-price sales thanks to unusually warm weather over the Easter period, beating its own forecast of 3.1% growth.
Market Movers
FTSE 100 (UKX) 7,385.26 -0.44%
FTSE 250 (MCX) 19,813.74 -0.06%
techMARK (TASX) 3,610.57 -0.09%
FTSE 100 - Risers
Paddy Power Betfair (PPB) 6,766.00p 4.28%
Sainsbury (J) (SBRY) 231.20p 3.91%
London Stock Exchange Group (LSE) 5,160.00p 2.91%
Whitbread (WTB) 4,575.00p 2.58%
Carnival (CCL) 4,120.00p 2.11%
Lloyds Banking Group (LLOY) 63.79p 1.95%
TUI AG Reg Shs (DI) (TUI) 866.40p 1.87%
InterContinental Hotels Group (IHG) 5,055.00p 1.75%
NMC Health (NMC) 2,871.00p 1.74%
Standard Chartered (STAN) 711.20p 1.60%
FTSE 100 - Fallers
Micro Focus International (MCRO) 1,839.60p -5.07%
Just Eat (JE.) 678.20p -2.98%
Antofagasta (ANTO) 888.20p -2.18%
Pearson (PSON) 812.40p -2.14%
British American Tobacco (BATS) 2,927.50p -2.09%
Royal Dutch Shell 'A' (RDSA) 2,407.50p -1.73%
Phoenix Group Holdings (PHNX) 710.80p -1.62%
Royal Dutch Shell 'B' (RDSB) 2,428.50p -1.46%
AstraZeneca (AZN) 5,644.00p -1.43%
United Utilities Group (UU.) 817.00p -1.42%
FTSE 250 - Risers
Ferrexpo (FXPO) 227.70p 9.84%
Spirent Communications (SPT) 165.60p 4.28%
NewRiver REIT (NRR) 238.00p 3.70%
Ascential (ASCL) 368.60p 3.37%
AJ Bell (AJB) 419.00p 3.20%
Metro Bank (MTRO) 774.00p 3.20%
Charter Court Financial Services Group (CCFS) 366.00p 3.10%
Galliford Try (GFRD) 554.50p 2.31%
IG Group Holdings (IGG) 521.00p 2.20%
McCarthy & Stone (MCS) 130.80p 2.03%
FTSE 250 - Fallers
Funding Circle Holdings (FCH) 239.00p -5.53%
Cairn Energy (CNE) 163.30p -4.61%
Greene King (GNK) 616.40p -3.84%
Domino's Pizza Group (DOM) 258.30p -3.44%
Acacia Mining (ACA) 141.50p -3.28%
Intu Properties (INTU) 91.30p -3.16%
Premier Oil (PMO) 97.00p -2.79%
Tullow Oil (TLW) 219.10p -2.75%
Aston Martin Lagonda Global Holdings (AML) 969.00p -2.46%
Dixons Carphone (DC.) 141.55p -2.45%