Travel and leisure stocks dragged the London market lower as investors responded to Saturday’s terror attack in the British capital. The FTSE 100 Index was down 21.87 points at 7,525.76, with tourism-focused firms under pressure in the first trading session since the atrocity, which has left seven people dead and dozens more injured.
Budget airline easyJet and British Airways-owner IAG were down 45p to 1,344p and 15.5p to 592p respectively, while Merlin Entertainments – the company behind the London Eye and Alton Towers – fell 13p to 524p.
Jasper Lawler, senior market analyst at London Capital Group, said: “An under-performance of travel and leisure stocks was a distinct reaction to the terror attack on London Bridge. “Shares of easyJet and BA-owner IAG as well as Merlin Entertainments and Carnival were amongst the worst performers on the FTSE 100 on Monday. The negative reaction reverses the recent trend of less market-impact after each terror attack.”
London’s premier index was also suffering at the hands of the pound, which lifted after the latest ICM General Election poll gave the Conservatives an 11-point lead over Labour. The foreign exchange markets are buoyed by the prospect of a Tory victory because some currency traders believe the Conservatives would handle the UK economy better than Labour.
Sterling was 0.2% ahead versus the US dollar at 1.291, with mining giant Antofagasta down more 3%, or 28.5p, to 776.5p. Blue-chip companies, which report in US dollars or euros, can struggle on the FTSE 100 Index when the pound rises because their earnings suffer from a less favourable currency translation.
The pound also climbed 0.5% against the euro at 1.148 despite an economic update for the services sector showing a sharp slowdown in activity. Output in the services industry eked out its slowest growth since February and came in shy of expectations as inflation and General Election uncertainty took its toll last month.
The closely watched Markit/CIPS services purchasing managers’ index (PMI) fell to 53.8 in May, down from 55.8 in April and below economists’ expectations of 55.0. A reading above 50 indicates growth. On the oil markets, Brent crude tumbled 1.5% – or 74 cents – to 49.21 US dollars a barrel after five Arab countries cut ties with Qatar amid claims it is supporting regional terror groups.
The move, led by Saudi Arabia and Egypt, has sparked concern that it could disrupt efforts to drive down oil production and tackle the glut in the market. In UK stocks, online grocer Ocado saw shares surge before slipping back after it sealed a long-awaited overseas deal for its software platform.
The FTSE 250-listed firm said it has signed an agreement with “a regional European retailer” to help it access website software and other technology. It said the customer “wishes to remain anonymous until it launches its online business”. Shares in Ocado closed down 3.8p at 312.2p.
The biggest risers on the FTSE 100 Index were Old Mutual up 4.5p to 201.5p, Standard Chartered up 8p to 753p, Marks & Spencer up 3.4p to 371.1p, and Next up 39p to 4,400p. The biggest fallers on the FTSE 100 Index were Antofagasta down 28.5p to 776.5p, easyJet down 45p to 1,344p, Sage Group down 19.5p to 709.5p, and Whitbread down 109p to 4,116p.