London close: Stocks fall amid French political concerns

The FTSE 100 index fell by 0.21% to 8,146.86, while the FTSE 250 dropped 0.37% to the same figure of 8,146.86.

In currency markets, sterling was last down 0.63% on the dollar to trade at $1.2681, while it slipped 0.25% against the euro, changing hands at €1.1855.

Market analysts highlighted concerns over the upcoming first round of voting in the French parliamentary election.

Marine Le Pen’s party is expected to secure the most votes, but an outright majority remains uncertain.

The prospect of a significant gain for Le Pen’s hard-right party is causing jitters among investors, particularly affecting French stocks and banks.

“European stock indices continue their rout as political infighting among French parties becomes farcical,” said IG senior market analyst Axel Rudolph.

“Fund outflows out of Europe into emerging markets and US mega stocks have contributed to the S&P 500 and Nasdaq 100 hitting fresh highs this week while the French CAC 40 fell by around 5%.”

Rudolph added that the US Federal Reserve’s decision to pencil in just one 25 basis point rate cut this year provoked a second week of gains in the dollar, albeit with a blip due to a softer US inflation print mid-week.

“The oil price practically regained all of its early June 9% losses and is on track for its first positive week in a month.

“The same is the case for the gold price which ends the last day of the week up around a percent while US yields drop to two-and-a-half month lows.

“Next week, the focus will be on RBA and BOE monetary policy meetings, UK and Japan CPI as well as a plethora of US and European flash services and manufacturing PMIs.”

US import prices decline, UK inflation expectations drop further

In economic news, the US saw an unexpected decline in import prices in May, according to the Department of Labor.

The import price index fell by 0.4% month-on-month, contrary to expectations of a 0.1% increase.

Fuel import prices dropped 2.0% from April, while prices for other goods decreased by 0.3%. Annually, import prices rose by 1.1%.

Meanwhile, export prices fell by 0.6%, driven by a 0.8% drop in non-agricultural goods, though agricultural exports increased by 0.5%.

On home shores, inflation expectations in the UK dropped to a three-year low, according to a Bank of England survey.

The survey showed that the public expects a 2.8% rise in prices over the next 12 months, down from 3% in February and the lowest since August 2021.

Despite that, the median perception of the current inflation rate remained at 5.5%, above the actual rate of 2.3%.

The Bank of England's Monetary Policy Committee is set to decide on interest rates next week, with many economists anticipating a rate cut in August due to slowing inflation.

“The fact that the current rate of inflation is perceived to be 5.5% suggests the cost of living crisis still feels very real,” said Andrew Montlake, managing director at mortgage broker Coreco.

“Though many in the UK would prefer higher rates, those with significant savings are dwarfed by people with significant debt.

“The effect of rate rises has been ubiquitous and everyone has felt the consequences of both global factors and Liz Truss’s brief spell in Number 10.”

On the continent, the eurozone trade balance returned to a surplus in April, though it fell short of market expectations.

Eurostat reported a surplus of €15bn in trade of goods, compared to a deficit of €11.1bn in April 2023.

Analysts had predicted a €20bn surplus.

Exports surged by 14% year-on-year to €247.6bn, while imports increased by 1.8% to €232.5bn.

Earlier in the global day, the Bank of Japan (BoJ) maintained its lending rates in its latest decision, while announcing plans to reduce its extensive bond purchases.

Detailed tapering plans are expected in July.

The BoJ said it would continue its government bond purchasing at around JPY 6trn (£30 million) per month.

Its board unanimously decided to keep the short-term policy rate target between 0% and 0.1%, highlighting a moderate economic recovery with steady consumption.

Tesco in the green, Burberry falls on market concerns

On London’s equity markets, Tesco rose 2.64% after reporting a 3.4% rise in group first-quarter sales, totaling £15.3bn.

That growth was driven by strong volume increases across the UK, Republic of Ireland, and Central Europe, supported by easing inflation.

