15th Mar 2021 16:59
(Alliance News) - Nervy European equity markets continued to be hurt by lingering fears of rising US treasury yields on Monday, with London's FTSE 100 ending in the red despite healthy share price gains for Paddy Power owner Flutter Entertainment.
London's mid-cap FTSE 250 index shook off heavy declines for subprime lender Provident Financial to notch minor gains. Equity prices in mainland Europe fell as concerns of Covid-19 vaccine efficacy mounted.
The FTSE 100 index closed down 11.77 points, or 0.2%, at 6,749.70. The FTSE 250 ended up 15.88 points, or 0.1%, at 21,522.35. The AIM All-Share rose 7.88 points, or 0.7%, at 1,199.34.
The Cboe UK 100 ended down 0.2% at 672.20, the Cboe UK 250 closed up at 19,171.77, and the Cboe Small Companies ended up 0.5% 13,942.80.
"The day has turned from small gains to losses, as markets hit what can best be described as an 'air pocket', i.e. a sudden outbreak of volatility," IG markets analyst Chris Beauchamp commented.
The yield on the benchmark 10-year US Treasury note sat at 1.60% on Monday afternoon, from 1.63% at the same time on Friday. The yield had risen to around 1.64% earlier on Monday, however.
The muted mood on Monday boosted the dollar, as traders were drawn to its safe haven appeal as markets were nervy at the start of a week with three major central bank decisions. The US Federal Reserve reveals its latest interest rate decision on Wednesday - with the Bank of England and Bank of Japan following on Thursday and Friday.
The pound was quoted at USD1.3885 at the London equities close on Monday, down sharply from USD1.3985 on Friday. Against the yen, the dollar was trading at JPY109.08, up from JPY109.00.
The euro stood at USD1.1931 at the European equities close on Monday, down from USD1.1940 on Friday.
The single-currency struggled on Monday as Europe's Covid-19 inoculation drive continues to stumble.
AstraZeneca on Sunday insisted its coronavirus vaccine is safe, after concern around blood clots prompted Ireland and then Germany to become the latest European countries to suspend use of the jabs.
A review of available safety data in more than 17 million people who have been vaccinated across the UK and EU has shown no evidence of an increased risk, the pharmaceutical firm said.
Germany's health ministry said: "After new reports of thromboses of the cerebral veins in connection with the vaccination in Germany and Europe, the PEI [Paul Ehrlich Institute] considers further investigations to be necessary."
The vaccine has been widely used in Britain's inoculation campaign, but in the EU, a rollout using the jabs has been slowed down by delivery problems.
The CAC 40 in Paris ended 0.2% lower and the DAX 30 in Frankfurt fell 0.3%.
"European stocks have struggled throughout the day, and the selling accelerated in the afternoon after France and Italy became the latest European nations to halt the use of the AstraZeneca-Oxford Covid jab, following Germany and a few other nations. Reports of blood clotting in some patients in Norway is the reason behind its suspension," ThinkMarkets analyst Fawad Razaqzada noted.
In London, AstraZeneca closed up 0.5%.
Gambling firm Flutter topped the London large-caps on Monday, rising 6.8%. Flutter responded to a press report regarding the potential initial public offering of its US business FanDuel.
"Recently, several US states have eased up on their restrictions with respect to gaming so European firms moved in quickly. If Flutter is mulling a partial IPO it might be because they are keen to raise funds for as a way of expanding the business," CMC Markets analyst David Madden noted.
A CNBC report late Friday said the betting giant is considering spinning out US sports betting subsidiary FanDuel as a separately traded company on a US stock exchange.
"Options including the listing in the US of a small shareholding in FanDuel are being considered but no decision has been made at this time. Should a decision be made to proceed with a listing in due course, an announcement will be made as appropriate," the Paddy Power owner said.
Provident Financial meanwhile, ended worst of the mid-caps, plunging 28%. The subprime lender cautioned its Consumer Credit Division faces liquidation unless arrangements can be agreed to pay off increasing customer complaints.
Provident said customer complaint payments were about GBP25 million in the second half of 2020. On top of this, the unit processed balance reductions for home credit customers of about GBP11 million during the same period.
Provident Financial warned on "substantial" financial repercussions should CCD fold, though it said Vanquis Bank and Moneybarn will be largely unhurt. The lender also noted the UK Financial Conduct Authority has opened an enforcement investigation into its CCD unit.
In New York, the Dow Jones Industrial Average and the S&P 500 were down 0.1% at the time of the London equities close. The Nasdaq Composite was up 0.2%.
"The Fed's Federal Open Market Committee meets tomorrow and Wednesday, and although no rate moves are expected, the market's been on edge lately every time Fed Chair Jerome Powell steps to a microphone. He does it again Wednesday afternoon after the meeting, and focus could be on anything he says about inflation," TD Ameritrade Chief Market Strategist JJ Kinahan commented.
Brent oil was quoted at USD68.70 a barrel at the London equities close, down from USD69.63 on Friday. An ounce of gold fetched USD1,730.28, up from USD1,710.65.
Tuesday's economic calendar has Japanese industrial output figures overnight, the ZEW economic sentiment survey for both the eurozone and Germany at 1000 GMT and US retail sales at 1230 GMT.
The local corporate calendar has annual results from copper miner Antofagasta, baker Greggs and an interim report from plumbing and heating products firm Ferguson.
By Eric Cunha; [email protected]
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