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24 Mar 2021 | 08:09

London open: Stocks fall amid third wave worries; inflation data in focus

(Sharecast News) - London stocks fell in early trade on Wednesday amid ongoing concerns about a third wave of coronavirus, as investors digested the latest UK inflation data. At 0830 GMT, the FTSE 100 was down 0.5% at 6,667.18.

CMC Markets analyst Michael Hewson said: "The optimism that had characterised the rebound in travel and leisure stocks these past few weeks, appears to be slowly bleeding away, against a backdrop of rising concern that a European third wave is likely to delay any sort of return to normal when it comes to international travel this year.

"Adding to the uncertainty around the progress in vaccination is EU threats to limit exports of vaccination supplies to countries they deem as not playing fair when it comes the production of vaccine."

Sentiment also took a hit after it emerged that Hong Kong and Macau have temporarily suspended the use of the Pfizer BioNTech vaccine because of a packaging defect.

On home shores, investors were mulling the latest figures from the Office for National Statistics, which showed inflation unexpectedly fell in February as the price of clothes and second-hand cars declined.

Consumer price inflation fell to 0.4% from 0.7% in January, coming in below expectations of 0.8%.

Clothing, second-hand cars, and games, toys and hobbies were the largest downward contributors. Clothing and footwear prices fell 5.6% in the year to February 2021 - the biggest fall since November 2009.

Meanwhile, the core rate of inflation - which excludes more volatile energy and food prices - declined to 0.9% in February from 1.4% the month before, versus expectations of no change.

ONS deputy national statistician for Economic Statistics, Jonathan Athow, said: "A fall in clothing prices helped to ease inflation in February, traditionally a month where we would see these prices rise, but the impact of the pandemic has disrupted standard seasonal patterns. Elsewhere there were falls in the price of second-hand cars.

"However, prices at the pump rose this month, compared with a fall this time last year."

In equity markets, stocks with significant exposure to Covid restrictions and lockdowns were under the cosh again. Engine maker Rolls-Royce, British Airways owner IAG, GKN owner Melrose, catering group Compass, Cineworld and WH Smith all lost ground. The latter was also dented by a downgrade to 'neutral' at JPMorgan.

Housebuilder Bellway was weaker as it reinstated its dividend and reported a strong forward order book, but said interim profits had fallen slightly.

On the upside, safety and protection company Halma rallied after it said annual profit would beat expectations as revenue continued to improve and rose in all its major regions.

Softcat surged after the IT infrastructure and services provider said full-year results were set to be "significantly" ahead of its previous expectations.

Market Movers

FTSE 100 (UKX) 6,667.18 -0.48% FTSE 250 (MCX) 21,263.73 -0.32% techMARK (TASX) 4,179.72 -0.39%

FTSE 100 - Risers

Halma (HLMA) 2,363.00p 2.52% Admiral Group (ADM) 3,075.00p 0.95% Spirax-Sarco Engineering (SPX) 11,425.00p 0.75% SEGRO (SGRO) 926.60p 0.70% Rightmove (RMV) 597.80p 0.61% BAE Systems (BA.) 502.80p 0.56% London Stock Exchange Group (LSEG) 7,292.00p 0.44% Rio Tinto (RIO) 5,362.00p 0.32% Croda International (CRDA) 6,416.00p 0.31% Renishaw (RSW) 5,950.00p 0.25%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 103.15p -2.04% International Consolidated Airlines Group SA (CDI) (IAG) 183.95p -1.81% Next (NXT) 7,550.00p -1.62% Melrose Industries (MRO) 163.60p -1.53% HSBC Holdings (HSBA) 417.85p -1.53% Fresnillo (FRES) 915.40p -1.38% Hargreaves Lansdown (HL.) 1,514.00p -1.37% Standard Chartered (STAN) 477.60p -1.36% Prudential (PRU) 1,527.00p -1.23% Associated British Foods (ABF) 2,313.00p -1.15%

FTSE 250 - Risers

Softcat (SCT) 1,725.00p 10.65% Unite Group (UTG) 1,075.00p 4.37% TBC Bank Group (TBCG) 1,120.00p 2.56% PureTech Health (PRTC) 404.50p 2.41% Coats Group (COA) 62.00p 2.31% Morgan Advanced Materials (MGAM) 314.00p 2.28% Watches of Switzerland Group (WOSG) 672.00p 2.13% Apax Global Alpha Limited (APAX) 193.60p 1.89% BlackRock Smaller Companies Trust (BRSC) 1,768.00p 1.73% BMO Global Smaller Companies (BGSC) 155.00p 1.44%

FTSE 250 - Fallers

Tullow Oil (TLW) 46.25p -5.52% Cineworld Group (CINE) 100.15p -4.57% WH Smith (SMWH) 1,727.00p -4.43% Investec (INVP) 206.00p -3.33% IWG (IWG) 343.80p -2.55% Babcock International Group (BAB) 227.10p -2.41% IntegraFin Holding (IHP) 496.50p -2.26% Virgin Money UK (VMUK) 183.60p -2.26% Marks & Spencer Group (MKS) 145.55p -2.25% Rank Group (RNK) 168.80p -2.20%
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