London close: Stocks drop as traders book profits; miners and energy shares retreat
London stocks fell on Wednesday as investors took profits following a solid session the day before which saw the energy sector propel the top-flight index to near seven-month highs.
The FTSE 100 ended down 0.7% at 7,471.75, while sterling was up 0.1% against the dollar at 1.2944 and 0.4% firmer versus the euro at 1.1568 as the single currency slipped following a weaker-than-expected German Ifo reading.
Figures released by the Office for National Statistics earlier showed that UK government borrowing has fallen to its lowest level since 2002.
Borrowing in the latest full financial year to March 2019 was estimated to be £24.7bn, down £17.2bn from the previous year and the lowest yearly borrowing for 17 years.
However, it was ahead of the £22.8bn forecast by the office of Budget Responsibility.
Public sector net debt, excluding public sector banks was £1,801bn, up £22.1bn on March 2018. That was slightly below the OBR's forecast of £1,803bn.
In March, the public sector borrowed £1.7bn, after the government spent more than it received in taxes and other incomes. That was well above March 2018’s figure of £800m and above a consensus for £400m.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said March's hike did not indicate a lagging economy.
"The jump in borrowing entirely reflects a £1.8bn increase in central government net investment, which is volatile and will boost the economy," he said.
In equity markets, Anglo American was hit by a downgrade to ‘neutral’ at JPMorgan, while Antofagasta was lower even as it reported copper production of 188,600 tonnes in its first quarter, which was in line with expectations and up 22.6% year-on-year.
Miners were weaker on the whole, with traders pointing to concerns about a reduction in Chinese stimulus.
BP and Royal Dutch Shell gushed lower, having rallied sharply in the previous session as oil prices rose after the US announced that it would let waivers on Iran sanctions fully expire.
Sainsbury's shares were in the red ahead of the Competition and Markets Authority's final verdict on its merger with Asda on Thursday.
There was some good news for retailers, however, with Primark owner Associated British Foods on the rise as it reported a drop in first half earnings but said full-year profits were still expected to be in line with the prior year's result.
Outside the FTSE 350, online fast fashion brand Boohoo racked up strong gains as it posted a 38% jump in full-year pre-tax profit and a 48% increase in revenue amid growth across all three of its brands, with PrettyLittleThing a standout performer.
IG market analyst Chris Beauchamp said: "The leaner business model continues to be a success, and while the shares are already up over 50% since December, a run back to the highs of 2017 around 270p looks increasingly likely."
Land Securities was the top gainer on the FTSE 100 after an upgrade to 'buy' from 'hold' at Deutsche Bank as part of a review of the London office market, while Derwent London and Great Portland Estates on the FTSE 250 were also underpinned by the same upgrade.
Over-50s specialist Saga got a boost from an upgrade to 'neutral' at JPMorgan Cazenove, which said the risk/reward is now more balanced as the market is well aware of the challenges facing the company.
Building materials group CRH was in the green as posted a 7% jump in first-quarter like-for-like sales, said second-half earnings were set to be ahead of last year and extended its buyback programme. It also announced an agreement to divest its European Shutters & Awnings business to StellaGroup for more than €0.3bn.
Centamin shares shone brightly as the company said its Sukari gold mine produced 116,183 ounces of gold in the first quarter, above forecast of 105,000 - 115,000 ounces.
Market Movers
FTSE 100 (UKX) 7,471.75 -0.68%
FTSE 250 (MCX) 19,993.67 0.43%
techMARK (TASX) 3,586.95 0.33%
FTSE 100 - Risers
Land Securities Group (LAND) 935.60p 3.02%
Micro Focus International (MCRO) 1,983.00p 2.67%
NMC Health (NMC) 2,681.00p 2.29%
SEGRO (SGRO) 685.40p 2.18%
Associated British Foods (ABF) 2,559.00p 2.11%
Severn Trent (SVT) 2,008.00p 1.98%
United Utilities Group (UU.) 835.00p 1.61%
Spirax-Sarco Engineering (SPX) 8,330.00p 1.52%
Reckitt Benckiser Group (RB.) 6,028.00p 1.45%
British Land Company (BLND) 600.20p 1.28%
FTSE 100 - Fallers
Smurfit Kappa Group (SKG) 2,318.20p -4.25%
Anglo American (AAL) 2,082.50p -3.81%
WPP (WPP) 912.40p -2.54%
BP (BP.) 570.10p -2.13%
Standard Chartered (STAN) 658.40p -1.97%
Antofagasta (ANTO) 955.80p -1.95%
Royal Dutch Shell 'A' (RDSA) 2,472.50p -1.92%
Mondi (MNDI) 1,696.50p -1.82%
Royal Dutch Shell 'B' (RDSB) 2,495.50p -1.81%
Rio Tinto (RIO) 4,554.00p -1.79%
FTSE 250 - Risers
Centamin (DI) (CEY) 89.34p 11.90%
Saga (SAGA) 60.50p 5.13%
AJ Bell (AJB) 374.00p 5.06%
IP Group (IPO) 97.50p 4.28%
Derwent London (DLN) 3,214.00p 3.95%
Great Portland Estates (GPOR) 763.80p 3.89%
NewRiver REIT (NRR) 233.00p 3.56%
Restaurant Group (RTN) 137.50p 3.38%
Pagegroup (PAGE) 534.00p 3.09%
Contour Global (GLO) 204.50p 3.07%
FTSE 250 - Fallers
Funding Circle Holdings (FCH) 278.50p -8.69%
Tullow Oil (TLW) 240.60p -3.76%
Royal Mail (RMG) 252.20p -3.48%
CYBG (CYBG) 214.00p -2.77%
Cairn Energy (CNE) 170.20p -2.58%
Mediclinic International (MDC) 343.20p -2.50%
Metro Bank (MTRO) 810.00p -2.41%
Kaz Minerals (KAZ) 690.00p -2.38%
Weir Group (WEIR) 1,775.00p -2.15%
Energean Oil & Gas (ENOG) 825.00p -2.14%