London midday: Stocks turn lower despite travel & leisure rally
London equity markets had moved into the red by midday on Tuesday despite a rally in travel and leisure stocks, as worries about inflation continued to play on investors’ minds.
The FTSE 100 was down 0.3% at 6,589.57, while the pound was 0.2% firmer at 1.4091.
Chris Beauchamp, chief market analyst at IG, said: "Investors continue to watch the rise in bond yields with concern, and the weakness seen in US tech stocks yesterday has spread across to Europe.
"European markets have seen their momentum stall in recent weeks, and as night follows day, such a stall has been followed up by heavy losses, although in most places this is still a fairly well-contained selloff. US futures have gone from a solid expected open to modest losses, as the general move lower continues there as well. With earnings season generally done and the Biden stimulus plan still yet to come to fruition markets are fast running out of reasons to hold their ground or move higher; weakness in the second half of February and into March is a typical event at this time of year, with the fears about inflation and bond yields providing the excuse for some profit-taking after a very healthy start to the year."
Investors were also digesting the latest figures from the Office for National Statistics, which showed the unemployment rate hit its highest level in five years in December.
The unemployment rate rose to 5.1% in the three months to the end of December from 5.0% in November, in line with economists’ expectations and marking the highest level since early 2016. Meanwhile, 726,000 jobs lost since before the pandemic in February 2020.
Still, the figures also showed that in January, 83,000 more people were in payrolled employment compared to December 2020, making the second consecutive monthly increase.
ONS deputy national statistician for economic statistics Jonathan Athow said: "Our survey shows that the unemployment rate has had the biggest annual rise since the financial crisis. However, the proportion of people who are neither working nor looking for work has stabilised after rising sharply at the start of the pandemic, with many people who lost their jobs early on having now started looking for work."
In equity markets, HSBC fell as it reported a 34% slump in annual profits, but resumed dividend payments as it said it would refocus operations on China.
Online supermarket Ocado and Just Eat, both of which have benefitted from lockdowns and restrictions, lost ground.
On the upside, shopping centre owners Land Securities and British Land rallied amid the prospect of easing restrictions and the reopening of non-essential stores.
Travel and leisure stocks were also sharply higher as budget airline easyJet said there had been a surge in bookings after Prime Minister Boris Johnson outlined the government’s lockdown exit strategy on Monday.
British Airways owner IAG, easyJet, engine maker Rolls-Royce, Premier Inn owner Whitbread, caterer Compass Group, Cineworld, Mecca Bingo owner Rank Group, WH Smith, SSP and Tui all gained.
InterContinental Hotels was in the red, however, reversing earlier gains after saying it swung to a full-year loss and scrapping its final dividend.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The roadmap to reopening has accelerated the recovery in travel and hospitality stocks with fresh rises since the market open.
"The palpable sigh of relief that there are dates to target for struggling pub and restaurant chains, has translated into a share price rally for the sectors.
"Although international travel won’t begin until at least 17th May, news that the government’s global taskforce will reconvene in April to recommend how holidays can resume has been a boost for the industry which has been anxious for a sense of direction."
FTSE 100 - Risers
Land Securities Group (LAND) 655.00p 4.37%
Rolls-Royce Holdings (RR.) 110.05p 4.36%
British Land Company (BLND) 494.30p 3.98%
Informa (INF) 557.80p 3.95%
Melrose Industries (MRO) 174.95p 3.25%
Compass Group (CPG) 1,529.50p 2.93%
Lloyds Banking Group (LLOY) 39.29p 2.26%
BAE Systems (BA.) 482.30p 2.23%
BP (BP.) 285.40p 1.95%
International Consolidated Airlines Group SA (CDI) (IAG) 181.05p 1.66%
FTSE 100 - Fallers
Scottish Mortgage Inv Trust (SMT) 1,153.00p -9.00%
Ocado Group (OCDO) 2,300.00p -4.21%
B&M European Value Retail S.A. (DI) (BME) 541.80p -3.53%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,916.00p -3.49%
Avast (AVST) 458.80p -3.33%
Kingfisher (KGF) 260.70p -3.12%
Polymetal International (POLY) 1,495.00p -3.02%
HSBC Holdings (HSBA) 419.65p -2.78%
Intertek Group (ITRK) 5,398.00p -2.70%
Evraz (EVR) 552.20p -2.61%
FTSE 250 - Risers
SSP Group (SSPG) 368.80p 17.08%
WH Smith (SMWH) 1,940.00p 8.68%
Rank Group (RNK) 165.00p 6.87%
Wood Group (John) (WG.) 316.80p 6.56%
Unite Group (UTG) 1,015.00p 6.45%
C&C Group (CCR) 264.50p 6.22%
Babcock International Group (BAB) 259.00p 5.58%
Workspace Group (WKP) 764.50p 5.38%
Hammerson (HMSO) 22.69p 5.09%
easyJet (EZJ) 934.00p 4.69%
FTSE 250 - Fallers
Baillie Gifford US Growth Trust (USA) 329.00p -7.06%
Aston Martin Lagonda Global Holdings (AML) 2,025.00p -6.98%
Allianz Technology Trust (ATT) 2,870.00p -5.90%
AO World (AO.) 284.50p -5.48%
Edinburgh Worldwide Inv Trust (EWI) 378.50p -4.90%
Synthomer (SYNT) 486.00p -4.71%
Fidelity China Special Situations (FCSS) 437.00p -4.38%
Polar Capital Technology Trust (PCT) 2,205.00p -4.13%
Herald Investment Trust (HRI) 2,150.00p -4.02%
Mitchells & Butlers (MAB) 324.00p -4.00%