London close: China concerns drag FTSE 100 lower
By Josh White
Date: Monday 21 Nov 2022
(Sharecast News) - London stocks were in a mixed state at the close on Monday, with the top-flight index slipping into the red amid renewed Covid-19 concerns out of China.
The FTSE 100 ended the session down 0.12% at 7,376.85, while the FTSE 250 rose 0.68% to 19,413.35.
Sterling was also struggling for direction, and was last down 0.83% against the dollar at $1.1791, as it strengthened 0.1% against the euro to trade at €1.1527.
"It's been a lacklustre start to the week for markets in Europe, after an Asia session which was dominated by concern that Chinese authorities will have to implement further lockdowns, after the country reported its first Covid-related deaths since April," said CMC Markets chief market analyst Michael Hewson.
"Consequently, we've seen sharp declines in the price of crude oil and base metals on concerns over weaker demand, which has acted as a drag on the basic resources and the energy sector.
"The declines in crude oil haven't been helped by a report that Saudi Arabia might back an increase in supplies."
On the political front, prime minister Rishi Sunak insisted earlier that the UK would not pursue any 'Swiss-style deals' with the European Union.
Speaking at the CBI conference in Birmingham, the prime minister told business leaders: "Let me be unequivocal about this. Under my leadership, the UK will not pursue any relationship with Europe that relies on alignment with EU laws."
"I voted for Brexit, I believe in Brexit. I know that Brexit can deliver, and is already delivering, enormous benefits and opportunities for the country."
His comments looked to directly dismiss weekend reports that the senior government officials wanted the UK to forge closer, Swiss-style economic ties with the EU.
Switzerland is not a member of the EU but has access to the single market through a series of bilateral agreements, including permitting more liberal migration and paying towards the bloc's budget.
UK government ministers denied the story, although an unnamed Downing Street source told the Sunday Times there was "definitely a deal to be done".
Sunak also earlier rejected calls by the CBI to loosen immigration requirements to tackle labour shortages, saying that the government's focus instead was tackling illegal migration.
In economic news, retail footfall grew just 1.6% week-on-week in the seven days ended 19 November according to Springboard, with consumers seemingly yet to make the most of already-live Black Friday promotions.
UK retail footfall rose by 1.7% in high streets, 2.4% in shopping centres and just 0.5% in retail parks, while the uplift from 2021 dropped by nearly half to 2.8% from 5% in the week before last.
On high streets, the increase from 2021 dropped by nearly a third to 2.7% from 6.5% in the week before last
The gap from the 2019 footfall levels, however, narrowed to -10.5% from -11.1% in the week before last, with most of the uplift resulting from increases over the week on Sunday and Monday that averaged 12.7% - a bounce back from a decline of -9.4% in the week before last.
"As Black Friday promotions started to become evident, footfall across UK retail destinations rose marginally last week from the week before," said Springboard's Diane Wehrle.
"However, rather than organic growth in activity, all of the uplift was a consequence of a bounce back in footfall on Sunday and Monday from noticeable drops on those two days in the previous week.
"Over the rest of the week through to Saturday footfall either declined or rose only very slightly from the week before."
On the continent, producer prices unexpectedly fell in Germany last month according to official data, after energy costs eased.
According to the Destatis federal statistics office, producer prices of industrial products fell 4.2% when compared to September.
It was the first month-on-month decrease since May 2020, and significantly better than forecasts, for a rise of 0.6%.
Year-on-year, producer prices spiked 34.5%, although that was an improvement on September, when the rate was 45.8%.
Earlier in the global day, market expectations were sated after China held benchmark lending rates.
The People's Bank of China confirmed that it was leaving the one-year loan prime rate (LPR) at 3.65%.
In its statement it also stood pat on the five-year rate - a reference for mortgages - at 4.3%.
On London's equity markets, online grocer and warehouse technology developer Ocado Group was on the slide again, closing down 4.87%.
Miners - which are heavily dependent on demand from China - were also in the red, with Glencore down 1.77%, Anglo American off 2.33%, and Antofagasta 1.17% weaker.
