London close: Commodity concerns see stocks turn red
London stocks closed just below the waterline on Tuesday, as investors digested fresh data on the UK’s trade with the European Union, as well as the latest UK borrowing figures and retail sales data.
The FTSE 100 ended the session down 0.31% at 7,029.79, and the FTSE 250 was 0.2% weaker at 22,438.90.
Sterling was in the red as well, last trading 0.18% weaker against the dollar at $1.4132, and losing 0.31% on the euro at €1.1552.
“Mining stocks remain on the back foot today, with a recent Chinese bid to depress commodity prices dealing a blow to sentiment in the sector,” said IG senior market analyst Joshua Mahony.
“The impact of higher commodity prices will be felt most keenly by the Chinese, and thus their bid to reign in any manipulative practises could put pressure on producers to release any built up stocks.”
Mahony said that while Covid-19 added a “level of complexity” to the supply picture, the question was now about how much of the rise in commodity prices was down to manipulation, and how much was supply-and-demand dynamics.
“Meanwhile, lumber prices have dipped lower once again today, with a sharp decline in new home sales sparking fears that house building could slow in the US.”
Data released by the Office for National Statistics showed that the total trade in goods with the EU - the sum of exports and imports - fell by 23.1% between the first quarter of 2018 and the first three months of 2021.
Exports fell by 24.0% over that timeframe, and imports by 22.5%.
ONS said stockpiling ahead of the end of the Brexit transition period may have contributed to the drop.
Earlier, ONS data also showed that government borrowing fell in April but remained at its second highest level on record for the month.
Public sector borrowing was £31.7bn, down £15.6bn from the same month last year and marking the first annual fall since the start of the pandemic.
The amount was comfortably below the Office for Budget Responsibility’s forecast of £39bn and consensus expectations of £32.4bn.
Still, borrowing remains at its second highest April level since records began in 1993 amid continued spending on the pandemic.
Meanwhile, the ONS estimate of borrowing in 2020-2021 was revised down to £300.3bn from £303.1bn.
That was well below the £354.6bn forecast by the OBR in March’s Budget, but still the highest borrowing since financial year records began in March 1946.
Elsewhere, the latest survey from the Confederation of British Industry showed retail sales returned to more normal levels in May following a big jump in April after non-essential retailers were allowed to reopen.
Retailers reported that sales volumes were "broadly average" for the time of year, with a balance of -3 in May from +16 in April.
The reported sales balance declined to +18 in May from +20 the month before, coming in below consensus expectations of +25.
CBI economist Ben Jones said the fact sales were in line with seasonal norms was a definite improvement from earlier in the year, but that the month’s survey is perhaps "a touch disappointing" after April’s stronger results.
In equity markets, Aveva Group rose 1.62% after the industrial software company said trading had normalised in most of its markets from the impact of Covid-19, and that the outlook remained in line with expectations.
Royal Mail gained 6.58% after an upgrade to ‘buy’ at Peel Hunt and amid expectations it will return to the FTSE 100 in the next reshuffle.
On the downside, convenience food group Greencore lost 15.69% after saying it swung to a loss in the first half as Covid-related restrictions and lockdown dented revenues.
Avon Rubber was also down, losing 10.71%, despite posting a jump in interim profit and revenue.
Provident Financial was 6.49% weaker as guarantor lender Amigo Holdings tanked after the High Court rejected its rescue plan.
Trainline was knocked 8.28% lower by a downgrade to ‘hold’ at Stifel.
Market Movers
FTSE 100 (UKX) 7,029.79 -0.31%
FTSE 250 (MCX) 22,438.90 -0.20%
techMARK (TASX) 4,329.39 -0.02%
FTSE 100 - Risers
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,471.00p 4.52%
International Consolidated Airlines Group SA (CDI) (IAG) 201.95p 2.53%
Ocado Group (OCDO) 2,013.00p 2.22%
Experian (EXPN) 2,781.00p 1.94%
Aveva Group (AVV) 3,340.00p 1.62%
Smurfit Kappa Group (CDI) (SKG) 3,817.00p 1.52%
Rightmove (RMV) 600.40p 1.42%
Compass Group (CPG) 1,606.00p 1.33%
Informa (INF) 542.40p 1.27%
Avast (AVST) 464.50p 1.22%
FTSE 100 - Fallers
Royal Dutch Shell 'B' (RDSB) 1,314.80p -2.64%
Royal Dutch Shell 'A' (RDSA) 1,374.00p -2.46%
Anglo American (AAL) 3,083.00p -2.36%
BT Group (BT.A) 174.10p -2.19%
Glencore (GLEN) 305.30p -2.05%
Antofagasta (ANTO) 1,494.00p -2.03%
BP (BP.) 310.05p -2.01%
Associated British Foods (ABF) 2,289.00p -1.72%
BHP Group (BHP) 2,069.00p -1.59%
Rio Tinto (RIO) 5,905.00p -1.45%
FTSE 250 - Risers
Royal Mail (RMG) 587.80p 6.58%
Cineworld Group (CINE) 93.88p 4.78%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,471.00p 4.52%
Aston Martin Lagonda Global Holdings (AML) 1,990.50p 3.56%
Rank Group (RNK) 203.00p 3.47%
Carnival (CCL) 1,694.40p 3.08%
Ascential (ASCL) 354.80p 2.84%
Genuit Group (GEN) 630.00p 2.76%
National Express Group (NEX) 302.80p 2.64%
Genus (GNS) 5,020.00p 2.45%
FTSE 250 - Fallers
Greencore Group (CDI) (GNC) 144.00p -15.69%
Avon Rubber (AVON) 2,944.00p -10.71%
Trainline (TRN) 276.20p -8.28%
Provident Financial (PFG) 242.20p -6.49%
Sirius Real Estate Ltd. (SRE) 94.10p -5.33%
Hammerson (HMSO) 35.01p -4.89%
CLS Holdings (CLI) 239.00p -4.21%
Mitie Group (MTO) 66.60p -4.17%
GCP Student Living (DIGS) 156.00p -3.94%
Dr. Martens (DOCS) 483.20p -3.60%