London close: Stocks finish weaker as retail sales fall further

London stocks settled weaker on Tuesday, weighed down by disappointing updates from the likes of British American Tobacco and Bellway.

The FTSE 100 ended the session down 2.11% at 6,335.72, and the FTSE 250 was 2.1% lower at 17,755.25.

Sterling was mixed against its major trading pairs, last strengthening 0.09% against the dollar to $1.2735, while losing 0.28% on the euro to €1.1225.

“The rally looks a little tired, as might be expected after the first week of June saw such a strong move higher,” said analysts at IG.

“The positive impact from the ECB meeting and Friday’s US jobs report has waned, with no fresh bullish news to take their place.

“But such volatility has been seen several times before over the past three months, and such sharp reversals have merely been ‘resets’ of bullish price action, clearing the decks for another move higher as money continues to flow into equities.”

IG said the drivers of the price action were “supercharged” versions of what moved markets between 2009 and 2019, being a “quest for income” from investors looking for yield, and a search for growth stocks that left value trailing behind.

“Despite the revival in some value names in recent weeks, continued gains in equities will be led by growth stocks, but these are also the ones that will see temporary, but sharp, reversals.”

On home shores, the British Retail Consortium's monthly monitor showed that UK retail sales continued to fall in May but the pace of decline eased as shoppers ventured out in warm weather.

Total sales fell 5.9% in May - an improvement on April's 19.1% plunge but still a weak reading compared with a record low in May 2019.

“For those shops whose doors remain shuttered it was once again a tough month and even those who stayed open suffered reduced footfall and huge costs implementing social distancing measures,” said BRC chief executive Helen Dickinson.

“Many retailers will be anxious to see whether demand returns to our high streets when non-essential shops reopen from 15 June.

“Weak consumer confidence and social distancing rules are likely to hold back sales.”

Investors were also eyeing the start of the Federal Reserve’s two-day policy meeting

Morgan Stanley said Fed chair Jerome Powell would likely deliver a downbeat and uncertain take on the outlook.

“We expect more clarity on quantitative easing, but forward guidance is likely to remain soft until September.”

In equity markets, Legal & General fell 3.77% after a downgrade to ‘neutral’ at Bank of America Merrill Lynch.

British American Tobacco was 3.09% weaker after it lowered full-year guidance as it felt the impact of the coronavirus crisis on international travel sales and new products.

The cigarette maker said it expected constant currency adjusted revenue growth of between 1% and 3%, from previous guidance of around the lower end of 3% to 5%.

Bellway was in the red by 5.71% as the housebuilder said sales completions fell between 1 August 2019 and 31 May.

On the upside, Aveva was ahead 4.33% after leaving its final dividend unchanged, as the industrial software company announced a 22% increase in annual profit and up to £60m of cost cuts.

Oxford Instruments was also in the black by 3.34%, as it deferred a decision on its dividend after the Covid-19 crisis hit orders in the first two months of the current year.

Market Movers

FTSE 100 (UKX) 6,335.72 -2.11%
FTSE 250 (MCX) 17,755.25 -2.10%
techMARK (TASX) 3,792.55 -1.06%

FTSE 100 - Risers

Aveva Group (AVV) 4,217.00p 4.93%
Ocado Group (OCDO) 2,072.00p 4.46%
Fresnillo (FRES) 759.80p 3.83%
Polymetal International (POLY) 1,463.50p 2.45%
BAE Systems (BA.) 534.60p 2.06%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,762.00p 1.55%
Reckitt Benckiser Group (RB.) 6,870.00p 0.59%
Experian (EXPN) 2,760.00p 0.54%
AstraZeneca (AZN) 8,244.00p 0.54%
Severn Trent (SVT) 2,521.00p 0.44%

FTSE 100 - Fallers

Meggitt (MGGT) 329.00p -7.95%
Rolls-Royce Holdings (RR.) 370.00p -7.13%
Royal Bank of Scotland Group (RBS) 131.35p -6.41%
Informa (INF) 491.80p -6.29%
International Consolidated Airlines Group SA (CDI) (IAG) 311.20p -6.15%
Land Securities Group (LAND) 656.20p -6.10%
Barratt Developments (BDEV) 547.00p -5.87%
British Land Company (BLND) 437.90p -5.52%
Royal Dutch Shell 'B' (RDSB) 1,384.40p -5.36%
Berkeley Group Holdings (The) (BKG) 4,269.00p -5.28%

FTSE 250 - Risers

Petropavlovsk (POG) 26.30p 6.69%
Forterra (FORT) 229.50p 3.84%
Renishaw (RSW) 3,952.00p 3.65%
Oxford Instruments (OXIG) 1,292.00p 3.34%
Centamin (DI) (CEY) 152.00p 2.74%
Genus (GNS) 3,268.00p 2.64%
Hochschild Mining (HOC) 189.50p 2.60%
Convatec Group (CTEC) 203.00p 2.46%
HGCapital Trust (HGT) 237.50p 2.37%
Allianz Technology Trust (ATT) 2,140.00p 1.90%

FTSE 250 - Fallers

Wood Group (John) (WG.) 234.70p -9.10%
Provident Financial (PFG) 214.40p -8.74%
Stagecoach Group (SGC) 75.00p -8.35%
Workspace Group (WKP) 725.50p -8.29%
Biffa (BIFF) 229.00p -7.47%
OneSavings Bank (OSB) 287.20p -7.30%
Redrow (RDW) 504.50p -6.96%
Aggreko (AGK) 513.00p -6.80%
Travis Perkins (TPK) 1,171.00p -6.73%
WH Smith (SMWH) 1,311.00p -6.17%