FTSE 100 ends weaker, near session low as travel, energy stocks fall back

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  • FTSE 100 sheds 63 points
  • US stocks stay mixed
  • Carnival posts US$2.1bn quarterly loss

The FTSE 100 index ended weaker on Monday, near the day’s low point, while US stocks were mixed, as a fresh bout of worry over coronavirus (COVID-19) cases caused a sell-off in travel stocks and there was some profit-taking in energy issues.


At the close, the UK blue-chip index was down 63.10 points, or nearly 0.9% at 7,072.97, just fractionally above the session low of 7,071.95, having dropped from an early peak of 7,136.22.


On Wall Street by London’s close, the Dow Jones Industrials Average was also lower, off 170 points, or 0.5% at 34,263, but the broader S&P 500 index edged 0.02% higher and the tech-laden Nasdaq Composite rose 0.7% to fresh all-time highs.


Michael Hewson, chief market analyst at CMC Markets UK) commented: “European markets have got off to a poor start to the week, as rising virus cases threaten to undermine sentiment as we come to the end of the month, the end of the quarter and the first half of 2021, with the energy sector, along with travel and leisure leading the losses.


“Oil prices are slipping back ahead of this week’s OPEC+ meeting as well as concerns that a rise in global cases, and new restrictions will act as a brake on the pace of global reopening, with BP and Royal Dutch Shell lower.”


He noted: “Having seen falls at the end of last week over disappointment over the limited government relaxation of travel restrictions, which saw the addition of Malta, Madeira and the Balearics to the green list. Airlines were also unhappy that the government wasn’t bolder in promising that it would look at dropping quarantine rules for fully vaccinated UK residents returning home from amber list countries.


“While airlines and travel companies expressed disappointment over last week’s announcement criticising the government for its cautious approach, the reality is whatever countries the government puts on its green list now matters less than the restrictions being faced by UK passengers when they leave the UK for their destination country.”


Hewson added: “While European markets are sliding, US markets continue to look resilient with the Nasdaq and S&P500 both hitting new record highs, while the Dow has slipped back. There appears to be increasing optimism that some form of infrastructure deal can be done on a cross party basis, after Republican senators indicated the deal could move forward.”


3.25pm Carnival battles against travel weakness


The FTSE 100 has fallen below 7,100 again after a mixed opening on Wall Street.


London’s index of blue-chip shares was down 47 points (0.7%) at 7,089, despite the S&P 500 hitting new intra-day record highs.


The S&P 500 was up by less than a point at 4,281 while the Nasdaq Composite was 99 points (0.7%) heavier at 14,459. The Dow Jones industrial average, however, dived 130 points (0.4%) to 34,303.


Dual-listed cruise operator Carnival PLC (LON:CCL) edged up 0.1% to 1,679.8p after its half-year report revealed it made a loss before tax of US$2.06bn in the three months to the end of May, compared to a loss of US$4.39bn in the corresponding perod of 2020.


2.45pm: US stocks start mixed


US stocks opened mixed to start the week, with the Dow lagging, but the S&P 500 and Nasdaq hit new intraday highs as the bullish investor mood appears to be continuing.


Soon after the bell, the Dow Jones Industrial Average shed around 84 points at 34,349.


The S&P 500 added around three points at 4,283. The Nasdaq advanced over 92 points at 14,452.


“Despite a weaker start on Monday, sentiment is overall positive in these last few days of the month and quarter,” said Fawad Razaqzada, market analyst at ThinkMarkets.com.


“Buying-the-dip is likely to remain the trade of choice in the equity markets, as despite rising inflationary pressures, central banks are still keen to keep their record stimulus measures in place for the time being.”


He added: “This message is likely to be echoed by a handful of central bank officials scheduled to speak. On Wednesday, we might see some volatility as money managers rebalance their portfolios ahead of the third quarter.”


Coming up, attention will turn to this Friday’s US jobs data, where traders will be looking for a rebound from some disappointing recent monthly stats.


“Analysts expect a 600K reading, which would be a little higher than the May print. However, average hourly earnings have beaten expectations in the previous two months and another sharp rise could re-ignite inflation concerns,” noted Razaqzada.


Ahead of the US open, London shares are modestly lower on balance as lockdown fears return to the fore.


The FTSE 100 was down 23 points (0.3%) at 7,113.


The new health Secretary, Sajid Javid, is to address parliament at 5.00pm today, reacting to the latest coronavirus data.


Javid has indicated his “absolute priority” as Health Secretary is getting the COVID-19 lockdown restrictions lifted as soon as possible, and has pledged – or possibly threatened – that once the restrictions are lifted, there would be “no going back”.


Meanwhile, some European countries appear not to be waiting for the latest data with Spain stipulating that arrivals in the Balearic Islands (Mallorca, Ibiza and Minorca) from the UK will have to produce a PCR test result of proof of vaccination to be admitted to the popular holiday islands.


Portugal, meanwhile, has imposed a 14-day travel ban on UK arrivals who have not had both jabs.


German chancellor Angela Merkel, meanwhile, has suggested that all UK arrivals in European Union should be quarantined, as the number of cases with the Delta variant continues to rise.


All of this talk is naturally hitting stocks whose fortunes are tied to air travel; British Airways owner International Consolidated Airlines SA (LON:IAG) is down 4.7% at 178.72p while aerospace engineer Rolls-Royce Holdings PLC (LON:RR.) has shed 3.0% at 103.26p.


