London close: Stocks finish mixed as GSK sinks in late trading

London stocks closed in a mixed state on Wednesday, as investors weighed up uninspiring services data against optimism over the vaccine rollout and US stimulus.

The FTSE 100 ended the session down 0.14% at 6,507.82, while the FTSE 250 was 0.3% higher at 20,752.44.

Sterling was a mixed picture as well, last trading 0.11% weaker against the dollar at $1.3653, as it strengthened 0.05% on the euro to €1.1354.

“The US open sapped some of the life out of the European indices this Wednesday, a flat start for the Dow Jones doing little for its peers,” said Spreadex analyst Connor Campbell.

“The FTSE suffered the biggest about face this Wednesday, trading a 0.6% increase for a 0.3% decline.

“Kicking the index the wrong side of 6,500, the FTSE struggled with a 4.3% dive from GlaxoSmithKline.”

On the US stimulus front, meanwhile, the Senate voted 50 to 49 to begin the process of budget reconciliation, meaning the Democrats can push through the package without needing to bring 10 Republicans over to their side of the table.

However, sentiment took a knock after the latest survey on UK services showed the sector suffered the sharpest decline in business activity in January in eight months, although the rollout of Covid vaccines helped to lift optimism to its highest since May 2014.

The IHS Markit/CIPS purchasing managers’ index for the sector fell to 39.5 from 49.4 in December, as the third national lockdown took its toll, weighing on the travel, leisure and hospitality businesses.

Still, the index came in above the consensus and flash estimate of 38.8.

Survey respondents also pointed to cautious spending patterns among clients and renewed delays to projects due to the pandemic.

On the upside, however, around 60% of survey respondents said they expect a rise in business activity over the next 12 months, compared to just 13% predicting a decline.

That was attributed in part to "swift progress" in the UK vaccine rollout, providing hope of a timely return to growth and the release of pent up demand in 2021.

“Service providers experienced a steep downturn in business activity due to the third national lockdown in January, although the speed of decline remains much slower than last spring,” said Tim Moore, economics director at IHS Markit.

“Tight restrictions on travel, leisure and hospitality resulted in severely reduced trading among customer-facing businesses.”

Moore said temporary closures had led to shrinking demand for business services, and a ripple effect of corporate spending cutbacks.

“As a result, total new work fell at the fastest pace since May 2020 and this setback contributed to a steeper rate of job shedding at the start of the year.”

In equity markets, Vodafone advanced 5.87% as it said it was confident about the full-year outlook after its German business drove a return to organic growth in the third quarter.

Aviva was ahead 3.66% after an upgrade to ‘overweight’ at Morgan Stanley, while Upper Crust owner SSP was boosted 5.69% by an upgrade to ‘buy’ at Berenberg.

Elsewhere, housebuilders Persimmon and Taylor Wimpey were lifted 1.54% and 0.81%, respectively, by upgrades to ‘overweight’ at Barclays, while Redrow was 2.62% higher on the back of a positive note from JPMorgan.

Wizz Air ascended 3.73% even as it said January passenger numbers plunged 81.8% year-on-year as new variants of the coronavirus and travel bans battered demand.

On the downside, Unite Group fell 5.54% after it announced a three-week extension to its 50% student discount and said the move would cost it £6m in lost revenue.

It was also hit by a downgrade to ‘underweight’ at Barclays.

GlaxoSmithKline reversed earlier gains to close down 6.29% after it and CureVac earlier announced a new €150m collaboration to develop a vaccine to combat emerging variants of Covid-19.

“While the pharma firm did have some good news, announcing a partnership with CureVac to develop the next generation of covid-19 vaccines, disruptions caused by the pandemic led GSK to forecast a mid-to-high single digit decline in 2021 adjusted earnings, compared to the 3% drop expected by analysts,” Connor Campbell said.

Market Movers

FTSE 100 (UKX) 6,507.82 -0.14%
FTSE 250 (MCX) 20,752.44 0.30%
techMARK (TASX) 4,110.54 -0.06%

FTSE 100 - Risers

Vodafone Group (VOD) 134.86p 5.87%
Aviva (AV.) 357.20p 3.66%
M&G (MNG) 187.00p 2.30%
BT Group (BT.A) 128.30p 1.78%
Royal Dutch Shell 'B' (RDSB) 1,272.40p 1.78%
Ocado Group (OCDO) 2,842.00p 1.64%
Persimmon (PSN) 2,692.00p 1.54%
Royal Dutch Shell 'A' (RDSA) 1,329.00p 1.46%
Scottish Mortgage Inv Trust (SMT) 1,318.00p 1.38%
BP (BP.) 258.30p 1.29%

FTSE 100 - Fallers

GlaxoSmithKline (GSK) 1,282.00p -6.29%
Rolls-Royce Holdings (RR.) 91.88p -3.04%
Melrose Industries (MRO) 174.20p -2.22%
Diageo (DGE) 2,979.00p -2.14%
Hikma Pharmaceuticals (HIK) 2,374.00p -2.03%
Bunzl (BNZL) 2,429.00p -1.83%
Entain (ENT) 1,265.00p -1.75%
Evraz (EVR) 493.10p -1.63%
Burberry Group (BRBY) 1,695.00p -1.63%
Smith & Nephew (SN.) 1,549.50p -1.62%

FTSE 250 - Risers

Virgin Money UK (VMUK) 153.25p 8.27%
Mitchells & Butlers (MAB) 318.50p 6.29%
SSP Group (SSPG) 325.20p 5.69%
Micro Focus International (MCRO) 447.80p 5.14%
Wetherspoon (J.D.) (JDW) 1,276.00p 4.68%
PZ Cussons (PZC) 259.00p 4.23%
Capita (CPI) 38.38p 4.22%
Wizz Air Holdings (WIZZ) 4,800.00p 3.73%
National Express Group (NEX) 270.40p 3.13%
FirstGroup (FGP) 76.15p 2.97%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 2,146.00p -6.07%
Unite Group (UTG) 925.50p -5.54%
Babcock International Group (BAB) 229.60p -3.20%
Cineworld Group (CINE) 73.00p -2.95%
Petropavlovsk (POG) 28.20p -2.26%
Derwent London (DLN) 3,100.00p -2.20%
BMO Commercial Property Trust Limited (BCPT) 75.50p -1.95%
Ferrexpo (FXPO) 290.80p -1.89%
Diversified Gas & Oil (DGOC) 116.40p -1.85%
Hochschild Mining (HOC) 223.80p -1.76%