London close: Stocks follow Wall Street weaker in late trading

London’s main indices followed their Wall Street counterparts into the red by the close on Tuesday, having risen earlier after well-received updates from the likes of Compass and Unilever.

The FTSE 100 ended the session down just 0.02 points at 7,306.28, and the FTSE 250 was 1.18% lower at 19,568.79.

Sterling was in a mixed state, last trading 0.07% weaker against the dollar at $1.2034, while it strengthened 0.84% on the euro to €1.1886.

“It’s been a broadly negative day for European markets with the FTSE 100 outperforming after some positive earnings updates, as well as a buoyant energy and utilities sector, with the likes of BP, Shell and British Gas owner Centrica edging higher the way on the back of rising oil and gas price,” said CMC Markets chief market analyst Michael Hewson.

“The wider negative tone for markets has been primarily driven by yesterday’s news from Gazprom, that it would be reducing gas flows from tomorrow to 20% of capacity, and the consequence of what that is likely to mean for the economic outlook for Europe as we head into the winter months.

“The IMF also announced it was cutting its 2022 global GDP target to 3.2% from 3.6% in April, with the US being downgraded to 2.3% from 3.7%, and the UK downgraded from 3.7% to 3.2%.”

In economic news, retail sales continued to fall in the year to July, albeit at a more modest pace, as the cost-of-living crisis continues to take its toll, according to the Confederation of British Industry.

The CBI's retail sales balance came in at -4 compared to -5 in June, while the balance of expectations for July declined to -14 from -2 the month before - the lowest level since March 2021.

“Retail activity continues to take a hit as consumers struggle to cope with the effects of the cost-of-living crisis,” said CBI principal economist Martin Sartorius.

“For wholesalers, high inflation and weakening economic momentum has meant that sales volumes have now fallen following a solid period of growth stretching back to March 2021.”

Sartorius said the government needed to act to “inspire business confidence” and stimulate growth.

“Fundamentally reforming both business rates and the apprenticeship levy are crucial starting points to encourage investment, which will play a key role in improving living standards in the long-term.”

Across the channel, European Union members agreed to reduce their gas consumption in the face of increased gas rationing by Russia, albeit in a more watered-down fashion than that first proposed.

The 27-member bloc agreed the up-to-15% reduction in gas prices with the caveat of “some exemptions and possibilities”, which had not been part of the earlier plans.

According to the Washington Post, Spain and Portugal had argued that agreeing to the plan without exemptions would have amounted to an “illegal sacrifice”, given they rely less on gas from Russia.

More globally, the world's watchdog for financial stability lowered its projections for economic growth in 2022 due to tighter central bank policies, Covid-19 lockdowns and the real estate crisis in China, and the war in Ukraine.

In its autumn forecasts, the International Monetary Fund predicted that global gross domestic product would expand by 3.2% in 2022 - down from 6.1% in 2021, and by 0.4 percentage points from its last forecasts made in April.

Its US GDP growth forecast was marked down by 1.4 percentage points to 2.3%, and that for the People's Republic of China by 1.1 points to 3.3%.

The UK was seen growing by 3.2% and the euro area by 2.6% - 0.5% and 0.2% less than its prior forecasts, respectively.

On London’s equity markets, oil giants Shell and BP gushed 0.85% and 0.48% higher, respectively, amid stronger oil prices, while miners also advanced in tandem with metals prices.

Antofagasta was up 0.42%, Anglo American added 0.81%, and Glencore was ahead 1.39%.

Catering group Compass rallied 3.33% after it said underlying revenues had more than doubled in the three months ended 30 June, with all three of its trading regions operating above 2019 levels.

Consumer goods giant Unilever rose 2.95% after it reported 8.1% growth in first-half underlying sales as it lifted prices to tackle higher costs, and raised its sales growth guidance for the year.

Renewable power generator Drax was 1.92% higher after it backed its full-year expectations and posted better-than-expected first-half profits.

On the downside, B&Q owner Kingfisher tumbled 8.54% and kitchen supplier Howden Joinery lost 3.79% after Wickes downgraded its full-year adjusted pre-tax profit expectations, sending shares in the retailer down 17.99%.

Budget airline easyJet reversed earlier gains to descend 0.13%, after saying it currently expected fourth-quarter capacity to be around 90% of pre-Covid pandemic levels with load factors above 90%, while it narrowed third-quarter losses.

Media group Future was in the red by 5.91% after Daily Express and Mirror publisher Reach posted a drop in first-half profits and revenues amid cost pressures and warned that digital growth would remain "subdued".

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,306.28 0.00%
FTSE 250 (MCX) 19,568.79 -1.18%
techMARK (TASX) 4,344.71 -0.81%

FTSE 100 - Risers

Compass Group (CPG) 1,906.50p 3.33%
Unilever (ULVR) 4,032.00p 2.95%
Admiral Group (ADM) 1,787.50p 2.94%
AstraZeneca (AZN) 11,020.00p 1.94%
Dechra Pharmaceuticals (DPH) 3,648.00p 1.50%
Phoenix Group Holdings (PHNX) 622.60p 1.40%
Glencore (GLEN) 438.80p 1.39%
National Grid (NG.) 1,123.00p 1.26%
Smith & Nephew (SN.) 1,189.00p 1.11%
Centrica (CNA) 89.38p 1.06%

FTSE 100 - Fallers

Kingfisher (KGF) 245.20p -8.54%
JD Sports Fashion (JD.) 127.75p -8.03%
Vodafone Group (VOD) 122.36p -5.16%
Rolls-Royce Holdings (RR.) 87.69p -4.63%
Hargreaves Lansdown (HL.) 804.40p -4.26%
Howden Joinery Group (HWDN) 629.40p -3.79%
B&M European Value Retail S.A. (DI) (BME) 405.00p -3.78%
Abrdn (ABDN) 153.50p -3.49%
St James's Place (STJ) 1,145.00p -3.46%
Flutter Entertainment (CDI) (FLTR) 7,782.00p -3.45%

FTSE 250 - Risers

Bridgepoint Group (Reg S) (BPT) 239.60p 4.90%
Tullow Oil (TLW) 47.78p 2.27%
Babcock International Group (BAB) 339.60p 2.04%
Drax Group (DRX) 768.50p 1.92%
Wizz Air Holdings (WIZZ) 1,965.00p 1.92%
Convatec Group (CTEC) 226.60p 1.89%
Balanced Commercial Property Trust Limited (BCPT) 118.80p 1.54%
Helios Towers (HTWS) 139.50p 1.53%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 87.90p 1.50%
Mitie Group (MTO) 74.30p 1.36%

FTSE 250 - Fallers

ASOS (ASC) 1,032.00p -7.94%
Jupiter Fund Management (JUP) 123.40p -7.57%
Currys (CURY) 65.80p -7.32%
Aston Martin Lagonda Global Holdings (AML) 436.20p -7.11%
Marks & Spencer Group (MKS) 135.45p -6.84%
Ferrexpo (FXPO) 141.50p -6.54%
Travis Perkins (TPK) 971.60p -5.99%
Future (FUTR) 1,798.00p -5.91%
Dr. Martens (DOCS) 258.80p -5.27%
Volution Group (FAN) 380.50p -4.99%