London close: Stocks weaker as Evergrande hand-wringing continues
London stocks closed in the red on Friday, rounding out the week with continued concerns about embattled Chinese property developer Evergrande.
The FTSE 100 ended the session down 0.38% at 7,051.48, and the FTSE 250 was 0.93% weaker at 23,608.79.
Sterling was in negative territory as well, last trading 0.28% weaker on the dollar at $1.3681, and losing 0.09% against the euro to change hands at €1.1679.
“Having started this week very much on the back foot, and then posting three days of gains, European markets have been on a bit of a rollercoaster this week, after hitting two-month lows on Monday,” said CMC Markets chief market analyst Michael Hewson.
“As we come to the end of the week, we look set for another negative session, which would neatly bookend a week that has seen decent gains for the travel and leisure sector, and that has helped to reverse a trend of three successive weekly losses for the FTSE 100.”
Hewson noted that it was a similar story for the new DAX 40, which hit a four-month low on Monday, and which looked set to reverse its losses for the week as Friday drew to a close.
“Concerns about contagion effects from Evergrande haven’t gone away, but they appear to have taken a back seat to worries about supply chain blockages, surging energy prices and rising inflationary pressure, hence the rise in bond yields this week.”
On the economic front, the latest survey from GfK showed that consumer confidence slid in September as concerns about rising food and energy prices mount.
GfK's consumer confidence index fell five points from August to -13, with all individual measures used to compile the widely-followed index on the back foot.
The forecast for personal finances over the next 12 months lost six points to 5, while expectations for the general economic situation in the coming year lost 10 points to -16 and the major purchase index was down three points at -6.
Finally, the savings index was down three points to 22, with GfK attributing the declines to growing anxiety about rises in the cost of living.
“On the back of concerns about rising prices for fuel and food, the growth in headline inflation, tax hikes, empty shelves and the end of the furlough scheme, September sees consumers slamming on the brakes as those already in economic hardship anticipate a potential cost of living crisis,” said Joe Staton, client strategy director.
“When consumer confidence drops, shoppers tend to spend less and this dampens the overall economic prospects for the UK.
“This really is an unwelcome picture going into 2022 and beyond.”
Elsewhere, the latest distributive trades survey from the Confederation of British Industry showed retail sales grew at the weakest pace since March in the 12 months to September, while growth in orders placed with suppliers also slowed.
The CBI’s headline sales balance for retailers fell to +11% in September from +60 the month before, while retail orders also grew at a slower pace in the year to September, with a "slight acceleration" expected next month.
Sales were seen as poor for the time of year in September, and were expected to be "broadly average" for the time of year in October.
“Demand cooled for retailers in the year to September after running red hot over the summer, pushing sales below seasonal norms for the first time since March," said the CBI’s principal economist Ben Jones.
"But volumes are expected to return to more typical levels for the time of year next month.
“Low stock adequacy remains a concern across the distribution sector.”
In political developments, Prime Minister Boris Johnson reportedly approved the relaxation of UK immigration rules during the afternoon, to allow more foreign truck drivers into the country to ease shortages at petrol stations and wider economic disruption.
The government had recently faced mounting criticism from retailers and the haulage industry as a shortage of drivers caused by Brexit has led to increased supply chain disruption.
One person close to the situation said the prime minister had issued instructions to fix the escalating problem.
“Boris wants this solved,” the Financial Times newspaper reported.
An ally of Johnson reportedly added: “Boris is completely fed up with bad headlines on this and wants it sorted and doesn’t care about visa limits any more.”
In equity markets, JD Sports Fashion fell 2.48% after Nike’s first-quarter sales missed expectations and the company cut its full-year sales forecast.
Fund management services provider JTC slumped 3.27% after Shore Capital downgraded the stock to ‘sell’ from ‘hold’, saying it was time to take some profits after recent share price strength.
On the upside, travel and leisure stocks gained ground, with engine maker Rolls-Royce up 4.38%, British Airways owner IAG ascending 1.96%, caterer Compass Group ahead 0.99%, Cineworld rising 4.84%, easyJet adding 4.1%, TUI 1.83% firmer, and SSP 3.36% stronger.
AstraZeneca gained 2.04% after it said that its Lynparza drug has met the primary endpoint in a trial for the treatment of prostate cancer.
Mitie rose 1.69% as the facilities management company lifted annual profit guidance after a strong second quarter, boosted by the award of more Covid-19-related contracts.
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 132.50p 4.38%
AstraZeneca (AZN) 8,839.00p 2.04%
International Consolidated Airlines Group SA (CDI) (IAG) 175.60p 1.96%
InterContinental Hotels Group (IHG) 4,789.00p 1.25%
Whitbread (WTB) 3,373.00p 1.05%
Compass Group (CPG) 1,483.00p 0.99%
Hikma Pharmaceuticals (HIK) 2,386.00p 0.89%
Lloyds Banking Group (LLOY) 45.43p 0.82%
BP (BP.) 320.20p 0.77%
Ocado Group (OCDO) 1,760.50p 0.66%
FTSE 100 - Fallers
Intertek Group (ITRK) 5,114.00p -3.58%
Rightmove (RMV) 720.60p -3.26%
Rentokil Initial (RTO) 592.00p -3.05%
Halma (HLMA) 3,046.00p -2.90%
SEGRO (SGRO) 1,260.50p -2.59%
Croda International (CRDA) 8,840.00p -2.58%
JD Sports Fashion (JD.) 1,101.00p -2.48%
Entain (ENT) 2,206.00p -2.30%
Bunzl (BNZL) 2,487.00p -2.09%
Severn Trent (SVT) 2,693.00p -2.07%
FTSE 250 - Risers
Cineworld Group (CINE) 71.90p 4.84%
National Express Group (NEX) 248.00p 4.55%
easyJet (EZJ) 680.60p 4.10%
SSP Group (SSPG) 277.20p 3.36%
Telecom Plus (TEP) 1,206.00p 3.26%
Pantheon International (PIN) 3,000.00p 2.39%
Carnival (CCL) 1,683.20p 2.35%
Micro Focus International (MCRO) 398.00p 1.87%
Wetherspoon (J.D.) (JDW) 1,095.00p 1.86%
TUI AG Reg Shs (DI) (TUI) 327.90p 1.83%
FTSE 250 - Fallers
Darktrace (DARK) 904.00p -7.72%
Draper Esprit (GROW) 1,104.00p -4.33%
Auction Technology Group (ATG) 1,372.00p -4.06%
Harbour Energy (HBR) 344.60p -3.90%
Currys (CURY) 134.30p -3.80%
Liontrust Asset Management (LIO) 2,215.00p -3.70%
Morgan Sindall Group (MGNS) 2,505.00p -3.65%
Oxford Biomedica (OXB) 1,560.00p -3.58%
Homeserve (HSV) 921.50p -3.31%
JTC (JTC) 740.00p -3.27%