Elsewhere, caterer Compass Group fell 1.43% even after it hiked its dividend and reported a rise in full-year underlying operating profit and revenues, hailing record net new business.
Sports betting and gaming group Entain lost 3.28% even after it said it was awarded five-year licences by the State Administrative Office of Saxony-Anhalt, for the operation of its gaming and poker services throughout Germany.
Entain was granted all five licences it applied for, enabling it to offer gaming under its Bwin, Ladbrokes and Sportingbet brands, and poker under Bwin and Ladbrokes.
RHI Magnesita fell 3.29% after it said it had bought the Indian refractory business of Dalmia Bharat Refractories in a share swap agreement.
The deal would see RHI take on the business in exchange for 27 million shares in its 70%-owned India-listed subsidiary, valued at around €212m.
On the upside, Endeavour Mining gained 1.95% after saying it had made a major discovery at its 100%-owned Tanda-Iguela greenfield exploration property in Côte d'Ivoire.
"We view this as a material positive for Endeavour as it suggests the presence of a deposit with the scale and grade to be developed as a mine possibly by 2026," said analysts at Berenberg.
Virgin Money UK jumped 14.94% after it reported a strong rise in full-year profits driven by higher interest rates.
The bank said pre-tax profit surged 43% to £595m, and also posted impairment losses of £52m, compared with a £131m credit a year ago.
Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti, Abigail Townsend and Iain Gilbert.
Market Movers
FTSE 100 (UKX) 7,376.85 -0.12%
FTSE 250 (MCX) 19,413.35 0.68%
techMARK (TASX) 4,403.55 0.90%
FTSE 100 - Risers
Rentokil Initial (RTO) 547.40p 2.43%
Smiths Group (SMIN) 1,611.00p 2.35%
GSK (GSK) 1,398.00p 2.16%
Relx plc (REL) 2,332.00p 2.15%
RS Group (RS1) 970.50p 2.00%
Endeavour Mining (EDV) 1,672.00p 1.95%
Bunzl (BNZL) 3,084.00p 1.92%
Unilever (ULVR) 4,112.50p 1.78%
BAE Systems (BA.) 782.00p 1.53%
Reckitt Benckiser Group (RKT) 5,900.00p 1.51%
FTSE 100 - Fallers
Harbour Energy (HBR) 299.50p -8.52%
Ocado Group (OCDO) 645.20p -4.87%
BP (BP.) 458.15p -3.76%
M&G (MNG) 191.10p -3.66%
Entain (ENT) 1,296.00p -3.28%
Intermediate Capital Group (ICP) 1,173.00p -3.10%
Shell (SHEL) 2,272.50p -3.07%
Prudential (PRU) 955.60p -2.35%
Anglo American (AAL) 3,087.00p -2.33%
Rio Tinto (RIO) 5,270.00p -2.14%
FTSE 250 - Risers
Virgin Money UK (VMUK) 167.35p 14.94%
PureTech Health (PRTC) 263.50p 9.79%
Balanced Commercial Property Trust Limited (BCPT) 91.30p 7.54%
Kainos Group (KNOS) 1,680.00p 5.86%
Syncona Limited NPV (SYNC) 186.80p 5.66%
Urban Logistics Reit (SHED) 150.50p 4.51%
NextEnergy Solar Fund Limited Red (NESF) 115.80p 4.32%
TBC Bank Group (TBCG) 2,270.00p 4.13%
Chemring Group (CHG) 307.00p 4.07%
Darktrace (DARK) 379.50p 3.43%
FTSE 250 - Fallers
ASOS (ASC) 657.00p -6.61%
Shaftesbury (SHB) 369.60p -5.67%
Tullow Oil (TLW) 43.70p -5.41%
Capital & Counties Properties (CAPC) 106.60p -4.31%
International Distributions Services (IDS) 243.70p -3.41%
RHI Magnesita N.V. (DI) (RHIM) 2,180.00p -3.29%
Ashmore Group (ASHM) 231.20p -2.94%
Marks & Spencer Group (MKS) 119.85p -2.92%
Molten Ventures (GROW) 437.20p -2.84%
Wetherspoon (J.D.) (JDW) 449.20p -2.77%
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