London close: Stocks succumb to US-fuelled negative sentiment
London stocks slid back into negative territory during afternoon trading on Tuesday, as investors weighed up better-than-expected earnings from the likes of BP and HSBC against ongoing concerns about the Covid-19 pandemic and doubts about US stimulus.
The FTSE 100 ended the session down 1.09% at 5,728.99, and the FTSE 250 was 1.49% weaker at 17,587.71.
At the same time, sterling was stronger, last gaining 0.28% on the dollar to $1.3061, and advancing 0.15% against the euro to €1.1046.
“The markets started to replicate yesterday’s trading as Tuesday went on, with Europe especially looking worse for wear after another round of bruising Covid-19 headlines,” said Spreadex analyst Connor Campbell.
“A lack of incoming stimulus, rising Covid-19 case numbers, the impending election and some rough earnings releases - Caterpillar fell 3.3% after revealing a 54% decline in third quarter earnings - left the Dow unable to shake off its recent malaise.
“And with the Dow down, the European indices didn’t stand a chance.”
Campbell said that investors, increasingly fearful of the impact the latest round of pandemic restrictions would have on the economy, rushed for the exit door.
He noted that the FTSE had spent much of the morning protected by HSBC’s gains, before eventually succumbing to fall to its lowest price since the start of May.
“With HSBC’s gains cut from 6% to 3.4%, the rest of its banking stocks in the red, and a worried look in the faces of its commodities, the UK index couldn’t withstand the pull of the market’s current trajectory.”
Market participants were also increasingly sceptical that any further US stimulus will be forthcoming before the election.
“Stimulus seems like a bust before the election after Pelosi and Mnuchin failed to reach agreement on a call on Monday and Mitch McConnell adjourned the Senate until 9 November,” said Neil Wilson, chief market analyst at Markets.com.
“Pre-election volatility would be expected but this is occurring just as we are seeing the average number of new daily cases of coronavirus in the US hitting a record, with former FDA boss Dr Scott Gottlieb warning of an exponential spread of the virus.
“Strict lockdowns across Europe and the problem of getting fiscal support where it’s needed threatens to create a double dip recession.”
On home shores, investors mulled the latest survey from the Confederation of British Industry, which showed retail sales fell in October at the fastest since June.
The CBI’s monthly gauge of retail sales fell to -23 in October from +11 in September, missing expectations for a reading of +1.
September’s level had marked an 18-month high.
Non-food retailers, department stores, clothing and ‘other normal goods’ were among those reporting a decline in sales, while retailers of furniture, DIY and recreational goods saw strong growth.
Internet sales growth also picked back up to the long-run average, the CBI said.
“The fall in retail sales in October is a warning sign of a further loss of momentum in the economy as coronavirus cases pick up and restrictions are tightened across many parts of the country,” said CBI economist Ben Jones.
In equity markets, HSBC closed up 3.37% after saying it plans to move to a fee-based businesses model as it unveiled a less-than-expected 35% fall in third quarter profits.
Pre-tax profit for the three months to 30 September came in at $3.1bn, compared with a $2.07bn average of analysts' estimates compiled by the bank.
The FTSE 350 banks index was ahead 0.66%.
On the downside, oil giant BP reversed earlier gains to close down 2.13%, as it turned in a profit of $0.1bn on a replacement cost basis, despite a "significantly" lower result in its oil trading arm, following the prior quarter's $6.7bn loss.
Whitbread was 1.96% weaker after the Premier Inn owner revealed that it swung to a loss in the first half after its hotels were closed due to the coronavirus lockdown.
Contracts-for-difference platform Plus500 slid 6.22%, despite reporting a jump in third quarter revenue and earnings amid market volatility, and saying that results for the year are set to be in line with market expectations.
Traders pointed to the fact that while customer income during the quarter was the second highest quarterly level in the company’s history, it was down from the record peak levels achieved in the second quarter, with the gradual reduction from peak levels continuing into the fourth quarter.
FTSE 100 - Risers
HSBC Holdings (HSBA) 330.10p 3.37%
Ocado Group (OCDO) 2,321.00p 2.70%
DCC (DCC) 5,124.00p 2.07%
Hikma Pharmaceuticals (HIK) 2,602.00p 1.84%
Croda International (CRDA) 6,354.00p 1.76%
Fresnillo (FRES) 1,236.00p 1.48%
London Stock Exchange Group (LSE) 8,542.00p 1.42%
Pennon Group (PNN) 1,045.50p 1.41%
Antofagasta (ANTO) 1,035.50p 1.32%
GlaxoSmithKline (GSK) 1,361.00p 1.20%
FTSE 100 - Fallers
M&G (MNG) 154.75p -6.92%
Prudential (PRU) 1,000.50p -5.21%
Legal & General Group (LGEN) 185.65p -5.09%
Persimmon (PSN) 2,389.00p -5.01%
WPP (WPP) 627.20p -4.77%
Barratt Developments (BDEV) 502.60p -4.45%
Land Securities Group (LAND) 526.20p -4.38%
International Consolidated Airlines Group SA (CDI) (IAG) 96.36p -4.31%
Taylor Wimpey (TW.) 110.60p -4.28%
Smiths Group (SMIN) 1,378.50p -3.60%
FTSE 250 - Risers
Aston Martin Lagonda Global Holdings (AML) 54.50p 4.51%
Domino's Pizza Group (DOM) 341.00p 3.46%
888 Holdings (888) 266.00p 3.10%
Virgin Money UK (VMUK) 95.52p 2.95%
Gamesys Group (GYS) 1,148.00p 2.87%
PureTech Health (PRTC) 252.00p 2.44%
Vectura Group (VEC) 107.40p 2.09%
Pets at Home Group (PETS) 394.80p 2.02%
Helios Towers (HTWS) 168.40p 1.94%
Indivior (INDV) 107.00p 1.90%
FTSE 250 - Fallers
Plus500 Ltd (DI) (PLUS) 1,482.00p -8.57%
AO World (AO.) 343.50p -6.78%
Ascential (ASCL) 295.60p -6.40%
Bellway (BWY) 2,317.00p -6.31%
RHI Magnesita N.V. (DI) (RHIM) 2,610.00p -6.12%
Redrow (RDW) 433.20p -5.99%
CMC Markets (CMCX) 317.00p -5.93%
Polypipe Group (PLP) 462.00p -5.91%
Babcock International Group (BAB) 232.40p -5.80%
Energean (ENOG) 526.40p -5.63%