London close: Stocks slip on UK election, US jobless claims

23rd May 2024 16:46

(Sharecast News) - London stocks ended lower on Thursday, mirroring Wall Street's decline as jobless claims in the US fell more than anticipated.

Investors also had their first chance to react to prime minister Rishi Sunak's announcement of a general election on July 4, which was made after the markets closed on Wednesday.

The FTSE 100 dropped 0.37% to close at 8,339.23, while the FTSE 250 decreased by 0.38% to 20,631.30.

In currency markets, sterling was last up 0.01% on the dollar, trading at $1.2718, while it fell 0.04% against the euro to change hands at €1.1745.

"London's FTSE 100 extended its decline for the third consecutive day, as Britain made arrangements for a general election on 4 July and data revealed a significant slowdown in business growth in May," said TickMill market analyst Patrick Munnelly.

"Nvidia's positive quarterly earnings report was overshadowed by prime minister Rishi Sunak's unexpected announcement of a general election, causing concern among investors."

That, Munnelly said, led to a "strategic repositioning" as they assessed potential outcomes.

"As a result, utility shares fell to the lowest position on the sectoral charts, while defensive stocks like Unilever, BAE Systems, and GSK saw gains."

US jobless claims fall more than expected, UK manufacturing shows signs of recovery

In economic news, initial jobless claims in the US fell by 8,000 to 215,000 for the week ended 18 May, below market expectations for 220,000 and significantly lower than the elevated levels seen earlier in the month.

However, continuing jobless claims rose by 8,000 to 1.79 million - the highest level in over a month.

The four-week moving average for initial claims, which smooths out week-to-week volatility, increased by 1,750 to 219,750.

US economic activity meanwhile saw an unexpected boost in May, according to surveys by S&P Global.

The preliminary composite purchasing managers' index (PMI) surged from 51.3 in April to 54.4 in May, reaching a 25-month high.

That increase was primarily driven by the services sector, which saw its PMI rise from 51.3 to 54.8, while the factory PMI also strengthened, climbing from 51.1 to 52.4.

On home shores, the UK manufacturing sector showed signs of recovery in May.

The S&P Global flash UK manufacturing PMI rose to 51.3 from 49.1 in April, marking a 22-month high.

The output index also increased, reaching a 25-month high of 52.7 from April's 49.4.

That improvement was attributed to stronger client demand and emerging signs of recovery in export sales and inventory purchases.

However, the UK's services PMI fell to 52.9 from 55.0 in April, leading to a decline in the composite PMI output index from 54.1 in April to 52.8 in May.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the flash data suggested the economy was continuing to recover from recession.

"The survey data are consistent with GDP rising by around 0.3% in the second quarter, with an encouraging revival of manufacturing accompanied by sustained, but slower, service growth," he explained.

"With companies now reporting the slowest price growth in over three years, and headline inflation falling close to target, the data support the view that the Bank of England will start cutting interest rates in August - providing the data continue to move in the right direction over the summer."

On the continent, the eurozone's economic recovery continued to gain momentum in May, as the HCOB flash eurozone composite PMI output index increased to 52.3 from 51.7 in April, indicating expansion for the third consecutive month.

Analysts had expected a reading of 52.0.

The growth was primarily driven by the service sector, which saw activity rise for the fourth month in a row.

However, manufacturing production continued to decline, extending its downturn to 14 months.

The survey also noted that new orders in the eurozone rose at the fastest pace in more than a year.

Hargreaves Lansdown jumps, National Grid leads utilities lower

On London's equity markets, Hargreaves Lansdown surged 13.28% after confirming it had rejected a takeover offer valued at 985p per share from a consortium including CVC, Nordic Capital, and Platinum Ivy, a subsidiary of the Abu Dhabi Investment Authority.

AJ Bell shares increased by 11.17%, buoyed by encouraging interim results.

The investment platform announced a dividend hike following a "very strong" performance, with rising profits and revenues as its platform customers reached a milestone.

FTSE 100 peer St James's Place also rallied, rising by 4.72%.

