London close: Stocks manage positive finish amid vaccine spat
London stocks managed a positive finish on Monday, helped along by a strong performance from Kingfisher, although gains were limited as travel and leisure issues slumped amid an EU-UK vaccine spat and rising Covid cases in Europe.
The FTSE 100 ended the session up 0.26% at 6,726.10, and the FTSE 250 was 0.17% firmer at 21,455.89.
Sterling was stronger as well, last gaining 0.08% on the dollar to trade at $1.3861, and advancing 0.33% against the euro to €1.1608.
“Last week, there were concerns about rising Covid-19 cases in several large European countries, such as Germany, Italy and France,” said CMC Markets analyst David Madden.
“The situation has deteriorated as those counties have extended restrictions, so that has pushed back the prospect of their economies being reopened.
“It was confirmed that Germany’s lockdown has been extended until 18 April, but the DAX 30 and the majority of other European indices are set to finish higher today.”
Madden said that for the moment, governments were rolling out vaccinations as normal, but cautioned that later in the week the EU could be banning exports of the AstraZeneca-Oxford vaccine and its ingredients to the UK.
“Such action would be drastic, but it seems that Brussels is determined to play catch up with respect to vaccination rates.
“The EU has vaccinated approximately 10% of its population while the UK’s rate is above 40%.
“Airline stocks are at the forefront of selling pressure due to worries about continental European economies enduring extended lockdowns and the possibility of the EU banning AstraZeneca vaccine exports to the UK.”
Over the weekend, the European Union threatened to ban exports of the AstraZeneca vaccine to the UK, with European Commission president Ursula von der Leyen saying the EU can "forbid" vaccines made on the continent from being sent to the UK.
Meanwhile, worries about a third wave in Europe were exacerbated by news that German Chancellor Angela Merkel recommended a four-week lockdown extension.
“Despite expectations that the worst is behind us, the Brazil variant poses a critical risk given its ability to sidestep many current vaccines,” said IG analyst Joshua Mahony.
“Thus, while vaccination efforts continue to impress, we are seeing traders question whether this apparent straight line to normality is perhaps too good to be true.”
Mahony said the threat of an EU ban on vaccine exports ran the risk of a “tit-for-tat battle”, that could ultimately see vaccination efforts stumble after the UK crossed the 50% threshold.
“The proposed EU ban threatens to delay the UK vaccination programme by two months, bringing a benefit that amounts to just over a week to the EU.”
Sentiment also took a knock after the Turkish lira slid 15% over the weekend as president Erdogan sacked hawkish central bank governor Naci Agbal and replaced him with Sahap Kavcioglu, who has been a critic of high interest rates.
“The risk here is that Agbal could reverse the recent rate hikes, causing huge capital outflows as a result,” Mahony said.
“While some of that initial Lira weakness has abated thanks to comments from both the finance minister and Agbal himself, this latest bout of instability adds yet another layer of uncertainty around the future of policy in Turkey.”
In equity markets, B&Q owner Kingfisher rallied 3.61% after it reinstated its dividend as it reported soaring annual profits and a strong start to the new fiscal year on higher demand from "a new generation of DIYers" working from home during the Covid-19 pandemic.
AstraZeneca rose 3.29% after it said a US trial of the coronavirus vaccine it has developed with the University of Oxford showed it is 79% effective at preventing symptomatic Covid-19 and 100% efficacy at preventing severe disease and hospitalisation.
On the downside, travel and leisure stocks slumped on reports that summer holidays abroad were looking unlikely due to new variants of Covid-19 and a surge in cases in Europe.
British Airways and Iberia parent IAG was down 5.2%, engine maker Rolls-Royce lost 4.36%, InterContinental Hotels was 0.42% weaker, budget airlines easyJet and Wizz Air descended 5.43% and 2.12%, TUI lost 4.92%, and cruise operator Carnival fell 1.37%.
IAG was also knocked lower by a downgrade to ‘hold’ from ‘buy’ at Deutsche Bank.
Hargreaves Lansdown was down 0.58% after The Times reported that the investment platform was being sued for recommending Woodford Equity Income to investors.
“The claim is based on losses sustained directly and loss of opportunity for investors who could have invested elsewhere,” said broker Peel Hunt.
“The matter is still subject to a FCA inquiry. Inevitably, we expect this will take some time to resolve, with nothing in the article giving any sense on timelines from here.
“The news is likely to be a small negative for sentiment, although there have been rumours of such action for a while.”
Market Movers
FTSE 100 (UKX) 6,726.10 0.26%
FTSE 250 (MCX) 21,455.89 0.17%
techMARK (TASX) 4,211.56 0.75%
FTSE 100 - Risers
Scottish Mortgage Inv Trust (SMT) 1,165.00p 4.48%
Kingfisher (KGF) 324.00p 3.61%
Rightmove (RMV) 587.00p 3.38%
DCC (CDI) (DCC) 6,452.00p 3.30%
AstraZeneca (AZN) 7,344.00p 3.29%
Reckitt Benckiser Group (RB.) 6,488.00p 2.76%
Standard Life Aberdeen (SLA) 294.20p 2.62%
Halma (HLMA) 2,293.00p 2.18%
Bunzl (BNZL) 2,297.00p 2.09%
Spirax-Sarco Engineering (SPX) 11,295.00p 1.94%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 195.95p -5.20%
Rolls-Royce Holdings (RR.) 111.90p -4.36%
British Land Company (BLND) 506.20p -2.28%
Melrose Industries (MRO) 171.00p -2.26%
Legal & General Group (LGEN) 272.10p -2.09%
Fresnillo (FRES) 945.20p -1.97%
Land Securities Group (LAND) 677.10p -1.63%
Rio Tinto (RIO) 5,386.00p -1.55%
WPP (WPP) 922.20p -1.43%
Next (NXT) 7,830.00p -1.39%
FTSE 250 - Risers
Bytes Technology Group (BYIT) 438.00p 6.08%
888 Holdings (888) 369.00p 4.68%
XP Power Ltd. (DI) (XPP) 4,980.00p 4.61%
TBC Bank Group (TBCG) 1,122.00p 4.47%
PureTech Health (PRTC) 410.00p 4.46%
PZ Cussons (PZC) 269.00p 4.26%
4Imprint Group (FOUR) 2,350.00p 4.21%
JTC (JTC) 612.00p 4.08%
Helios Towers (HTWS) 159.40p 3.92%
C&C Group (CDI) (CCR) 293.50p 3.89%
FTSE 250 - Fallers
Hammerson (HMSO) 31.40p -10.31%
Cineworld Group (CINE) 111.30p -8.77%
Babcock International Group (BAB) 234.30p -6.28%
Watches of Switzerland Group (WOSG) 662.00p -5.97%
easyJet (EZJ) 941.20p -5.43%
TUI AG Reg Shs (DI) (TUI) 378.00p -4.93%
Tullow Oil (TLW) 53.50p -4.91%
Airtel Africa (AAF) 84.20p -3.88%
Sirius Real Estate Ltd. (SRE) 93.50p -3.12%
Petropavlovsk (POG) 25.25p -3.07%