London markets drop into red as trader caution returns

The London markets’ recent rally lost steam on Friday as traders acted cautiously ahead of the weekend with jitters around the German election.

Stocks are slightly higher for the week despite navigating concerns over Evergrande – amid fears of a potential default at the embattled Chinese property giant – and central Bank updates, with traders taking an unsurprising breather.

The FTSE 100 closed 26.87 points, or 0.38%, lower at 7,051.48 on Friday.

Michael Hewson, chief market analyst at CMC Markets UK, said: “As we come to the end of the week, we look set for another negative session, which would neatly bookend a week that has seen decent gains for the travel and leisure sector, and that has helped to reverse a trend of three successive weekly losses for the FTSE 100.

“It’s been a similar story for the new DAX 40, which hit a four-month low on Monday, and which looks set to reverse its losses for the week too.

“Concerns about contagion effects from Evergrande haven’t gone away, but they appear to have taken a back seat to worries about supply chain blockages, surging energy prices and rising inflationary pressure, hence the rise in bond yields this week.”

The other major European markets drifted during the session, with uncertainty over the German elections and Angela Merkel’s successor particularly driving hesitancy among traders,

The German Dax decreased by 0.72% and the French Cac moved 0.95% lower.

Across the Atlantic, the US markets dipped as crypto stocks made losses after China’s central bank announced that transactions on all crypto-currencies, including Bitcoin, are illegal.

Meanwhile, sterling edged higher despite concerns over energy markets.

The pound was up 0.1% versus the US dollar at 1.368 and was 0.04% higher against the euro at 1.167.

In company news, Petrofac soared to the top of the FTSE 250 after the company said it will plead guilty to seven separate offences of failing to prevent bribery, after a long-running probe by the Serious Fraud Office into payments made in the Middle East.

The company, whose biggest shareholder is a major Tory donor, said it had “indicated guilty pleas” to failing to stop former staff from making payments linked to contracts the business wanted to win.

Shares climbed by 28.9p to 137.4p as investors cheered the end to uncertainty surrounding the case.

Elsewhere, online fashion retailer In The Style plunged in value after it warned that its profitability will be hit by high shipping costs and increased returns from customers, amid disruptions to UK supply chains.

Shares in the company dropped by 36p to 160p after the profit warning, despite revealing a 45% spike in sales from April to August, compared with the same period last year.

Cineworld shares also climbed to a two-month high amid strong anticipation and healthy ticket sales for the latest James Bond instalment, No Time To Die. Shares rose by 3.3p to 71.52p.

The price of oil made further gains, pushing back towards July’s peaks amid speculation that supply will continue to tighten.

Brent crude increased by 0.69% to 77.78 dollars per barrel.

The biggest risers on the FTSE 100 were Rolls-Royce, up 5.56p at 132.5p, AstraZeneca up 177p at 8,845p, IAG, up 3.38p at 175.6p, and Intercontinental Hotel Group, up 59p at 4,789p.

The biggest fallers of the day were Intertek, down 190p at 5,114p, Rightmove, down 24.2p at 718.8p, Rentokil, down 18.6p at 592p, and Halma, down 91p at 3,046p.