London close: Stocks weaker as possible winter energy crisis looms
London stocks closed in negative territory on Tuesday, amid worries about inflation and Chinese power shortages, with investors looking to a testimony from Federal Reserve chair Jerome Powell across the pond.
The FTSE 100 ended the session down 0.5% at 7,028.10, and the FTSE 250 was 2.03% weaker at 23,129.10.
Sterling was in the red as well, last trading down 1.12% on the dollar at $1.3544, and losing 1.08% on the euro to change hands at €1.1587.
“The prospect of higher energy prices, fuelling inflation, and rises in bond yields that appear to be pre-empting tighter monetary policy by central banks, have prompted widespread selling across global stock markets,” said IG chief market analyst Chris Beauchamp.
“As yesterday, it is the highly-valued growth stocks that have taken the brunt of the selling, as investors fret that a lower growth, tighter policy environment will hurt these previous star performers, but overall there are few safe havens in stock markets this afternoon.
“Investors are apparently eager to move back out of stocks, almost as eager as they were to move back into them last week.”
Beauchamp said some of the “fabled” month- and quarter-end movements had a part to play, with fund managers keen to book some profits as the third quarter drew to a close.
“This suggests we have some more volatility to come over the rest of the week.”
On the bond markets, yields on longer-term UK government debt hit their highest level since March 2020, amid signals from some central banks that they were ready to begin weaning their economies off emergency stimulus programmes.
The moves came after Bank of England Governor Andrew Bailey, appeared to broach the possibility that interest rates could be headed higher before year-end on Monday evening.
That sent the yield on the benchmark 10-year Gilt to 1.01% for the first time since the start of the pandemic, according to Bloomberg data.
UK motorists, meanwhile, were continuing to panic-buy petrol, leaving filling stations empty within hours of fuel arriving, according to the petrol station trade body.
Brian Madderson, chair of the Petrol Retailers Association, said as soon as a tanker arrived at a filling station the news spread on social media and motorists empty it.
"It is like bees to a honey pot. Everyone flocks there and … within a few hours it is out again,” Madderson told BBC Radio 4’s Today programme.
After a weekend of queues outside petrol stations the government had hoped panic-buying would abate and is considering using the army for deliveries.
Transport Secretary Grant Shapps said there were early indications the crisis was easing and that supplies at forecourts were stabilising.
“There are now the first very tentative signs of stabilisation in the forecourt storage which won’t be reflected in the queues as yet," Shapps said.
“It’s the first time that we have seen more petrol in the petrol stations itself.
“The sooner we can all return to our normal buying habits, the sooner the situation will return to normal.”
That frenzied buying in the UK came as benchmark oil prices pushed past $80 a barrel for the first time in three years, as concerns about possible shortages grew.
Oil prices had recently been climbing higher on concerns of possible widespread fuel shortages as the northern hemisphere headed into winter.
“Oil prices have extended last week’s gains amid supply concerns, as parts of the world sees demand pick up with the easing of pandemic conditions,” said SP Angel.
“This has led to Brent now trading around $80 for the first time in three years - the rise brought the price of crude almost 55% higher for the year-to date.
“A shortfall in global gas production, along with a concerted drive in China to cut down on pollution from heavy industry, is expected to push crude higher as industries shift to using oil to generate power.”
In equity markets, software group Sage was knocked 4.45% lower by a downgrade to ‘sell’ at Goldman Sachs.
Budget airline easyJet was down 3.5% after it said its rights issue to raise £1.2bn was 93% subscribed, leaving underwriters to find buyers for the remaining shares or pick up the tab themselves.
EasyJet earlier this month unveiled plans to raise the cash via a 31-for-47 rights issue at 410p each, a deep discount of 36% on the airline’s closing share price on 8 September.
Water company Pennon slumped 2.71% despite saying it was on track to deliver a resilient financial performance in line with management expectations.
Go-Ahead shares tumbled 24.93% after it said it had lost the Southeastern rail franchise, repaid the government £25m owed under the contract and parted company with its finance chief.
Online greeting card retailer Moonpig reversed earlier gains to tumble 5.55%, after it earlier lifted its full-year revenue guidance to between £270m and £285m from between £250m and £260m, as it hailed strong trading in the year to date.
Going the other way, Smiths Group rallied 3.48% after it said full-year headline operating profit from continuing operations rose 14% to £372m as revenue fell 6% to £2.41bn.
On an underlying basis profit rose 7% and revenue fell 2% with revenue growing in the final quarter of the year to the end of July.
FTSE 100 - Risers
Smiths Group (SMIN) 1,411.50p 3.48%
Royal Dutch Shell 'A' (RDSA) 1,641.80p 2.77%
Glencore (GLEN) 344.25p 2.29%
Royal Dutch Shell 'B' (RDSB) 1,631.00p 2.26%
BP (BP.) 336.60p 1.60%
Hargreaves Lansdown (HL.) 1,422.50p 1.50%
Pearson (PSON) 710.00p 1.25%
Unilever (ULVR) 4,012.50p 1.20%
British American Tobacco (BATS) 2,700.50p 1.01%
Imperial Brands (IMB) 1,548.50p 0.81%
FTSE 100 - Fallers
Aveva Group (AVV) 3,647.00p -5.74%
Sage Group (SGE) 707.80p -4.45%
Taylor Wimpey (TW.) 158.70p -4.14%
Intermediate Capital Group (ICP) 2,026.00p -4.07%
Ocado Group (OCDO) 1,682.50p -3.50%
Admiral Group (ADM) 3,180.00p -3.46%
Rolls-Royce Holdings (RR.) 142.66p -3.27%
Entain (ENT) 2,151.00p -3.24%
Antofagasta (ANTO) 1,370.00p -3.18%
Persimmon (PSN) 2,647.00p -3.05%
FTSE 250 - Risers
Trustpilot Group (TRST) 343.00p 1.90%
Cineworld Group (CINE) 81.24p 1.52%
Energean (ENOG) 900.00p 1.12%
Investec (INVP) 313.70p 0.93%
International Public Partnerships Ltd. (INPP) 166.00p 0.73%
Wood Group (John) (WG.) 229.70p 0.70%
Premier Foods (PFD) 118.80p 0.51%
Serco Group (SRP) 136.60p 0.44%
XP Power Ltd. (DI) (XPP) 5,340.00p 0.38%
Greencore Group (CDI) (GNC) 146.60p 0.34%
FTSE 250 - Fallers
Baltic Classifieds Group (BCG) 214.00p -7.14%
Darktrace (DARK) 820.00p -5.84%
Moonpig Group (MOON) 340.40p -5.55%
Just Group (JUST) 90.20p -5.38%
FirstGroup (FGP) 89.10p -5.06%
Kainos Group (KNOS) 1,866.00p -4.75%
UK Commercial Property Reit Limited (UKCM) 75.10p -4.57%
PureTech Health (PRTC) 350.00p -4.50%
4Imprint Group (FOUR) 2,995.00p -4.31%
Restaurant Group (RTN) 108.40p -4.31%