London close: Stocks give up gains to finish Tuesday mixed

The FTSE 100 ended the session up 0.08% at 7,386.19, while the FTSE 250 was 0.52% weaker at 20,492.12.

Sterling was in the red, last trading down 1.03% on the dollar at $1.2610, and losing 0.5% against the euro to change hands at €1.1833.

“The wrong kind of ‘turnaround Tuesday’ has taken place today, with US markets reversing from Monday’s rebound,” said IG chief market analyst Chris Beauchamp.

“In Europe indices are clinging on to gains, but the optimism of overnight and early morning has evaporated. Investors are back to fretting about economic growth, returning to the theme that dominated at the end of last week.

“Meanwhile, excitement over the Twitter buyout has faded and instead nerves about big tech earnings this week has come to the fore, explaining why the Nasdaq is taking it on the chin this afternoon.”

Beauchamp noted that, while HSBC kicked off this round of UK bank updates in poor form, Lloyds sailed to the top of the index, bolstered by Taylor Wimpey’s solid outlook on the UK housing market.

“Demand remains strong, and mortgages are still available, and as the big player in this market Lloyds has reason to feel optimistic.

“Hopefully this tone comes through in tomorrow’s update.”

Fears over the current Covid-19 situation in China continued to weigh on sentiment, but a rally in technology plays stateside helped to turn things around in New York overnight.

Also in focus was the news that Twitter’s board would accept a $44bn offer from Elon Musk to take over the social network.

On the economic front, public borrowing was almost a fifth higher than forecast, according to data from the Office for National Statistics.

UK public sector net borrowing totalled £151.8bn for the 2021-2022 financial year - comfortably topping the £127.8bn pencilled in by the Office for Budget Responsibility just last month.

The total for the year was more than £165bn less than in the prior financial period, when the government spent huge sums to support the economy during the worst of the Covid-19 lockdowns.

It was, however, still the third-highest figure since records began in 1947.

Borrowing was below expectations in March itself, coming in at £18.1bn, compared to the £19.25bn expected in a Reuters poll.

Samuel Tombs, UK specialist at Pantheon Macroeconomics, predicted the estimate of borrowing would be revised down to be closer to the Office for Budget Responsibility's forecast.

But he added that the UK faced slowing economic growth caused by rising inflation, which could affect tax receipts and welfare spending, putting pressure on Chancellor Rishi Sunak.

"The latest public finance figures are unlikely to make the Treasury anxious," Tombs said.

"Weaker-than-expected growth will increase the pressure on the chancellor to ease the further fiscal consolidation planned for the next couple of years.

“The political pressure to support the economy also will increase as the May 2024 general election nears.”

Elsewhere, research released earlier showed grocery price inflation continuing to mount in April, reaching levels not seen in over a decade.

According to retail consultancy Kantar, like-for-like grocery inflation was 5.9% in April, the highest rate since December 2011.

The surging prices prompted shoppers to seek out cheaper retailers, with discounter Aldi the fastest growing grocer during the period, with sales up 4.2% in the 12 weeks to 17 April.

Rival discounter Lidl saw sales rise 4.0%.

Aldi’s and Lidl’s market shares were now 8.8% and 6.6% respectively, their highest yet, after more than one million extra shoppers visited respectively over the past 12 weeks.

“The average household will be exposed to a potential price increase of £271 per year,” said Fraser McKevitt, head of retail and consumer insight at Kantar.

“A lot of this is going on non-discretionary, everyday essentials which will prove difficult to cut back on as budgets are squeezed.”

Across the pond, new orders for manufactured durable goods increased 0.8% month-on-month across the US in March, according to the Census Bureau, bouncing back from a downwardly-revised 1.7% drop in February but below market expectations of a 1% gain.

Excluding transportation, new orders rose 1.1%, ahead of a 0.5% drop in February, and excluding defence, new orders advanced 1.2%, a marked improvement on the prior month's 2.1% fall.

Computers and electronic products, up two of the last three months, led the increase, up 2.6% to $26.3bn.