Rolls-Royce Holdings advanced by 2.5% after reporting a strong start to the year despite ongoing supply chain challenges in the industry.

Scottish Mortgage Investment Trust gained 2.62% following a positive return over the past year and was further boosted by favourable results from shareholding Nvidia.

QinetiQ Group saw a significant jump of 13.36% after raising its full-year guidance and reporting increased underlying profit and revenue.

Budget airline Wizz Air Holdings flew higher by 8.77%, swinging to a profit of €365.9m for the year ending in March from a previous loss of €531.1m, driven by sustained demand.

On the downside, National Grid plummeted by 11.95% following its results and the announcement of a £7bn equity raise through a rights issue.

Other utility companies also faced declines, with Drax Group down by 8.56%, Severn Trent by 5%, Pennon Group by 7.07%, and United Utilities Group by 4.8%.

Pets at Home Group fell by 2.33% after the Competition and Markets Authority announced a full investigation into the UK vet market.

Johnson Matthey declined by 1.77% after reporting a fall in full-year underlying profit due to lower metals prices.

NatWest Group dropped by 2.01% amid speculation that the upcoming general election could affect the planned sale of shares in the bank to the general public.

Whitbread and DCC both saw declines, with Whitbread down by 2.03% and DCC by 1.22%, as they traded without entitlement to the dividend.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,339.23 -0.37%

FTSE 250 (MCX) 20,631.30 -0.38%

techMARK (TASX) 4,856.28 -0.15%

FTSE 100 - Risers

St James's Place (STJ) 488.00p 4.77%

Scottish Mortgage Inv Trust (SMT) 898.00p 3.22%

Rolls-Royce Holdings (RR.) 440.40p 2.90%

Persimmon (PSN) 1,471.50p 2.58%

Ocado Group (OCDO) 352.10p 2.50%

Schroders (SDR) 391.00p 2.20%

Taylor Wimpey (TW.) 147.80p 1.90%

BAE Systems (BA.) 1,397.00p 1.71%

Barclays (BARC) 215.00p 1.68%

Auto Trader Group (AUTO) 753.80p 1.67%

FTSE 100 - Fallers

National Grid (NG.) 1,005.00p -10.86%

RS Group (RS1) 760.00p -6.52%

Severn Trent (SVT) 2,503.00p -5.15%

United Utilities Group (UU.) 1,024.00p -4.92%

Whitbread (WTB) 2,956.00p -3.11%

Smith & Nephew (SN.) 984.80p -2.98%

Flutter Entertainment (DI) (FLTR) 15,855.00p -2.73%

Aviva (AV.) 482.90p -2.68%

SSE (SSE) 1,769.50p -2.59%

Croda International (CRDA) 4,594.00p -2.32%

FTSE 250 - Risers

Hargreaves Lansdown (HL.) 1,120.00p 14.40%

QinetiQ Group (QQ.) 424.40p 13.42%

AJ Bell (AJB) 403.00p 11.17%

Wizz Air Holdings (WIZZ) 2,168.00p 10.50%

Hill and Smith (HILS) 2,095.00p 7.00%

Tate & Lyle (TATE) 712.00p 5.17%

Keller Group (KLR) 1,370.00p 4.90%

Ibstock (IBST) 165.60p 4.02%

Hochschild Mining (HOC) 171.00p 3.89%

Bytes Technology Group (BYIT) 590.50p 3.69%

FTSE 250 - Fallers

Drax Group (DRX) 507.50p -8.56%

Mobico Group (MCG) 58.00p -7.64%

Pennon Group (PNN) 620.50p -6.69%

Plus500 Ltd (DI) (PLUS) 2,162.00p -5.92%

Investec (INVP) 526.00p -5.14%

WH Smith (SMWH) 1,108.00p -5.14%

Carnival (CCL) 1,070.50p -4.93%

Essentra (ESNT) 175.00p -4.27%

Moonpig Group (MOON) 152.80p -4.26%

Domino's Pizza Group (DOM) 325.60p -4.24%