FTSE lacks impetus as banks offset reassuring data
The UK market lacked direction on Tuesday, slipping into the red under the weight of banks and miners
The UK blue-chip index slipped 10.0 points to 4,425.5, while its mid-cap counterpart took on 13.5 points to close at 7,623.9. A negative start on Wall Street also hampered market confidence.
The number of people claiming jobless benefits increased by 244,000 in the three months to March, official ILO figures revealed today, bringing the unemployment rate up to 7.1%—its highest since 1997. Dire though the figures may sound, they were actually lower than analysts had expected and month-by-month numbers revealed a marked reduction in the number of people claiming benefits in March, suggesting the job cutting rate could be slowing.
In other economic news, March manufacturing output fell by just 0.1% over the month compared to the consensus forecast for a 0.8% decline, while April retail sales surprised with a 4.6% year-on-year increase. Though these measures offered cause for optimism, the UK’s shrinking trade balance—to £6.6 billion in March from February’s £6.8 billion—reflected a reduction in trade volumes as opposed to growth in exports and acted to remind investors that we are far from being out of the woods.
On the equity front, the retail sales figures helped propel supermarkets group Tesco up 3.7% to 352.5p and retailer Next 2.9% higher at 1,550p.
Pharmaceuticals were also in demand. AstraZeneca continued to ride high on the back of the success in clinical trials of its Brilinta drug over market-leading competitor Plavix; GlaxoSmithKline attracted buyers after announcing it has agreed to buy a 16% stake in African generic drugmaker Aspen Pharmacare. Shares in Astra closed 2.4% firmer at 2,590p and those in Glaxo took on 3.0% to 1,054p.
Gains in oil and gas heavyweights were fuelled by the oil price reaching $60 per barrel for the first time in six months, sending Royal Dutch Shell, Tullow Oil, Cairn Energy and BP each 0.5% to 2.2% higher.
Helping to offset all of this, however, was a banking sector that continued to feel Monday’s pressure, exacerbated by a downbeat note from Credit Suisse warning that Barclays, Lloyds Banking Group and Royal Bank of Scotland all stand to suffer from margin pressures, potentially to the tune £20 billion. Lloyds was the FTSE 100’s leading casualty, down 10.3% at 89.1p, followed by Barclays, off 6.5% at 268.5p, and RBS, 5.6% lower at 43.5p.
The metal extractors also prevented the UK benchmark index from climbing out of the red. Lonmin was the worst off, sliding 8.6% to 1,335p, while Rio Tinto lost 6.9% at 2,801p. Antofagasta, Xstrata, Anglo American and BHP Billiton fell back 2.5%-3.6% apiece. Both Anglo American and Rio issued cautious statements earlier today, while mixed metal prices offered little respite. The price of gold was back on the up, however, sending Randgold Resources and Fresnillo a respective 2.5% and 4.8% higher.
Last but not least, Imperial Tobacco, normally favoured in a weaker market for its defensive qualities, dropped 4.0% to 1,567p after implying at its first-half results release that it could change its dividend payout as a result of restructuring costs related to its Altadis acquisition.
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