London close: Stocks fall amid rising geopolitical concerns

(Sharecast News) - London stocks closed lower on Wednesday - the 40th anniversary of the FTSE 100's launch - as sentiment remained cautious due to increasing tensions in the Middle East.

Investors were also looking ahead to the release of the latest US Federal Reserve meeting minutes.

The FTSE 100 index declined 0.51%, ending the day at 7,682.33, while the FTSE 250 posted a loss of 0.95%, closing at 19,326.40.

In currency markets, sterling was last up 0.23% on the dollar, trading at $1.2646, while it increased 0.52% against the euro to change hands at €1.1593.

"Heightened tensions in the Middle East following a bomb blast at a ceremony honouring a slain general in Iran have led to further risk-off sentiment and rising US yields," said IG senior market analyst Axel Rudolph.

"The dollar has benefitted from flight-to-safety flows but not the price of precious metals such as gold which fell by over 1.25% and silver by over 3.25%."

Rudolph noted that oil prices shot up by over 3% as the shutdown of Libya's largest oil field amid protests led to supply worries.

"European natural gas prices rallied by over 5%, as the upcoming cold snap is set to deepen, fueling demand for heating."

US manufacturing improves, UK supermarket sales surge

In economic news, the US manufacturing sector showed signs of improvement in December, surpassing economist expectations.

According to the Institute for Supply Management, the manufacturing PMI increased by 0.7 points, reaching 47.4, up from November's 46.7.

Although that marked the 14th consecutive month in negative territory, economists had anticipated a more modest increase to 47.1.

"The US manufacturing sector continued to contract, but at a slightly slower rate in December as compared to November," said Timothy Fiore, chair of the ISM.

"Demand remains soft, and production execution is stable compared to November, as panellist companies continue to manage outputs, material inputs, and labour costs.

"Suppliers continue to have capacity."

On home shores, discount retailers Aldi and Lidl performed exceptionally well in December, according to data from retail expert Kantar.

British supermarkets saw a record £13.7bn in spending over the four weeks ended 24 December.

Kantar recorded Lidl's sales growth at 13.8% and Aldi's at 9.9%, leading to a combined market share of 17%.

Tesco experienced a 7.5% sales increase, raising its market share to 27.6%, while Sainsbury's sales grew by 9.3%, pushing its market share to 15.8%, the highest since December 2020.

Finally on data, Germany's unemployment in December rose slower than anticipated, according to the Federal Employment Agency.

Data revealed a modest increase of 5,000 people out of work in seasonally adjusted terms, totalling 2.7 million, which surpassed economists' expectations of a 20,000 gain.

Germany's seasonally adjusted jobless rate increased to 5.9%, while the annual unemployment rate remained one of the lowest since German reunification.

Miners and airlines fall back, Babcock rises on geopolitical tensions

On London's equity markets, heavily weighted mining stocks were in the red, with Anglo American down 5.18%, Glencore off 2.82%, and Antofagasta losing 3.4%.

Wizz Air Holdings descended 4.2% despite reporting a significant rise in December passenger numbers.

The company carried 4,964,857 passengers, reflecting an 18.8% year-on-year increase.

However, the airline's load factor for December fell by 2.4 percentage points to 82.1% due to ongoing challenges related to the Covid pandemic.

Wizz Air also announced the cancellation of all flights to Tel Aviv until March due to the conflict between Hamas and Israel.

Rival carrier easyJet also fell by 4.2%, influenced by increasing tensions in the Middle East.

Rentokil Initial registered a decline of 5.62% after RBC Capital Markets reduced its price target on the shares and downgraded forecasts.

However, RBC expressed confidence in the company's long-term prospects.

Luxury fashion brand Burberry experienced a drop of 2.97%, following a downgrade from 'buy' to 'hold' by Stifel.

Similarly, AstraZeneca was downgraded to 'hold' at Jefferies, leading to a fall of 1.22%.

Entain, the owner of Ladbrokes, initially saw gains but eventually closed 0.53% lower after announcing the appointment of Eminence Capital founder Ricky Sandler as a non-executive director.

On the upside, Babcock International made significant gains, rising by 4.49%, driven by the Middle East concerns.

GSK also saw positive movement, with a 1.92% increase, following an upgrade to 'buy' at Jefferies.

Supermarket retailers J Sainsbury and Tesco advanced by 1.61% and 1.6%, respectively, after Kantar reported that retailers had their busiest Christmas since 2019, boosting their stock performance.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,682.33 -0.51% FTSE 250 (MCX) 19,326.40 -0.95% techMARK (TASX) 4,265.46 -0.48%

FTSE 100 - Risers

Centrica (CNA) 145.75p 3.15% GSK (GSK) 1,520.40p 2.74% Marks & Spencer Group (MKS) 282.50p 2.36% BAE Systems (BA.) 1,134.00p 1.61% Tesco (TSCO) 297.80p 1.60% Hikma Pharmaceuticals (HIK) 1,814.00p 1.54% Sainsbury (J) (SBRY) 303.30p 1.51% Haleon (HLN) 328.15p 1.22% Imperial Brands (IMB) 1,834.50p 0.96% United Utilities Group (UU.) 1,054.00p 0.96%

FTSE 100 - Fallers

Anglo American (AAL) 1,869.00p -5.04% Rentokil Initial (RTO) 411.10p -4.95% Pershing Square Holdings Ltd NPV (PSH) 3,426.00p -3.98% Spirax-Sarco Engineering (SPX) 9,846.00p -3.61% Antofagasta (ANTO) 1,592.50p -3.57% International Consolidated Airlines Group SA (CDI) (IAG) 150.50p -3.53% IMI (IMI) 1,605.00p -3.37% Halma (HLMA) 2,150.00p -3.33% JD Sports Fashion (JD.) 155.45p -3.21% Fresnillo (FRES) 553.20p -3.12%

FTSE 250 - Risers

Babcock International Group (BAB) 440.80p 4.95% PureTech Health (PRTC) 197.60p 3.68% Syncona Limited NPV (SYNC) 123.00p 2.33% Coats Group (COA) 74.70p 2.15% Vietnam Enterprise Investments (DI) (VEIL) 566.00p 1.98% QinetiQ Group (QQ.) 316.00p 1.87% Helios Towers (HTWS) 88.15p 1.67% Barr (A.G.) (BAG) 514.00p 1.57% Abrdn Private Equity Opportunities Trust (APEO) 464.50p 1.53% Elementis (ELM) 129.80p 1.41%

FTSE 250 - Fallers

Ashmore Group (ASHM) 208.20p -7.47% Carnival (CCL) 1,180.50p -6.79% Wizz Air Holdings (WIZZ) 2,116.00p -4.51% Kainos Group (KNOS) 1,047.00p -4.38% easyJet (EZJ) 481.70p -4.35% Bridgepoint Group (Reg S) (BPT) 263.00p -4.24% Discoverie Group (DSCV) 742.00p -4.13% Ferrexpo (FXPO) 84.20p -4.05% Spirent Communications (SPT) 117.60p -4.00% Aston Martin Lagonda Global Holdings (AML) 207.20p -3.81%