in

UK blue-chips rise with European peers as Royal Mail drags mid caps lower

People walk through the lobby of the London Stock Exchange in London. — Reuters pic
People walk through the lobby of the London Stock Exchange in London. — Reuters pic

LONDON, June 26 ― London’s blue-chip FTSE 100 ended higher yesterday as banks and energy stocks climbed, while the domestically focused mid-caps index slipped amid worries over the economic damage being wrought by the coronavirus pandemic.

The FTSE 100 rose 0.4 per cent, in line with the main European bourses, after the European Central Bank said it will offer euro loans against collateral to central banks outside the euro area to backstop funding markets amid the pandemic.

Banks led gains followed by healthcare stocks, while a rise in oil prices buoyed energy stocks.

The FTSE 250 ended 0.2 per cent lower with Royal Mail and pandemic-pressured travel and leisure stocks leading losses.

The postal company slipped 12.4 per cent after it reported a 31 per cent fall in profits and scrapped dividend payouts for 2020-2021, while also announcing a restructuring plan that includes 2,000 job cuts.

“We have seen a major focus on the international outlook, with ongoing improvements in the (domestic) Covid trajectory and impending easing of lockdown measures doing little to bolster (UK) stocks,” said Joshua Mahony, senior market analyst at IG.

Broader sentiment remained fragile, with surging numbers of new coronavirus cases and high levels of jobless claims in the United States signalling a prolonged period of economic distress.

“In particular, domestic travel groups such as Trainline, Go-Ahead Group, and National Express are seeing sharp downside as doubt creeps in despite the proposed reopening of the UK.”

Low-budget airline easyJet shed 9.5 per cent a day after reporting a bigger loss for the first half of the year. Among other decliners, subprime lender NSF tumbled 32.2 per cent on flagging risks to its going concern status.

Focus is also returning to the UK’s trade negotiations following its exit from the European Union.

“Trade issues (are) a major downward factor for markets going ahead, considering the FTSE 100 is highly export-driven,” said Roland Kaloyan, equity strategist at Societe Generale. ― Reuters

Reference