London close: Stocks start October in negative territory

The FTSE 100 ended the session down 0.84% at 7,027.07, and the FTSE 250 was 0.24% weaker at 22,925.77.

Sterling was in the green, meanwhile, last trading up 0.68% on the dollar at $1.3565, and gaining 0.5% against the euro to €1.1698.

“European markets stumbled out of the blocks this morning, dropping sharply in response to yesterday’s poor US finish and a weak lead from Asia, with Chinese markets closed for the next few days,” said CMC Markets chief market analyst Michael Hewson.

“Investors remain concerned about rising energy prices acting as a brake on the wider recovery story, and they should be with European natural gas prices showing little signs of slowing down as they continue to move to new record highs.

“Nonetheless, while we’ve got off to a poor start, we have pulled off the lows of the day, which suggests that while there is concern about the outlook, it's not significantly higher than it was earlier this week, as markets continue to search for direction.”

On the economic front, fresh survey data showed that UK manufacturing growth eased to a seven-month low in September amid supply chain issues and labour shortages.

The IHS Markit/CIPS manufacturing purchasing managers’ index fell to 57.1 from 60.3 in August.

Still, it came in above the preliminary reading of 56.3.

A reading over 50.0 indicates expansion, while a reading below signals contraction.

The survey showed that production schedules were disrupted by input shortages, longer supplier lead times and capacity constraints, including difficulties with staff shortages and hiring required skills.

“Manufacturing activity in September was crammed with obstacles to succeed as supply disruptions continued to dampen growth for a fourth month in a row,” said Duncan Brock, group director at the Chartered Institute of Procurement & Supply.

“Smaller businesses were impacted the most as reduced resources in supplies and drivers made trade more unmanageable as we moved towards the last quarter of the year.

“New orders growth slowed again compared to May’s high from both domestic and overseas customers as the Brexit and covid-related long delivery times and accelerating costs contributed to a reduced eagerness to commit.”

Offshore, worries about the energy crisis in China also weighed on sentiment, after the country reportedly ordered state-owned firms to do whatever it takes to secure supplies for the winter.

In equity markets, online electricals retailer AO World tanked 24.29% after it said adjusted core earnings for the year are set to be between £35m and £50m, versus expectations of £54m, and warned that a shortage of delivery drivers was taking its toll.

Currys shares also fell sharply, by 8.61%.

Darktrace was under the cosh by 3.17% after shareholders KKR Dark Aggregator LP, Summit DT CLN Holdings 4 and Balderton Capital SFI SLP sold 25m shares in the company in a placing at 750p each.

Convenience food maker Greencore lost 2.41% despite saying that adjusted annual profits would be at the upper end of guidance as it worked to mitigate supply-chain and labour issues in the UK caused by Brexit and the Covid pandemic.

Bucking the trend, education publisher Pearson rallied 2.05% on the back of a positive research note by Citi, which said the recent selloff has created "an interesting valuation opportunity".

Euromoney rose 7.68% after it said full-year adjusted pre-tax profit was set to be "significantly ahead" of analysts' expectations.

British Airways and Iberia parent IAG and engine maker Rolls-Royce were both higher, by 5.33% and 1.96%, respectively, recovering from heavy losses in the previous session.

Pub chain JD Wetherspoon reversed earlier losses to close up 2.49%, after saying it had plunged to its worst full-year loss ever as revenues tumbled after its pubs were forced to shut due to Covid measures.

Market Movers

FTSE 100 (UKX) 7,027.07 -0.84%
FTSE 250 (MCX) 22,975.77 -0.24%
techMARK (TASX) 4,582.94 -0.91%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 188.02p 5.33%
InterContinental Hotels Group (IHG) 4,917.00p 3.39%
Whitbread (WTB) 3,406.00p 2.71%
Burberry Group (BRBY) 1,858.50p 2.40%
ITV (ITV) 109.05p 2.30%
Compass Group (CPG) 1,555.50p 2.07%
Pearson (PSON) 726.40p 2.05%
Rolls-Royce Holdings (RR.) 142.88p 1.96%
Informa (INF) 559.20p 1.78%
Entain (ENT) 2,160.00p 1.41%

FTSE 100 - Fallers

Evraz (EVR) 570.80p -3.97%
Hikma Pharmaceuticals (HIK) 2,365.00p -3.47%
Scottish Mortgage Inv Trust (SMT) 1,384.50p -3.05%
B&M European Value Retail S.A. (DI) (BME) 573.20p -2.95%
Smith (DS) (SMDS) 400.80p -2.93%
British American Tobacco (BATS) 2,535.00p -2.65%
Lloyds Banking Group (LLOY) 45.36p -2.61%
Tesco (TSCO) 247.15p -2.43%
Polymetal International (POLY) 1,228.00p -2.38%
BHP Group (BHP) 1,843.60p -2.36%

FTSE 250 - Risers

Euromoney Institutional Investor (ERM) 1,100.00p 8.27%
SSP Group (SSPG) 297.30p 7.41%
Watches of Switzerland Group (WOSG) 1,008.00p 6.55%
easyJet (EZJ) 703.80p 6.19%
Mitchells & Butlers (MAB) 251.20p 6.08%
TUI AG Reg Shs (DI) (TUI) 339.50p 5.47%
IWG (IWG) 306.50p 4.61%
Wizz Air Holdings (WIZZ) 5,214.00p 3.99%
Carnival (CCL) 1,741.40p 3.53%
Drax Group (DRX) 495.80p 2.91%

FTSE 250 - Fallers

AO World (AO.) 164.60p -24.29%
Currys (CURY) 122.30p -8.39%
Hill & Smith Holdings (HILS) 1,710.00p -5.84%
Ferrexpo (FXPO) 309.60p -5.38%
CMC Markets (CMCX) 270.50p -4.75%
Oxford Biomedica (OXB) 1,476.00p -4.65%
Aston Martin Lagonda Global Holdings (AML) 1,830.00p -4.46%
Dunelm Group (DNLM) 1,364.00p -4.08%
Virgin Money UK (VMUK) 196.35p -3.94%
Baltic Classifieds Group (BCG) 189.00p -3.82%