London close: Stocks close slightly lower after choppy session
London stocks closed just below the waterline on Thursday after a turbulent session, as investors weighed concerns about tightening Covid-19 restrictions across Europe, and cheered results from the likes of Lloyds, BT and Shell.
The FTSE 100 ended the session down 0.02% at 5,581.75, and the FTSE 250 was off 0.41% at 17,177.68.
Sterling ended the trading day in a mixed state, last falling 0.58% against the dollar to $1.2908, but gaining 0.18% on the euro to €1.1074.
“Markets have enjoyed a welcome reprieve from the incessant selling that has dominated the week thus far,” said IG senior market analyst Joshua Mahony.
“With the impending US [election] expected to clear the way for a multi-trillion stimulus package, traders will be weighing up whether this current move towards a second lockdown should be enough to tip the scale into a full market capitulation.
“Unfortunately, there are precious few signs that the soft-touch tiered approach is enough to ward off another full lockdown, with the UK likely follow the lead of their European counterparts in Germany, France, and Ireland.”
Mahony said the question was whether that pullback could be a perfect ‘buy-the-dip’ opportunity given the possibility of a vaccine from either AstraZeneca or Pfizer in the coming months.
“However, while those two front-runners provide the potential for a more timely resolution to this crisis, there is a major risk that if neither vaccines prove sufficient, we could face another six-months of economic strife.”
The session opened with overtones of negative sentiment, as news of national lockdowns in France and Germany was digested, while in the UK, Prime Minister Boris Johnson remained under pressure for another national lockdown.
Data on the US economy helped keep a lid on the negativity during the afternoon, however, as the country’s gross domestic product bounced back in the third quarter from the collapse in activity seen in the preceding three months.
According to the Department of Commerce, GDP shot back at an annualised pace of 33.1%, beating consensus forecasts for a 32% improvement, and swinging from the second quarter's 31.4% plunge.
Despite the record pace of expansion registered over the three months to September, GDP was still 3.5% below where it was at the end of 2019.
On this side of the Atlantic, meanwhile, rate-setters in Frankfurt kept policy unchanged in their latest decision, but made clear signals that more stimulus was very likely when they meet again in December.
In a statement immediately following the governing council's meeting, the European Central Bank began by acknowledging that risks to the economy were "clearly" tilted to the downside.
"In the current environment of risks clearly tilted to the downside, the Governing Council will carefully assess the incoming information, including the dynamics of the pandemic, prospects for a rollout of vaccines and developments in the exchange rate," the statement read.
Investors earlier pored over the latest figures from the Bank of England, which showed that mortgage approvals hit their highest level in 13 years in September, while consumer credit declined.
Mortgage approvals for house purchase rose from 85,500 in August to 91,500, hitting the highest level since September 2007.
That was 24% higher than approvals in February.
However, consumer credit weakened in September, with net repayments of £600m.
That followed increases of £285m in August and £1.1bn in July, which marked the first rise since February.
Thomas Pugh, UK economist at Capital Economics, said September’s money and credit data showed that the mini-boom in the housing market continued but a fall in consumer credit suggests that consumer spending was already faltering before the latest rounds of restrictions were imposed.
"Overall, these figures support other evidence that the recovery continued to peter out at the end of the third quarter," Pugh said.
"The additional restrictions imposed since September will probably prompt businesses and households to start to conserve cash again, weighing on spending and investment.
“Indeed, we already expect the recovery to stall in the fourth quarter, and it could go into reverse.”
In equity markets, engine maker Rolls-Royce lost 8.29% as its stock went ex-dividend.
Standard Chartered was 7.68% weaker even after it posted a smaller-than-expected fall in third-quarter profit and lowered bad loan guidance as it considered a return to dividends at the full year stage.
Advertising company WPP slid 2.47% even as it reported an improvement in third-quarter sales, with revenue less pass-through costs - which excludes the impact of acquisitions and disposals - down 7.6% in the third quarter to £2.4bn, compared to a 15.1% fall in the second quarter.
On the upside, Lloyds Banking Group pushed 2.28% higher as the bank reported better-than-expected third-quarter profits and lowered its bad loan provisions after a surge in new mortgage lending.
Online supermarket Ocado 1.6% firmer, most likely amid expectations that it would benefit from a second lockdown.
BT added 3.86% as it posted a decline in half-year pre-tax profit but lifted its earnings guidance and said it plans to reinstate dividends from the 2022 financial year.
Royal Dutch Shell rallied 3.68% after it unveiled a plan to increase dividends and cut debt as it swung to a small third quarter profit.
The energy giant lifted its dividend by 4% quarter-on-quarter to 16.65 cents a share, and reported a $177m profit on a current cost of supplies basis, compared with a $18.4bn loss in the second quarter.
FTSE 100 - Risers
Flutter Entertainment (FLTR) 13,235.00p 7.73%
Royal Dutch Shell 'B' (RDSB) 898.30p 3.68%
Royal Dutch Shell 'A' (RDSA) 932.70p 3.63%
Scottish Mortgage Inv Trust (SMT) 1,015.00p 2.42%
Lloyds Banking Group (LLOY) 28.28p 2.28%
CRH (CRH) 2,684.00p 1.82%
Ocado Group (OCDO) 2,350.00p 1.60%
NATWEST GROUP PLC ORD 100P (NWG) 117.15p 1.56%
HSBC Holdings (HSBA) 323.60p 1.44%
Rio Tinto (RIO) 4,325.50p 1.39%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 72.40p -14.36%
Standard Chartered (STAN) 345.00p -7.68%
Next (NXT) 5,948.00p -3.03%
WPP (WPP) 598.00p -2.76%
Prudential (PRU) 934.40p -2.63%
Melrose Industries (MRO) 117.60p -2.53%
Informa (INF) 413.30p -2.52%
BT Group (BT.A) 99.12p -2.49%
Coca-Cola HBC AG (CDI) (CCH) 1,774.50p -2.10%
International Consolidated Airlines Group SA (CDI) (IAG) 91.74p -2.09%
FTSE 250 - Risers
AO World (AO.) 365.00p 9.12%
Petropavlovsk (POG) 27.45p 6.60%
Cineworld Group (CINE) 25.70p 5.67%
Network International Holdings (NETW) 212.60p 3.51%
PureTech Health (PRTC) 255.50p 3.44%
Computacenter (CCC) 2,298.00p 3.42%
Diversified Gas & Oil (DGOC) 110.20p 3.38%
Biffa (BIFF) 211.00p 3.18%
Centamin (DI) (CEY) 126.05p 2.69%
Hochschild Mining (HOC) 216.60p 2.65%
FTSE 250 - Fallers
Aston Martin Lagonda Global Holdings (AML) 51.45p -6.45%
Babcock International Group (BAB) 212.00p -4.89%
ICG Enterprise Trust (ICGT) 800.00p -4.76%
Micro Focus International (MCRO) 217.50p -4.61%
FirstGroup (FGP) 41.64p -4.19%
Wood Group (John) (WG.) 204.70p -3.40%
Countryside Properties (CSP) 331.20p -3.38%
Victrex plc (VCT) 1,832.00p -3.38%
Frasers Group (FRAS) 375.40p -3.25%
Fisher (James) & Sons (FSJ) 1,140.00p -3.23%