Markets cool following 18-month highs despite strong economic growth

Investors poured cold water on the recent 18-month highs seen on the stock market on Thursday as – like the weather – sentiment changed.

Traders were still pondering over the high inflation figures from the US a day earlier, which had been flat on the previous month causing bulls to rush in on Wednesday evening.

But by Thursday morning, caution set in – despite a solid set of second-quarter GDP figures released by the UK’s Office for National Statistics (ONS).

As a result, the FTSE 100 closed down 26.91 points, or 0.37%, at 7193.23.

Danni Hewson, AJ Bell financial analyst, said: “If yesterday was ‘team transitory’, today many investors might have been thinking of swapping camp.”

She added: “As seems to be the case in a post-Covid world, the bad news comes along with the good.

“New jobless claims (in the US) fell for the third week in a row and continuing claims fell below pre-pandemic levels.

“It’s a sign that (the) Delta (variant) isn’t having quite the impact that had been feared and the job market has stayed buoyant.

“UK markets have looked pretty subdued, despite decent economic growth figures. Blame it on the summer lull but both the FTSE 100 and 250 have struggled to find their mojo today.”

European markets had better sessions, with the German Dax 30 up 0.7% and the French Cac 40 up 0.36%.

The pound was flat against the dollar at 1.383 and down 0.1% against the euro at 1.178.

In company news, the best performing shares on the FTSE 100 was Aviva after the company confirmed it would be spending £4 billion from cash it accumulated following the selloff of its various divisions around the world.

Bosses said they would start with a £750 million share buyback scheme, with the rest of the cash handed back to investors within the next 12 months.

As a result, shares closed up 14.1p at 420.9p.

Elsewhere, Ladbrokes and Coral owner, Entain, revealed profits surged as lockdown restrictions eased and sporting events returned.

Strong growth was hailed in the US, where its partnership with MGM Resorts saw it become the country’s second biggest betting business.

Investors were wooed later in the day with a presentation from the board over the company’s future, although they were not impressed enough to boost the share price, with it closing down 23p at 1,942.5p.

Package holiday business TUI said revenues had risen by more than 800% to 649.7 million euros (£465 million) in the third quarter of 2021 compared to the same period a year earlier.

Earnings loss before income taxes narrowed from 1.5 billion euros (£1.3 billion) to 846.9 million euros (£717 million). Shares fell 3.5p to 329p on the news.

London-listed Stock Spirits, which sells vodka in central and eastern Europe, accepted a £767 million takeover bid from private equity firm CVC. The offer of 377p a share pleased investors, with shares closing up 117p, or 44%, at 385p – with some hoping for a rival bidder to emerge.

The biggest risers on the FTSE 100 were: Aviva, up 14.1p at 420.9p; Smiths, up 32.5p at 1,477.5p; Hargreaves Lansdown, up 32.5p at 1,512p; Ferguson, up 170p at 10,285p; and AstraZeneca, up 119p at 8,299p.

The biggest fallers were: Rio Tinto, down 464p at 5,637p; Evraz, down 46p at 598p; M&G, down 6.9p at 223.1p; Just Eat Takeaway, down 170p at 6,101p; and Legal & General, down 7.1p at 272.6p.