London close: Stocks fall as banks, travel issues weaken
London equity markets ended in the red on Tuesday as banks and travel stocks retreated.
The FTSE 100 closed down 0.4% at 7,119.70.
Chris Beauchamp, chief market analyst at IG, said: "Value stocks have been hit across the FTSE 100 today, with banks down as UK stocks play catch-up with Powell’s speech on Friday and travel stocks remain in the red as investors fret about the outlook for the next few months.
"Hopefully US jobs data this week will give equities a lift, allaying fears that the global economy is hitting a rough patch, and while the inflation story has not entirely disappeared, it looks like the main takeaway from Jackson Hole is that the Fed continues to err on the side of caution."
Investors were digesting the latest figures from the Bank of England, which showed that households increased savings and borrowed no new money in July amid economic uncertainty and rising Covid-19 cases.
Net consumer credit was unchanged, down from £0.3bn of extra borrowing a month earlier and missing analysts' consensus forecast of £0.4bn. Households' total liquid assets, including bank deposits and savings, rose by £7.1bn. The BoE did not give reasons for the trends.
The figures cast doubt on hopes that households would splurge money saved during the crisis to support a sustained economic recovery. The data also showed the housing market slowing after a year-long boom supported by the Chancellor's stamp duty holiday, which ends in September.
Meanwhile, mortgage approvals for house purchases fell to 75,200 - the lowest since July 2020. Sunak's decision to cut stamp duty fuelled a boom in property sales and purchases supported by households looking for more space to work from home.
Approvals were well ahead of their longer-term average but Pantheon Macroeconomics economist Samuel Tombs said he expected mortgage activity to return to pre-crisis levels by the end of 2021.
"Demand indicators already are softening, now that potential buyers have little hope of completing a transaction before the threshold for Stamp Duty Land Tax returns to £125K at the end of September, from £250K at present," he said.
Earlier, China’s official manufacturing purchasing managers’ index edged down to 50.1 in August from 50.4 in July, coming in just a touch below consensus expectations of 50.2. Meanwhile, the official non-manufacturing PMI tumbled to 47.5 in August from 53.3 the month before, coming in well below consensus expectations for a reading of 52.0.
In equity markets, banks were on the decline, with NatWest, HSBC and Lloyds all trading lower. HSBC was in focus following a report it’s in advanced and exclusive talks with L&T Finance Holdings to buy its mutual fund arm.
Travel stocks also lost ground after the EU recommended a pause on all non-essential travel from the US due to a rise in Covid cases. British Airways and Iberia parent IAG and budget airlines Wizz Air and easyJet all declined.
Engine maker Rolls-Royce fell after its biggest shareholder, Causeway Capital Management, called on the company’s incoming chair to "refresh" the board as it emerges from a downturn. Jonathan Eng, portfolio manager at the California-based investment group, told the Financial Times that he would like Anita Frew, who takes over as chair in October, to consider whether it had the right expertise at the top.
Bunzl was down even as it reported first-half adjusted profit up almost 15% as a recovery in its core business more than offset declining sales of Covid-19 related products.
Going the other way, Computacenter gained after saying it continues to expect annual adjusted profit to be ahead of market views.
FTSE 100 (UKX) 7,119.70 -0.40%
FTSE 250 (MCX) 24,105.66 0.19%
techMARK (TASX) 4,833.38 -0.28%
FTSE 100 - Risers
Melrose Industries (MRO) 167.12p 10.23%
Weir Group (WEIR) 1,743.50p 3.32%
Ferguson (FERG) 10,505.00p 2.74%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,559.00p 2.37%
Smiths Group (SMIN) 1,442.50p 1.26%
Persimmon (PSN) 2,927.00p 1.25%
Entain (ENT) 1,933.00p 1.23%
Ashtead Group (AHT) 5,678.00p 1.14%
British American Tobacco (BATS) 2,729.00p 1.11%
Royal Mail (RMG) 495.40p 1.10%
FTSE 100 - Fallers
B&M European Value Retail S.A. (DI) (BME) 559.00p -2.75%
NATWEST GROUP PLC ORD 100P (NWG) 213.10p -2.56%
International Consolidated Airlines Group SA (CDI) (IAG) 159.36p -2.54%
HSBC Holdings (HSBA) 386.20p -2.22%
Sainsbury (J) (SBRY) 304.00p -2.06%
BP (BP.) 296.95p -1.83%
Johnson Matthey (JMAT) 2,939.00p -1.80%
Polymetal International (POLY) 1,448.00p -1.76%
ITV (ITV) 115.60p -1.70%
Bunzl (BNZL) 2,636.00p -1.64%
FTSE 250 - Risers
Chrysalis Investments Limited NPV (CHRY) 276.00p 5.75%
Trustpilot Group (TRST) 432.00p 5.37%
Trainline (TRN) 366.80p 4.32%
Diversified Energy Company (DEC) 111.60p 3.53%
Inchcape (INCH) 919.50p 3.37%
Aston Martin Lagonda Global Holdings (AML) 2,004.00p 3.33%
Ninety One (N91) 256.00p 3.23%
Network International Holdings (NETW) 391.20p 3.19%
Investec (INVP) 306.50p 2.82%
RIT Capital Partners (RCP) 2,675.00p 2.49%
FTSE 250 - Fallers
Harbour Energy (HBR) 355.80p -3.63%
Wizz Air Holdings (WIZZ) 4,832.00p -3.07%
Playtech (PTEC) 408.80p -2.76%
Wood Group (John) (WG.) 249.80p -2.61%
Oxford Instruments (OXIG) 2,615.00p -2.43%
The Renewables Infrastructure Group Limited (TRIG) 125.60p -2.33%
Big Yellow Group (BYG) 1,527.00p -2.30%
National Express Group (NEX) 256.40p -2.29%
Lancashire Holdings Limited (LRE) 625.00p -2.19%
Workspace Group (WKP) 930.50p -2.16%