London close: Geopolitical tensions weigh on market

UK stocks were under pressure on Tuesday as heightened geopolitical tensions weighed on the market.

Travel and leisure stocks led the FTSE 100 to end down 28.26 points to 6,277.23.

British Airways owner International Consolidated Airlines and easyJet flew lower after suspending all flights to and from Egypt's Sharm el-Sheik due to security concerns. BA flights have been cancelled up to and including 14 January and easyJet services to the Egyptian resort are suspended until at least 6 January.

Hotel companies Whitbread, which owns Premier Inn, and InterContinental Hotels were also knocked lower by worries about the effects on tourism.

Adding to geopolitical concerns, Turkish warplanes shot down a Russian military aircraft on the border of Syria on claims it was violating Turkey’s airspace. Russian President Vladimir Putin insisted the aircraft was flying over Syrian territory, describing the incident as a "stab in the back" committed by "accomplices of terrorists".

“While both nations retire to work out their next move – which in Turkey’s case involves calling an extraordinary meeting of NATO – investors are left wondering what the ramifications will be,” said IG analyst Chris Beauchamp.

“We have seen oil prices spike again today as markets factor in a greater level of disruption to supplies, while major airline and travel names are under pressure once more."

BoE’s Haldane suggests further easing

Bank of England’s chief economist Andy Haldane has said monetary policy may need to be eased rather than tightened in the short-term in response to headwinds from emerging markets.

In testimony to the Treasury Select Committee on Tuesday morning, he said “risks to the UK from the external environment are skewed to the downside, as they are in the Bank’s latest Inflation Report projections”.

Governor Mark Carney also explained that interest rates remained low due to external risks, demographic changes and the impact of technology on the labour market. Carney remained vague on when rates might rise.

Mixed US data

US economic growth was revised higher in the third quarter in line with analysts' expectations, the Commerce Department revealed. The second estimate of gross domestic product was raised to an annualised 2.1% from a previous 1.5%. The decrease in private inventory investment was smaller than previously estimated. GDP rose 3.9% in the second quarter.

Separately, official data showed US consumer confidence declined unexpectedly in November. The index monitoring the confidence among US consumers declined from an upwardly revised 99.1 to 90.4 in November, comfortably below the 99.5 reading analysts had expected.

Commodities-linked stocks gain

Burberry declined after Nomura cut its rating to 'neutral', citing a downside risk to consensus expectations.

Housebuilders, notably Taylor Wimpey and Barratt Developments, were also lower ahead of Chancellor George Osborne's Autumn Statement on Wednesday, which is expected to contain some major developments for the sector. In a note to clients, Deutsche Bank noted that the last Budget saw a 5% fall from the building sector, but expected the reaction to be more moderate this time.

Going the other way miners Glencore, Anglo American, Randgold, Fresnillo and BHP Billiton rallied, along with Shell and BP as copper and Brent crude futures both moved ahead. Copper made a small recovery after comments from Chile sent it lower overnight, while oil was towards the upper end of the recent range with long sellers using Turkey's kerfuffle with Russia and Saudi comments to bump up the price a week before OPEC meets.

Intertek shares were lifted after the testing, inspection and certification services company said it was on track to meet full year targets as it benefits from good growth in its products and trade-related businesses.

A positive interim result boosted Babcock International, with news of 12% growth in underlying revenue for the first half of the year, due to strong growth in its support services division.

Rolls-Royce was another riser after giving details of a “major restructuring” from new CEO Warren East. The aerospace and engineering firm released an outline of its intentions on Tuesday ahead of a full presentation later in the day that will show how it plans to save between £150m and £200m per year from 2017.

Market Movers

FTSE 100 (UKX) 6,277.07 -0.45%
FTSE 250 (MCX) 16,946.35 -0.94%
techMARK (TASX) 3,161.11 -0.66%

FTSE 100 - Risers

Glencore (GLEN) 93.91p 3.86%
Rolls-Royce Holdings (RR.) 589.50p 3.60%
Intertek Group (ITRK) 2,665.00p 3.25%
Babcock International Group (BAB) 1,036.00p 3.08%
Randgold Resources Ltd. (RRS) 4,065.00p 2.76%
Anglo American (AAL) 452.00p 2.46%
Fresnillo (FRES) 712.50p 1.64%
Royal Dutch Shell 'B' (RDSB) 1,666.50p 1.55%
Royal Dutch Shell 'A' (RDSA) 1,650.00p 1.44%
BP (BP.) 385.70p 1.30%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,192.00p -5.25%
Whitbread (WTB) 4,303.00p -3.24%
easyJet (EZJ) 1,593.00p -3.22%
International Consolidated Airlines Group SA (CDI) (IAG) 550.50p -3.08%
Carnival (CCL) 3,386.00p -2.67%
Dixons Carphone (DC.) 453.70p -2.60%
GKN (GKN) 292.90p -2.59%
Merlin Entertainments (MERL) 395.90p -2.56%
Taylor Wimpey (TW.) 178.40p -2.35%
Marks & Spencer Group (MKS) 496.90p -2.28%

FTSE 250 - Risers

NMC Health (NMC) 814.00p 6.61%
Spire Healthcare Group (SPI) 304.80p 4.81%
Drax Group (DRX) 243.60p 4.46%
Kaz Minerals (KAZ) 92.45p 3.76%
Petra Diamonds Ltd.(DI) (PDL) 57.25p 3.62%
Tullow Oil (TLW) 203.90p 3.56%
Circassia Pharmaceuticals (CIR) 273.70p 3.28%
Serco Group (SRP) 102.80p 2.95%
Aggreko (AGK) 1,017.00p 2.21%
Acacia Mining (ACA) 172.40p 1.89%

FTSE 250 - Fallers

AO World (AO.) 142.90p -12.33%
BBA Aviation (BBA) 178.60p -7.94%
Entertainment One Limited (ETO) 205.20p -5.61%
Supergroup (SGP) 1,556.00p -4.36%
Bank of Georgia Holdings (BGEO) 1,804.00p -4.04%
Evraz (EVR) 81.50p -4.00%
Halfords Group (HFD) 363.90p -3.96%
Big Yellow Group (BYG) 755.50p -3.88%
Home Retail Group (HOME) 106.20p -3.80%
Thomas Cook Group (TCG) 98.35p -3.67%