In equities, Taylor Wimpey closed up 0.55% after saying it was trading in line with full-year expectations, and that it remained on track to deliver against guidance set out at the time of its 2021 annual results.

The housebuilder said its net private sales rate for the year ended 17 April was "strong" at 0.96, down only slightly from 1.00 in the equivalent period a year earlier, with cancellation rates flat year-on-year at 14%.

National Express motored ahead 3.56% after it said first-quarter group revenues were back to 2019 levels, with the group actually trading ahead of the same time two years earlier during March.

The coach operator said it delivered its seventh consecutive quarterly improvement, with revenue up 30% year-on-year in constant currency, driven by a "particularly strong recovery" in its UK and ALSA coach businesses, demonstrating strong pent-up demand for travel.

On the downside, workspace operator IWG tumbled 5.4% after it reported solid improvements in first quarter revenue on Tuesday, but warned of higher costs going forward amid inflationary pressures.

HSBC was 5.53% lower after it reported a 28% fall in first-quarter profits due to higher-than-expected credit losses, the Ukraine war and a slowdown in China as it also warned on the outlook for share buybacks.

Associated British Foods was in the red by 5%, after reporting soaring first-half profits, but warning of increasing prices at its Primark clothing business due to inflation.

Market Movers

FTSE 100 (UKX) 7,386.19 0.08%
FTSE 250 (MCX) 20,492.12 -0.52%
techMARK (TASX) 4,317.93 -0.66%

FTSE 100 - Risers

Glencore (GLEN) 464.50p 3.37%
Fresnillo (FRES) 772.40p 3.34%
Endeavour Mining (EDV) 2,002.00p 2.93%
BP (BP.) 379.45p 2.87%
Anglo American (AAL) 3,299.00p 2.73%
Shell (SHEL) 2,124.00p 2.39%
Land Securities Group (LAND) 770.20p 2.23%
Entain (ENT) 1,499.50p 2.08%
National Grid (NG.) 1,202.00p 1.78%
United Utilities Group (UU.) 1,152.50p 1.77%

FTSE 100 - Fallers

Ocado Group (OCDO) 960.20p -7.32%
HSBC Holdings (HSBA) 473.85p -5.53%
Melrose Industries (MRO) 114.05p -5.20%
Dechra Pharmaceuticals (DPH) 3,570.00p -5.15%
JD Sports Fashion (JD.) 133.45p -4.95%
Associated British Foods (ABF) 1,550.50p -4.88%
International Consolidated Airlines Group SA (CDI) (IAG) 141.28p -4.22%
Aveva Group (AVV) 2,300.00p -3.40%
Next (NXT) 5,936.00p -3.13%
Halma (HLMA) 2,406.00p -2.87%

FTSE 250 - Risers

Wood Group (John) (WG.) 202.10p 7.50%
Chemring Group (CHG) 325.50p 4.33%
Pantheon International (PIN) 308.00p 4.05%
Abrdn Private Equity Opportunities Trust (APEO) 520.00p 3.59%
National Express Group (NEX) 233.00p 3.56%
Lancashire Holdings Limited (LRE) 389.80p 3.18%
JTC (JTC) 779.00p 2.91%
Centamin (DI) (CEY) 91.56p 2.67%
Diversified Energy Company (DEC) 116.80p 2.64%
Pennon Group (PNN) 1,081.00p 2.56%

FTSE 250 - Fallers

Trustpilot Group (TRST) 110.50p -7.99%
Marks & Spencer Group (MKS) 141.70p -7.39%
Dr. Martens (DOCS) 211.00p -5.47%
IWG (IWG) 240.00p -5.40%
Baltic Classifieds Group (BCG) 141.00p -5.37%
Watches of Switzerland Group (WOSG) 1,004.00p -5.10%
Jupiter Fund Management (JUP) 185.00p -5.03%
Oxford Biomedica (OXB) 534.00p -4.47%
XP Power Ltd. (DI) (XPP) 3,280.00p -4.37%
Diploma (DPLM) 2,696.00p -4.19%