London close: Stocks and bonds unloved as Thames Water fiasco festers

Stocks in London underperformed peers on either side of the Atlantic as another batch of mostly better-than-expected economic data out of the States pushed government bond yields in the US and the UK higher.

The FTSE 100 dipped 0.38% to 7,471.69 and the second-tier index was down 0.77% to 18,270.73

In parallel, the yield on the benchmark 10-year Gilt was up by seven basis points to 4.384%.

Nonetheless, for Chris Beauchamp at IG, it wasn't just the latest US data that was dampening risk appetite in the next to last session of the second quarter.

"The potential demise of Thames Water has investors running scared, and London’s listed utilities are under pressure as a result. Fears of a domino effect in the industry are at fever pitch, though no other specific names have yet been mentioned," he said.

"But to add to that, UK yields are on the up once again, diminishing the attractiveness of dividend stocks, of which utilities make up a healthy constituency."

According to the U.S. Department of Labor, over the week ending on 24 June, initial unemployment claims fell by 26,000 to 239,000.

That was their largest decline for 20 months, although Ian Shepherdson believed the dip was likely "more noise than signal".

Perhaps, but an upwards revision to first quarter US GDP growth from 1.3% to 2.0% added to investors impression of an economy displaying welcome resilience.

Former N.Y. Fed chief William Dudley wrote in a Bloomberg column that the rout in long-term US Treasuries had further to run.

On home shores, the Bank of England said that Britons' net borrowing slowed from £1.5bn in April to £1.1bn in May (consensus: £1.5bn).

Further afield, at the World Economic Forum's annual meeting of the New Champions in Tianjin, China, former IMF deputy managing director, Zhu Min, said Beijing was likely to disappoint those holding out for massive stimulus.

3i pleases, B&M European Value Retail less so

Dutch discounter Action is on track to deliver another strong quarter of profit growth, owner 3i Group said on Thursday. In a brief trading update ahead of its annual general meeting, the blue chip investment firm said the retailer had seen “very strong” sales growth in the year to date, with like-for-like sales up 22% by the end of week 25.

B&M European Value Retail reported a 13.5% rise in group first quarter revenue, in line with expectations, as consumers sought lower prices amid the cost of living crisis. Like-for-like sales in the UK were up 9.2% as both grocery and general merchandise categories performed “very well, driven by consistently strong and positive LFL transaction numbers."

UK insurer Direct Line said rectifying unfair motor claim payments over a five-year period to 2022 would not have a "material financial impact" on this year's results. The company was on Wednesday ordered by Britain's Financial Conduct Authority to carry out a review of total losses where vehicles had been written off after it admitted it had underpaid some car and van insurance customers.

Asos co-founder Nick Robertson sold just over one millon pounds of shares in the digital fashion retailer.

Market Movers

FTSE 100 (UKX) 7,471.69 -0.38%
FTSE 250 (MCX) 18,270.73 -0.77%
techMARK (TASX) 4,442.89 -0.70%

FTSE 100 - Risers

Barclays (BARC) 151.32p 2.01%
Ocado Group (OCDO) 540.20p 1.96%
3i Group (III) 1,910.50p 1.54%
Standard Chartered (STAN) 677.60p 1.35%
Glencore (GLEN) 438.40p 1.01%
Vodafone Group (VOD) 74.34p 0.92%
HSBC Holdings (HSBA) 618.80p 0.90%
Pershing Square Holdings Ltd NPV (PSH) 2,818.00p 0.57%
NATWEST GROUP (NWG) 235.30p 0.56%
Associated British Foods (ABF) 1,983.50p 0.51%

FTSE 100 - Fallers

B&M European Value Retail S.A. (DI) (BME) 552.00p -6.54%
Rentokil Initial (RTO) 600.00p -4.73%
Rolls-Royce Holdings (RR.) 148.70p -4.56%
WPP (WPP) 816.80p -4.04%
Tesco (TSCO) 246.90p -3.52%
Severn Trent (SVT) 2,593.00p -3.50%
United Utilities Group (UU.) 976.20p -2.82%
Convatec Group (CTEC) 203.00p -2.50%
Unite Group (UTG) 857.50p -2.39%
Burberry Group (BRBY) 2,087.00p -2.39%

FTSE 250 - Risers

Serco Group (SRP) 154.70p 8.57%
Morgan Sindall Group (MGNS) 1,820.00p 4.60%
Capita (CPI) 28.32p 3.21%
Aston Martin Lagonda Global Holdings (AML) 343.40p 2.63%
Baltic Classifieds Group (BCG) 170.80p 2.52%
3i Infrastructure (3IN) 309.00p 2.15%
Wood Group (John) (WG.) 135.10p 2.04%
Senior (SNR) 175.00p 1.63%
Molten Ventures (GROW) 263.00p 1.23%
4Imprint Group (FOUR) 4,735.00p 0.96%

FTSE 250 - Fallers

Liontrust Asset Management (LIO) 718.00p -7.53%
Bank of Georgia Group (BGEO) 2,940.00p -6.67%
Ferrexpo (FXPO) 88.80p -6.48%
Urban Logistics Reit (SHED) 113.80p -6.11%
Tritax Eurobox (GBP) (EBOX) 51.20p -5.71%
Babcock International Group (BAB) 283.20p -5.35%
Direct Line Insurance Group (DLG) 133.90p -5.30%
IWG (IWG) 132.20p -5.00%
IntegraFin Holding (IHP) 238.60p -4.71%
TR Property Inv Trust (TRY) 265.00p -4.50%