London close: Stocks finish weaker for second day running

Tue 12 Apr 2022

LONDON (SHARECAST) - (Sharecast News) - London stocks closed in negative territory on Tuesday, as investors digested a fresh 40-year high for inflation in the US, and after uninspiring UK wage data released earlier in the session.

The FTSE 100 ended the day down 0.55% at 7,576.66, and the FTSE 250 was off 0.5% at 21,009.61.

Sterling was in the green, meanwhile, last trading up 0.01% on the dollar at $1.3031, and advancing 0.28% against the euro to change hands at €1.2006.

"Led by AstraZeneca and Rolls Royce, the FTSE 100 is declining for a second consecutive day, for the first time in a month," said IG chief market analyst Chris Beauchamp.

"The bounce from the March lows has carried the index back to the February highs, but a short-term pause now looks likely.

"But even so, with inflation carrying prices higher and yields still moving up in the months to come, the index seems well-placed for further gains that will take it to new highs for the year."

Across the pond, inflation hit a fresh 40-year high in the United States in March, as energy prices surged due to the war in Ukraine.

According to figures from the Labor Department, consumer price inflation jumped to 8.5% - its fastest annual rate of growth since 1981 - from 7.9% in February.

Analysts had been expecting a figure of 8.4%.

On the month, prices were up 1.2% in March, versus a 0.8% increase in February and marking the biggest jump since 2005.

The gasoline index surged 18.3%, accounting for more than half the total monthly increase, while food prices rose 1%, and shelter prices were 0.5% higher.

Stripping out volatile food and energy costs, core inflation was 6.5% on an annualised basis - up 0.1 percentage point on the month but below consensus estimates of 6.6%.

"With Fed officials continuing to sound more hawkish by the day, the March CPI data won't change their plans to up the pace of rate hikes to 50 basis points per meeting from next month," said Andrew Hunter, senior US economist at Capital Economics.

"Even so, it does support our view that, having been slow to realise that the initial surge wasn't transitory, Fed officials are now being a bit too pessimistic about how quickly it will drop back."

On home shores, official figures released earlier showed real pay for UK workers fell for the second month running as wage rises were more than offset by rising inflation.

Regular pay, excluding bonuses, rose 4% in the three months to February, the Office for National Statistics said, while pay adjusted for inflation fell 1%, and including bonuses, real pay rose 0.4%.

The figures showed incomes being squeezed by rising prices, even further increases that took inflation to 6.2% in March from 5.5% in February.

According to the Bank of England, inflation was looking set to peak at 8% or higher in 2022, while household budgets were also under pressure from hugely controversial tax increases.

Laith Khalaf, head of investment analysis at AJ Bell, said the pay data was the "calm before the inflationary storm" with implications for the wider economy.

"This month price rises are going to move up a notch, and really exert pressure on consumer purses, especially when combined with tax and National Insurance increases," Khalaf said.

"Real regular pay is already running 1% behind inflation, which means declining living standards for working people, and with inflation on the rise, that's only going to get worse."

Elsewhere, more than 75% of staff at the Financial Conduct Authority voted in favour of industrial action following a dispute around changes to pay and conditions.

The vote for a strike - a historic first for the financial regulator's workforce - came as FCA staff sought to make it "very clear" that proposed changes to staff pay and conditions were "completely unacceptable".

A further 89.8% also voted to support industrial action short of strike action, according to the Unite union.

Following the ballot result, Unite contacted ACAS in an attempt to encourage the FCA to sit down with Unite representatives in order to address the concerns of their workforce.

"FCA staff have not taken the decision to vote for industrial action lightly," said Alan Scott, Unite officer.

"Unite has made it clear that the pay cuts and unfair appraisals are extremely detrimental to thousands of staff and it is time for the FCA to rethink these plans.

"The continued refusal to recognise an independent trade union further damages the standing of the organisation."

In equity markets, engine maker Rolls-Royce tumbled 5.48% after JPMorgan Cazenove downgraded the shares to 'underweight' from 'neutral' and slashed the price target to 75p from 140p.

London Stock Exchange Group closed down 2.85% after a downgrade to 'neutral' at Exane, while Investec was knocked 7.6% lower by a downgrade at Goldman Sachs.

AstraZeneca lost 3.26%, with CMC Markets analyst Michael Hewson putting the losses down to profit taking, after the pharmaceutical giant hit record highs at the end of last week.