The supermarket chain also increased its UK market share by 52 basis points to 27.6%.

BT Group continued its upward momentum, rising 3.37% after Mexican billionaire Carlos Slim acquired a 3.2% stake earlier this week.

Vodafone saw a modest rise of 0.38% following reports that it plans to sell its entire $2.3bn stake in India's Indus Towers through stock market block deals next week.

Crest Nicholson shares soared 8.55% after rejecting two unsolicited takeover bids from Bellway, the latest valuing the company at approximately £650m.

The latest offer, received on 7 May, implied a value of 253p per Crest Nicholson share, an 18.8% premium over Thursday's closing price.

Despite that, Crest Nicholson's board unanimously rejected the proposals, deeming them significantly undervalued.

The news came shortly after Crest Nicholson cut its interim dividend, reported a first-half loss, and downgraded its profit forecast for the year, causing its shares to tumble on Thursday.

Bellway's shares dropped 4.42% following the news of its unsuccessful takeover bids for Crest Nicholson.

Elsewhere, Burberry shares declined 4.23% amid a broader slump in European luxury stocks, driven by concerns over demand after reports indicated some brands were heavily discounting their products in China.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,146.86 -0.21%
FTSE 250 (MCX) 20,120.36 -0.37%
techMARK (TASX) 4,775.78 -0.64%

FTSE 100 - Risers

BT Group (BT.A) 139.55p 3.37%
Tesco (TSCO) 310.20p 2.55%
Sage Group (SGE) 1,056.50p 2.47%
Airtel Africa (AAF) 118.60p 2.33%
Ocado Group (OCDO) 360.10p 1.77%
Unite Group (UTG) 903.00p 1.51%
Centrica (CNA) 132.00p 1.42%
Fresnillo (FRES) 545.50p 1.21%
National Grid (NG.) 882.00p 1.05%
Imperial Brands (IMB) 1,999.50p 0.98%

FTSE 100 - Fallers

Burberry Group (BRBY) 980.20p -4.23%
Melrose Industries (MRO) 600.60p -4.21%
BAE Systems (BA.) 1,335.00p -3.47%
Rentokil Initial (RTO) 447.10p -3.14%
Intertek Group (ITRK) 4,744.00p -2.99%
Kingfisher (KGF) 248.60p -2.81%
Entain (ENT) 656.00p -2.38%
Flutter Entertainment (DI) (FLTR) 13,835.00p -2.36%
Barratt Developments (BDEV) 488.90p -2.26%
CRH (CDI) (CRH) 6,030.00p -2.24%

FTSE 250 - Risers

Crest Nicholson Holdings (CRST) 242.00p 13.72%
Investec (INVP) 555.50p 4.42%
Indivior (INDV) 1,318.00p 3.37%
Jlen Environmental Assets Group Limited NPV (JLEN) 86.50p 3.22%
Patria Private Equity Trust (PPET) 550.00p 2.61%
JPMorgan Global Growth & Income (JGGI) 569.00p 2.34%
NextEnergy Solar Fund Limited Red (NESF) 74.80p 2.33%
3i Infrastructure (3IN) 325.50p 2.20%
Baillie Gifford Japan Trust (BGFD) 724.00p 2.12%
W.A.G Payment Solutions (WPS) 65.00p 1.88%

FTSE 250 - Fallers

Carnival (CCL) 1,077.00p -6.39%
Dr. Martens (DOCS) 80.30p -4.52%
Bellway (BWY) 2,598.00p -4.42%
Genus (GNS) 1,710.00p -3.39%
Wizz Air Holdings (WIZZ) 2,410.00p -3.29%
4Imprint Group (FOUR) 5,740.00p -2.74%
TI Fluid Systems (TIFS) 128.00p -2.74%
Future (FUTR) 993.00p -2.65%
Coats Group (COA) 80.50p -2.54%
SDCL Energy Efficiency Income Trust (SEIT) 62.40p -2.50%