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FTSE 100 movers: Copper boost lifts miners, RBS falls on govt sale
London's FTSE 100 index lost ground on Tuesday as financial stocks and oil majors BP and Shell, some of the biggest sector weightings in the index, proved a drag.
The biggest faller, however was cruise operator Carnival, which sprang a leak afer Morgan Stanley cut its earnings forecast 11% on the back of rising oil prices. Analysts expressed caution on the cruise lines given the "high and increasing" level of industry supply growth, slowing yield momentum and weakness in Caribbean and China.
RBS shares lost 4.77% after the government sold off a 7.7% stake in the bank overnight, with Chancellor Philip Hammond billing it as an important step forward in putting the financial crisis "behind us". The government sale of £2.5bn of its stake in RBS at 271p per share compares to an all-in share price of 643p, calculates Hargreaves Lansdown, meaning the taxpayer loss on last night's share sale is about £3.4bn.
Investec analyst Ian Gordon pointed out that the shares were placed at a discount of 3.5% to Monday's closing price, while there was only a 2.3% discount on the last sale in 2015. He said it was "conceivable" that the government could exit its stake in full by 2023, "but this will likely serve to cap the share price".
Market analyst David Madden at CMC Markets noted that the share price of Lloyds was pushed higher during the period when the government reduced its stake in the company, "and we might see a repeat with RBS".
Shares in British Airways owner IAG fell 3.24% on Tuesday, having risen on Monday, with chief executive Willie Walsh warned that ATC strikes posed a larger risk to the European airline sector than the surge in fuel prices.
WPP fell after Berenberg downgraded the advertising giant to 'sell' from 'hold' with a 1,075p target price on the back of profit margin growth slowing and the risk of further contraction. "We expect WPP's situation to get worse before it gets better," the German bank said. "Regardless of the reasons for recent management change, WPP's first-quarter relative performance versus peers (particularly in North America) showed that all is not well from an operational perspective: we think that this will prove more difficult and costly to fix than consensus expects."
Shell and BP were hit by a wobble in the oil price.
Miners Antofagasta and Glencore were among the top risers in the FTSE 100, up 2.21% and 1.82%, respectively, as the price of copper rose above $7,011 per tonne. Analysts at SP Angel pointed out that copper had closed at its highest price since mid-March on the Shanghai Futures Exchange amid fresh supply concerns surrounding disruption at the world's top mine.
Retailers also saw a boost on Tuesday, led by Burberry at 2.15% higher, followed by Next and Kingfisher, which saw 1.41% and 1.38% gains, respectively after a strong retail sales report from the BRC and KPMG.
Paul Martin, KPMG's head of retail, said, "Grocery sales once again continued to be strong, boosted by added enthusiasm for picnics and barbeques. Elsewhere, appetite for non-food categories, including fashion, also experienced a welcome uplift. That said, the picture was less favourable in the larger discretionary categories such as home improvement and furniture." Investors seemed to shrug off Martin pointing out that the market was "increasingly being split into winners and losers, with a number of legacy players continuing to face extremely challenging conditions".
Scottish Mortgage Investment Trust picked up as the US tech-focused investor reaped the rewards of a stronger Nasdaq, while Twitter, which is a major holding, was lifted after being added to the S&P 500 index.
Market Movers
FTSE 100 (UKX) 7,694.07 -0.61%
FTSE 250 (MCX) 21,074.51 -0.17%
FTSE 100 - Risers
Antofagasta (ANTO) 1,115.50p 2.81%
Burberry Group (BRBY) 2,135.00p 2.10%
Glencore (GLEN) 390.25p 1.93%
Next (NXT) 5,908.00p 1.23%
Kingfisher (KGF) 309.10p 1.21%
Informa (INF) 803.40p 1.18%
Evraz (EVR) 514.20p 1.10%
Scottish Mortgage Inv Trust (SMT) 521.65p 1.09%
Intertek Group (ITRK) 5,658.00p 1.07%
Rio Tinto (RIO) 4,355.00p 0.87%
FTSE 100 - Fallers
Carnival (CCL) 4,580.00p -6.01%
Royal Bank of Scotland Group (RBS) 266.40p -5.16%
Old Mutual (OML) 233.30p -3.20%
International Consolidated Airlines Group SA (CDI) (IAG) 682.40p -3.12%
WPP (WPP) 1,212.50p -3.04%
Barclays (BARC) 198.50p -2.96%
RSA Insurance Group (RSA) 645.40p -2.51%
Mediclinic International (MDC) 583.80p -2.37%
easyJet (EZJ) 1,737.00p -2.33%
Severn Trent (SVT) 1,975.00p -2.32%