Hotelier InterContinental Hotels Group PLC (LON:IHG) is another getting it in the neck, with the shares off 1.9% at 4,885p.


12.30pm: US stocks to open lower


The Footsie’s losses are gradually lengthening as traders start to listen to the mood music wafting across the Atlantic from Wall Street.


The FTSE 100 has fallen below the 7,100 level to 7,093, down 43 points (0.6%).


Across the pond, the Dow Jones industrial average is expected to open at around 34,403, down 31 points, while the S&P 500 is expected to start at around 4,282, off a point or so. The tech-heavy Nasdaq 100 is tipped to open 12 points weaker at 14,372.


“With no US economic data for investors to focus on, attention will be firmly on John Williams and Patrick Harker, Presidents of the Federal Reserve Banks of New York and Philadephia, respectively, for further clues over the next steps,” said Sophie Griffiths at OANDA.


10.50am: It’s a locked-down world


Against a background of governments around the world tightening COVID019 restrictions (some of which might even be observed by government ministers), equities are on the slide.


The FTSE 100 was down 33 points (0.5%) at 7,103, with sentiment not helped by sterling rallying by almost four-tenths of a cent against the greenback on foreign exchange markets.


AstraZeneca PLC (LON:AZN) defied the trend, rising 1.0% to 8,583p after it said the MEDLEY Phase II/III trial of Nirsevimab demonstrated a favourable safety profile in infants at high risk of respiratory syncytial virus.


9.35am: Burberry leads the retreat as CEO announces plans to jump ship


The FTSE 100 has stumbled at the start of the week and is just about keeping its head above the 7,100 level.


London’s index of heavyweight shares was down 33 points (0.5%) at 7,103, with Burberry Group PLC (LON:BRBY), down 7.1% at 2,091p, leading the retreat after the fashion firm’s chief executive, Marco Gobbetti, decided it was time to get his coat.


“That shows how much he is credited with the success of the luxury goods business,” opined AJ Bell’s Russ Mould.


On the new issues front, it’s a case of “hi-ho, Silver, away!” for Silver Bullet Data Services Group PLC (LON:SBDS), a data marketing business.


The shares, floated at 257p, were up 15.5p at 272.p in mid-morning trading.




8.30am: Sluggish start


The FTSE 100 made a sluggish start to proceedings as the spread of the Covid delta variant placed question marks over the easing of final lockdown restrictions and raised the prospect of a renewed overseas travel embargo.


Certainly, the EU appears to be in the process of quarantining the UK, if reports in the popular press are to be believed.


The market was taking them seriously with shares in British Airways owner IAG (LON:IAG) marked down 1.6%.


Budget carriers EasyJet (LON:EZJ), Ryanair (LON:RYA) and Wizz Air (LON:WIZZ) followed IAG’s descent as they dropped 1.8%, 1.3% and 1.2% respectively.


The Footsie’s top faller early on was Burberry (LON:BRBY), which was rocked by the decision of Marco Gobbetti, its chief executive, to quit in order to find work closer to home.


The news wiped half a billion pounds from the luxury fashion chain’s market capitalisation.


6.50 am: Sluggish start predicted


The FTSE 100 looks set to open unchanged amid worries over the spread of the Covid Delta variant, which looks set to put the kibosh on travel to Europe’s sunspots.


The Daily Mail in its inimitable style says Angela Merkel has personally begun a campaign to ban British holidaymakers from the EU.


Whatever the story, it is likely the airlines and travel firms will come under pressure during the early exchanges.


Asia’s main markets began the session in a subdued fashion, while the start to trading in Hong Kong was delayed by a rainstorm.


Back here in the UK, new health secretary Sajid Javid is reported to be a new voice in favour of the end of Covid restrictions next month, arguing controls are having a punitive impact on the economy.


Predecessor Matt Hancock, who quit after an affair with an aide, had always taken a more cautious approach to the phased ending of lockdown.


Looking ahead, we have corporate updates from Primark owner AB Foods (LON:ABF), outsourcing specialist Serco (LON:SRP) and electricals giant Dixons (LON:DC.).


In macro news, American non-farm payrolls take centre stage on Friday.


“One thing that came from last week’s comments by John Williams [New York Fed president] was a concern about the labour market and the lack of a rebound in the participation rate, despite record vacancy rates,” said Michael Hewson, analyst at CMC Markets.


“If Williams is concerned about this, he is unlikely to be the only one, which makes this week’s US jobs report even more important when it comes to trying to read the reaction function of Fed officials in the coming months.”


Around the markets


  • Pound US$1.3896 (+0.12%)
  • Bitcoin US$34,455.17 (+3.81%)
  • Gold US$1,784.50 (+0.38%)
  • Brent crude US$74.11 (flat)

6.50am: Early Markets – Asia / Australia


Stocks in the Asia-Pacific region were lower on Monday as official data showed profits at China’s industrial firms rose 36.4% in May as compared with a year earlier.


That was weaker than a 57% year-on-year growth posted in April.


The Shanghai Composite in China fell 0.13% and Hong Kong’s Hang Seng index slipped 0.08%


In Japan, the Nikkei 225 dipped 0.15% while South Korea’s Kospi declined 0.12%.


Shares in Australia fell, with the S&P/ASX 200 trading 0.03% lower.


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