London markets drop as gilt yields swing higher

The FTSE 100 moved 0.71%, or 54.24 points, lower to finish at 7,588.48.

The City of London and Canary Wharf as seen from Primrose Hill, London (Jonathan Brady/PA) (PA Archive)

London’s markets slid during a weak session on Monday as pharmaceuticals and mining firms were among the biggest fallers.

Sentiment was broadly lower as traders sold off stocks to take profits after gains late last week.

In London, there was increased pressure from further rises in borrowing costs, with the yields on two-year government bonds rising to above 5% for the first time since 2008.

The FTSE 100 moved 0.71%, or 54.24 points, lower to finish at 7,588.48.

Michael Hewson, chief market analyst at CMC Markets UK said: “Pharmaceutical giant AstraZeneca is acting as the biggest drag on the FTSE 100 on reports it is mulling a separate listing in Hong Kong as it looks to spin off its China business.

“Mining stocks are weaker on the back of disappointment that Chinese authorities haven’t weighed in on any new stimulus measures yet, with the likes of Rio Tinto and Glencore slightly lower.”

The other major European markets performed similarly, while the US markets were shut for the Juneteenth holiday.

Chris Beauchamp, chief market analyst at IG, added: “Stocks have succumbed to a round of profit-taking in today’s session, with the moves to the downside amplified by the absence of volume thanks to the US holiday.

“Becalmed by an empty calendar, markets have drifted lower, though with Powell testifying later in the week traders shouldn’t assume the dip buyers will immediately step in tomorrow.”

Germany’s Dax index fell by 0.96% and the Cac 40 closed down 1.01%.

Meanwhile, sterling slipped as it lost momentum following its strongest week against the dollar so far this year, despite the increase in gilt yields.

The pound was down 0.17% to 1.279 US dollars and had dropped 0.03% to 1.171 euros at market close in London.

In company news, drugs giant AstraZeneca dropped in value after reports it is looking at plans to spin off its Chinese businesses to protect it from geopolitical tension.

Citing people familiar with the situation, the Financial Times said the British-Swedish drugs giant has been in talks with bankers for several months.

Shares in the company closed 142p lower at 11,646p as a result.

Fashion retailer Next was one of the top performers after it lifted its sales and profit guidance for the year.

Next reported better-than-expected sales over the past seven weeks, linking the 9.3% jump in full-price sales to warmer weather and continued wage increases.

Shares in Next were 304p higher at 6,742p at the close of trading on Monday.

Rivals including Frasers Group and Primark owner Associated British Foods were also lifted higher as a result.

The price of oil edged lower amid uncertainties over demand in China and the prospect of any stimulus measures in the country.

A barrel of Brent crude fell by 0.68% to 76.09 US dollars at the time markets were closing in London.

The biggest risers in the FTSE 100 were Next, up 304p at 6,742p, Frasers Group, up 15p at 712p, Standard Chartered, up 12.6p at 687.8p, Rolls-Royce, up 2.6p at 153.8p, and Entain, up 16.5p at 1,237.5p.

The biggest fallers of the session were Spirax-Sarco, down 755p at 10,360p, Ocado Group, down 27p at 434.9p, Croda International, down 160p at 5,370p, Johnson Matthey, down 47.5p at 1,692.5p, and Weir Group, down 48p at 1,764.5p.