Hewson pointed to weakness in Asia-focussed banks HSBC and Standard Chartered, which were 2.63% and 2.57% respectively.

He said those losses could be down to the growth warning issued by Chinese premier Li Keqiang about the Chinese economy, rather than any spillover effect from weakness in Europe.

On the upside, BP rose 2.41% and Shell gained 1.43% as oil prices rose, with Brent crude futures last up 6.84% on ICE at $105.22 per barrel.

Miners also racked up gains, with Rio Tinto Group up 1.38%, Glencore ahead 0.85% and Antofagasta rising 0.93%.

Electrocomponents rose 1.59% after it reported a 26% jump in group like-for-like revenue for the year ended 31 March.

Diploma rallied 11.46% after the specialist seals and controls maker said full-year results were expected to "materially exceed" expectations after a strong contribution from acquisitions.

Plus500 gained 6.15% after the online trading platform said full-year revenue was set to be ahead of current market expectations as it posted a 68% jump in first-quarter revenues.

Moneysupermarket advanced 4.68% after it posted a jump in first-quarter revenue and reiterated its full-year guidance.

Fund management group Liontrust Asset Management pushed 3.05% higher after it reported an 8.5% increase in funds under management to £33.5bn as at the end of March.

Market Movers

FTSE 100 (UKX) 7,576.66 -0.55%
FTSE 250 (MCX) 21,009.61 -0.50%
techMARK (TASX) 4,404.98 -0.12%

FTSE 100 - Risers

Endeavour Mining (EDV) 2,064.00p 3.98%
Airtel Africa (AAF) 147.80p 2.50%
BP (BP.) 395.95p 2.41%
Fresnillo (FRES) 799.80p 2.30%
JD Sports Fashion (JD.) 147.40p 2.18%
Next (NXT) 6,140.00p 1.72%
Electrocomponents (ECM) 1,022.00p 1.59%
Smith (DS) (SMDS) 312.50p 1.52%
Howden Joinery Group (HWDN) 769.20p 1.45%
Shell (SHEL) 2,165.50p 1.43%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 89.79p -5.48%
Land Securities Group (LAND) 750.00p -4.53%
Ocado Group (OCDO) 1,184.50p -4.32%
British Land Company (BLND) 512.20p -3.94%
AstraZeneca (AZN) 10,504.00p -3.26%
London Stock Exchange Group (LSEG) 8,170.00p -2.85%
HSBC Holdings (HSBA) 519.30p -2.63%
Sainsbury (J) (SBRY) 244.60p -2.59%
Standard Chartered (STAN) 501.40p -2.57%
Lloyds Banking Group (LLOY) 44.12p -2.13%

FTSE 250 - Risers

Diploma (DPLM) 2,792.00p 11.46%
Ferrexpo (FXPO) 189.60p 8.72%
Tullow Oil (TLW) 60.90p 7.30%
Plus500 Ltd (DI) (PLUS) 1,570.00p 6.15% Group (MONY) 181.10p 4.68%
Centamin (DI) (CEY) 97.54p 3.61%
Baltic Classifieds Group (BCG) 157.80p 3.27%
Liontrust Asset Management (LIO) 1,284.00p 3.05%
Savills (SVS) 1,104.00p 2.70%
Renishaw (RSW) 3,846.00p 2.56%

FTSE 250 - Fallers

Investec (INVP) 496.00p -7.60%
Safestore Holdings (SAFE) 1,306.00p -6.09%
Greencore Group (CDI) (GNC) 120.30p -6.02%
TUI AG Reg Shs (DI) (TUI) 226.40p -5.71%
Capital & Counties Properties (CAPC) 164.30p -4.59%
Marshalls (MSLH) 640.00p -4.33%
Hammerson (HMSO) 32.21p -4.05%
Auction Technology Group (ATG) 983.00p -4.00%
Big Yellow Group (BYG) 1,491.00p -3.62%
Shaftesbury (SHB) 588.50p -3.52%
Archived Stories

15 Aug London close: Stocks squeeze out a positive finish after Chinese data
12 Aug London close: Stocks higher ahead of key data next week
11 Aug London close: Ex-dividends weigh down afternoon trading
10 Aug London close: Stocks strengthen as US inflation comes in below forecasts
09 Aug London close: Stocks mixed amid energy concerns, US CPI fears