The jolt to market confidence caused by a 2% slide for the FTSE 100 index was quickly put to one side today as travel and other re-opening stocks got back on their feet.
The top flight endured its biggest fall in two months yesterday, with British Airways owner IAG among those hardest hit on fears over rising Covid-19 case numbers in India.
Investors soon regained their nerve, however, as IAG put back some of the losses to climb 3% or 6.5p to 199.6p and the FTSE 100 index improved 29.15 points to 6,888.45.
BP and Royal Dutch Shell were a big factor in the swift recovery in risk appetite after Deutsche Bank issued a series of “buy” recommendations for the European oil sector.
One of its top picks is Shell, whose shares are seen offering a potential 37% upside as the dividend taps are turned back on following last year's shock cut. Shell was 19.2p higher at 1,310p, while BP improved 5.3p to 297.05p.
The mining sector also helped to bolster market sentiment as BHP rose 13.5p to 2180p on the back of its latest production update.
Chief executive Mike Henry said the company was “reliably executing” on its major projects, including new supply in copper, petroleum and iron ore. The biggest downside came from its coal output guidance, which was lowered due to the impact of poor weather.
Shares in rival Antofagasta were 7.5p lower at 1,833p, despite the Chile-based miner's bullish picture of the copper market after production in line with expectations.
CEO Iván Arriagada said: "The copper market continues to perform strongly, and we expect this to continue as structural supply and demand dynamics support a tight physical market.”
The biggest faller in the FTSE 100 index was Just Eat Takeaway, which tumbled 4% or 355p to 7,575p after rival Uber Eats revealed a plan to target the German food delivery market.
There was also a big move for shares in Hikma Pharmaceuticals, which rose 53p to 2,431p after resuming the US launch of its generic version of GlaxoSmithKline's Advair Diskus. The move follows regulatory approval of changes made by Hikma to reflect new industry standards on packaging.
The FTSE 250 index was 25.26 points higher at 22,135.76, with chemicals business Synthomer up 4% or 18.4p to 500p after increasing full-year earnings expectations in a first quarter trading update.
7am Markets previewBy Jim Armitage
The FTSE 100 rose slightly today after heavy selling on Tuesday saw London shares tumble 2% on concerns about Covid’s global spread.
A rally in European stocks that has been running for nearly two months came to a shuddering stop with travel, banking and retail stocks all tumbling.
A European Central Bank survey showing banks could squeeze lending to smaller businesses, crimping growth in the region, led to heavy selling in the previous session ahead of Thursday’s meeting on central bank monetary policy.
Covid infection rates around the world spooked travel stocks and sentiment around airlines and hospitality will be a key factor in today’s session. British Airways owner IAG fell 8% after India was added to the UK’s red list of flights.
Rolls-Royce, the aero engines maker, easyJet and Premier Inn owner Whitbread all fell 5-6%.
The pandemic is spreading alarmingly in India and across Asia, with much of that attributed to the new variant first seen in India which appears to be more virulent and able to strike those who have had the vaccine. The variant has been found in the UK.
Having said farewell to the 7000 levels the FTSE 100 broke through last week, investors were, before trading opened today, expecting a pause in the selling. IG’s platform was pricing in a 1.5 point gain to 6859. In the event, by lunchtime it was up 28.25 at 6888.12.
Asian market followed the US and Europe’s lead downhill this morning.
CMC analyst Michael Hewson said: “There is a nagging doubt that the economic recovery that is currently being priced looks set to encounter a few potholes, and it is that which appears to have exacerbated some of the rush to cash out on some risk positions.”
Inflation data saw the CPI number edge up from 0.4% to 0.7%.
The figures will be key to those who fear the direction of interest rates - albeit long term - is up.
In the US, that trend was reversed partially yesterday as government bond yields fell with the tumble in share prices. The 10-year Treasury yield slipped 0.04 percentage points to 1.56% - still way higher than its 0.9% level at the start of the year.
The biggest fallers yesterday remained in the doldrums, with only a 1.9% recovery for IAG.
Biggest risers were Hikma Pharmaceuticals up 35, Admiral 2% and Burberry 2%.
Fallers were Just Eat Takeaway, down 4%, Weir Group off 2% and Bunzl off 2%.