London midday: Stocks extend losses as sterling gains
London stocks had extended losses by midday on Tuesday following another vaccine-inspired rally in the previous session, underperforming their European peers as sterling gained ground.
The FTSE 100 was down 1.2% at 6,343.97, while the pound was up 0.5% against the dollar at 1.3267 following reports that the UK’s Brexit negotiator, David Frost, has told Prime Minister Boris Johnson to expect a trade deal with the EU "early next week".
According to The Sun, Frost said there was a "possible landing zone" that could be reached as early as next Tuesday.
A firmer pounds tends to dent the top-flight index, as around 70% of its constituents derive most of their earnings from overseas.
IG said: "The rally has stalled across Europe, pausing for breath after the huge gains of the past week that have been driven by positive vaccine news. Overall the atmosphere is still positive but as the euphoria about possible routes out of the crisis begins to fade the focus will shift, to a degree at least, to the manufacture and distribution of the vaccines. Neither of these things is likely any time soon, leaving investors to worry how much further the second wave will spread and how bad things could actually get over the course of the winter.
"Nonetheless, risk appetite appears well-supported from here, seasonality, inflows and sentiment all providing a foundation for further gains into the end of the year. The main debate will focus on whether value stocks have truly seen a resurgence, or whether, once again, this unloved sector of the market is just enjoying a brief recovery before investor enthusiasm for tech stocks and other high-growth names returns."
In equity markets, stocks that gained in the vaccine-fuelled rally were lower, with Premier Inn owner Whitbread, caterer Compass Group and engine maker Rolls-Royce all down.
Budget airline easyJet flew lower after it swung to a massive £1.3bn annual loss, the first in its history, revealing the full extent of the havoc caused by the coronavirus pandemic as capacity almost halved.
Neil Wilson, chief market analyst at Markets.com, said: "The problem for easyJet is that getting travel demand back to where it was is going to take time and whilst there are vaccines in the offing, investors may need to wait patiently.
"The guidance for flying only 20% of capacity in Q1 underlines the sluggish pace of demand recovery in key markets affected by the coronavirus. And whilst there are vaccines coming, there are timing issues here. Moreover, there remains great uncertainty about the opening up of key passenger routes in the meantime given the capricious quarantine and lockdown measures in place across Europe."
On the upside, Imperial Brands shares jumped after it reported a rise in annual sales, driven by a demand for tobacco which offset a drop in its e-cigarette business, and forecast profit growth in 2021.
Intermediate Capital rallied as it posted a sharp rise in first-half profits amid strong demand for its funds and a recovery in portfolio valuations across the period.
Homeserve was also on the front foot after saying it expects to deliver group profit before tax and appreciation for FY21 slightly ahead of current consensus estimates.
In broker note action, Upper Crust owner SSP and WH Smith were both weaker after downgrades at Morgan Stanley and RBC Capital Markets, respectively.
FTSE 100 - Risers
Intermediate Capital Group (ICP) 1,653.00p 5.56%
Imperial Brands (IMB) 1,476.50p 5.28%
Taylor Wimpey (TW.) 156.25p 3.96%
Barratt Developments (BDEV) 649.80p 2.46%
Homeserve (HSV) 1,263.00p 2.10%
Ocado Group (OCDO) 2,228.00p 1.78%
Hargreaves Lansdown (HL.) 1,607.00p 1.52%
Avast (AVST) 448.80p 1.49%
Berkeley Group Holdings (The) (BKG) 4,805.00p 1.46%
Fresnillo (FRES) 1,112.50p 1.18%
FTSE 100 - Fallers
Vodafone Group (VOD) 122.60p -4.05%
Rolls-Royce Holdings (RR.) 99.16p -3.73%
International Consolidated Airlines Group SA (CDI) (IAG) 152.95p -3.65%
Johnson Matthey (JMAT) 2,528.00p -2.96%
Smiths Group (SMIN) 1,528.00p -2.95%
London Stock Exchange Group (LSE) 8,022.00p -2.93%
AstraZeneca (AZN) 8,294.00p -2.91%
HSBC Holdings (HSBA) 377.55p -2.89%
Diageo (DGE) 2,957.50p -2.63%
Antofagasta (ANTO) 1,128.50p -2.42%
FTSE 250 - Risers
Avon Rubber (AVON) 4,295.00p 4.25%
Network International Holdings (NETW) 275.00p 4.09%
Aston Martin Lagonda Global Holdings (AML) 73.05p 4.06%
Aggreko (AGK) 588.50p 3.61%
XP Power Ltd. (DI) (XPP) 4,350.00p 3.57%
TBC Bank Group (TBCG) 1,206.00p 3.08%
CMC Markets (CMCX) 371.00p 2.91%
Gamesys Group (GYS) 1,064.00p 2.31%
Sabre Insurance Group (SBRE) 270.00p 2.27%
888 Holdings (888) 264.50p 2.12%
FTSE 250 - Fallers
SSP Group (SSPG) 345.40p -6.34%
Capital & Counties Properties (CAPC) 144.10p -4.70%
Syncona Limited NPV (SYNC) 265.50p -4.67%
AO World (AO.) 378.50p -4.18%
ICG Enterprise Trust (ICGT) 890.00p -4.09%
Helios Towers (HTWS) 169.80p -4.07%
Henderson Smaller Companies Inv Trust (HSL) 912.00p -4.00%
Carnival (CCL) 1,165.00p -3.92%
3i Infrastructure (3IN) 295.00p -3.75%
Shaftesbury (SHB) 579.00p -3.74%