London close: Stocks firmer on travel news as investors await Fed
London stocks closed in positive territory on Wednesday, with travel shares higher, but gains were muted as investors closed their pocketbooks ahead of the latest policy announcement from the US Federal Reserve.
The FTSE 100 ended the session up 0.29% at 7,016.63, and the FTSE 250 was 0.57% firmer at 23,006.45.
Sterling was stronger as well, last rising 0.03% against the dollar to trade at $1.3883, and gaining 0.08% on the euro to €1.1755.
“It is unlikely to be a particularly exciting FOMC meeting, but there may be hints regarding the process of tapering of asset purchases,” said IG chief market analyst Chris Beauchamp.
“The chorus of bears that never seems to quieten despite the plethora of record highs across stock markets will no doubt declare tapering will be the event that finally unhinges the great bull market of 2009 to 2021, but this is not 2013.”
Beauchamp said the FOMC was “much more accomplished” in communicating the details of a taper than previously, when it arrives, and so a market selloff purely on the mention of the “T-word” was unlikely.
“But while European markets make headway this afternoon, Wall Street is a touch quieter, preferring to edge lower, although the history of the 2013 taper tantrum shows that even when markets are unhappy about Fed policy, the improving economic and earnings backdrop which prompted the tapering is, unsurprisingly, a positive for stocks in the longer-term.”
Sentiment was boosted earlier in the afternoon after it was confirmed that fully-vaccinated travellers from so-called ‘amber’ countries in the European Union, as well as the United States, would soon be able to avoid quarantine when they arrive in the United Kingdom.
Travellers who received both of their Covid-19 jabs in the UK do not currently need to quarantine on arrival in Britain, if they are travelling from countries on the governments ‘amber’ and ‘green’ lists.
But travellers who are not vaccinated are required to self-quarantine at home or at their place of accommodation for 10 days, and return two Covid-19 tests on days two and eight of their isolation.
After a trial held by British Airways and Virgin Atlantic, and intense lobbying from the likes of Heathrow Airport, the government has agreed to drop the requirement from 2 August.
On the economic front, house price growth eased slightly in July as the stamp duty holiday came to an end, according to fresh survey data from Nationwide.
House prices rose 10.5% on the year, down from June’s 17-year high of 13.4%, while on the month, house prices fell 0.5% in July following a 0.7% increase the month before.
The average price of a home was £244,229, down from £245,432 in June.
“The modest fallback in July was unsurprising given the significant gains recorded in recent months,” said Nationwide’s chief economist Robert Gardner.
“Indeed, house prices increased by an average of 1.6% a month over the April to June period - more than six times the average monthly gain recorded in the five years before the pandemic.”
Shop prices, meanwhile, fell more sharply in July as food and fashion retailers battled for household spending, although cost pressures were mounting for the UK's retailers.
Store prices fell 1.2% from a year earlier compared with a decline of 0.7% a month earlier, according to the British Retail Consortium/NielsenIQ index.
Non-food prices dropped at an annual rate of 1.8% in July, steepening from a drop of 1% in June, while the annual rate of food deflation doubled to 0.4% in July compared with June, led by the price of fresh produce.
“Recently, retailers have faced huge cost pressures as a result of rising costs of shipping, haulage and petrol as well as frictions from exiting the EU,” said Helen Dickinson, the BRC's chief executive.
“The additional paperwork and physical checks on EU imports in October and January may push prices up in the long term.
“Government should do all it can to minimise the impact on consumers by reducing any further frictions and costly delays where it can.”
In equity markets, St. James’s Place was 5.6% higher after it reported a jump in its first-half underlying cash result amid a sharp increase in funds under management.
Precious metals miner Fresnillo shone by 6.95% after saying it was on track to meet its full-year targets as second-quarter silver production rose 18%.
Barclays rallied 2% after it smashed first-half profit estimates as it released £700m in impairments, resumed dividends and announced a £500m share buyback.
The bank reported pre-tax profit of £5bn for the six months to June 30, well above the consensus forecast of £4.1bn, and up from £1.3bn.
Wizz Air flew 7.96% higher after the budget airline reported a widening of its losses for the first quarter as it continues to be hit by pandemic restrictions, but struck an upbeat note on summer capacity and said it expects to be the first major European airline to fully recover capacity to pre-Covid-19 levels.
Airlines more broadly were in the black, with British Airways owner IAG and easyJet also up by 3.76% and 4.64%, respectively, after the government’s announcement of changes to quarantine requirements.
Other travel-related stocks also gained, such as Upper Crust and Ritazza owner SSP, which has outlets at airports and train stations, and jumped 6.73% by the end of trading.
Luxury car maker Aston Martin Lagonda gained 2.42% after saying that first-half losses narrowed as revenues surged, thanks in part to its first sport utility vehicle, the DBX.
On the downside, RHI Magnesita fell 11.88% after its interim earnings before interest, tax and appreciation came in marginally ahead of expectations but net debt came in higher.
Broadcaster ITV reversed earlier gains to close down 1.34%, even after it reported a rise in interim profit and revenue and said it was "emerging from the worst effects of the pandemic", with a recovery in advertising revenues.
FTSE 100 - Risers
Fresnillo (FRES) 806.40p 6.95%
St James's Place (STJ) 1,592.50p 5.60%
International Consolidated Airlines Group SA (CDI) (IAG) 181.92p 3.76%
Rolls-Royce Holdings (RR.) 101.70p 3.49%
Scottish Mortgage Inv Trust (SMT) 1,315.50p 2.93%
Smith & Nephew (SN.) 1,563.50p 2.76%
Melrose Industries (MRO) 161.80p 2.44%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,368.00p 2.43%
Intertek Group (ITRK) 5,586.00p 2.16%
Intermediate Capital Group (ICP) 2,222.00p 2.15%
FTSE 100 - Fallers
Reckitt Benckiser Group (RKT) 5,519.00p -3.18%
HSBC Holdings (HSBA) 396.60p -1.66%
ITV (ITV) 117.75p -1.34%
British American Tobacco (BATS) 2,734.00p -1.32%
Ashtead Group (AHT) 5,566.00p -1.24%
Vodafone Group (VOD) 115.34p -1.20%
Entain (ENT) 1,816.00p -1.01%
WPP (WPP) 931.60p -0.96%
Avast (AVST) 569.20p -0.66%
M&G (MNG) 225.40p -0.62%
FTSE 250 - Risers
Wizz Air Holdings (WIZZ) 5,030.00p 7.96%
4Imprint Group (FOUR) 2,815.00p 7.84%
SSP Group (SSPG) 269.30p 6.73%
Fidelity China Special Situations (FCSS) 360.00p 5.26%
easyJet (EZJ) 890.40p 4.64%
Capita (CPI) 35.80p 4.59%
FDM Group (Holdings) (FDM) 1,166.00p 4.11%
Hochschild Mining (HOC) 154.80p 4.10%
Savills (SVS) 1,125.00p 3.50%
Renishaw (RSW) 5,115.00p 3.42%
FTSE 250 - Fallers
RHI Magnesita N.V. (DI) (RHIM) 3,754.00p -11.88%
Tyman (TYMN) 425.00p -5.27%
Vesuvius (VSVS) 518.00p -3.63%
Greencore Group (CDI) (GNC) 129.60p -2.70%
Mitie Group (MTO) 65.50p -2.56%
PureTech Health (PRTC) 330.00p -2.23%
National Express Group (NEX) 264.60p -2.07%
Beazley (BEZ) 384.30p -2.06%
Coats Group (COA) 68.60p -2.00%
Lancashire Holdings Limited (LRE) 663.50p -1.78%