Shares round-up and why the FTSE 100 is falling fast

We run through some of the stocks causing yesterday’s big gains to unravel.

The choppy recent performance of the FTSE 100 index continued today as Whitbread (LSE:WTB) and weakness among London-listed banks ensured no consolidation of yesterday's 2% surge.

Asia-focused HSBC (LSE:HSBA) and Standard Chartered (LSE:STAN) fell by 2% Tuesday, while GlaxoSmithKline (LSE:GSK) and British American Tobacco (LSE:BATS) were among other heavyweight fallers during a session in which risk appetite was diminished by more fears about the surge in coronavirus cases in the US.

In what's becoming a familiar story for blue-chip investors, the FTSE 100 index followed yesterday's best session in three weeks by falling back 1.3%. At 6,203 prior to this afternoon's opening bell on Wall Street, the FTSE 100 index is close to where it has been since the end of May, having previously surged from below the 5,000 threshold in mid-March.

Premier Inn owner Whitbread was the biggest faller in the top-flight after disclosing that UK and international sales were down almost 80% in the first quarter of its financial year. While that's no great surprise, investors were concerned at comments from the company that demand in the regions and metropolitan areas, including London, remains subdued. Conditions are better for hotels in regional tourist destinations.

Over 270 UK hotels and 24 restaurants have now reopened since the lockdown, with the majority of the rest of the estate due to be back by the end of this month. Shares fell 4% to 2,239p, which compares with the 1,500p price of its heavily-discounted 1-for-2 rights issue that raised £1 billion in May.

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Retail and office landlord Land Securities, which on Friday signalled the potential return of its dividend later this year, was among the other big fallers in the blue-chip index. Its shares and those of rival British Land (LSE:BLND) fell 3%, while Hammerson (LSE:HMSO) was down 6% in the FTSE 250 index as Monday's improvement in sentiment towards the property sector quickly faded.

The strong start to the week by housebuilders continued, however, as investors factored in speculation that Chancellor Rishi Sunak will raise the stamp duty threshold from £125,000 to £500,000.

Persimmon (LSE:PSN) built on yesterday's 6% surge by adding another 14p to 2,412p, while Barratt Developments (LSE:BDEV) and Berkeley Group Holdings (LSE:BKG) were also in positive territory. There were also gains of 2% or more for FTSE 250 index listed Crest Nicholson (LSE:CRST) and estate agency Savills (LSE:SVS).

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The second-tier was led by Plus500 (LSE:PLUS), after the platform for contracts for difference trading said recent market volatility had attracted a record number of active customers during the first half of its financial year. The 115,225 new customers in the most recent quarter compared with 26,234 for the same period a year earlier.

David Zruia, who was also named as new chief executive today, described the company's performance as “exceptionally strong”. Shares rose 3% to 1,379p, which is the highest level since early 2019 and almost double the position seen in mid-March.

Among other FTSE 250 stocks, software company Micro Focus International (LSE:MCRO) tumbled 16% to 369p after it disclosed an impairment charge of $922.2 million (£735 million). That reflected expected sales disruption and timing pressure on renewals due to Covid-19. The company typically generates around 70% of revenues from recurring sources.

The pandemic has compounded an already misfiring business, with this year's suspension of dividend payments removing a key investor attraction.

Shares in Electrocomponents (LSE:ECM) were also down 2% after a first quarter in which all its distribution centres remained operational during the crisis. The company, which stocks over 500,000 products from 2,500 supplier brands, said like-for-like revenues were down 7% in June compared with 11% across the whole of the three-month trading period.

Among smaller companies, Halfords (LSE:HFD) fell back 9% to 159.8p as its annual results and latest trading update provided a reality check for investors after the big jump in its share price from 63p in early April.

While the lockdown helped cycling sales jump 57.1% on a like-for-like basis in the 13 weeks to  
3 July, this was offset by a 45.4% decline in sales in the higher margin motoring category. The overall figure was down 6.5%, albeit still significantly better than the company anticipated in late March and ahead of the 23% decline for the four weeks to 1 May. 

Halfords said:

“It seems likely that our mix will remain biased towards cycling and away from motoring in the short-term. Although this tailwind is welcome, cycling is a lower margin, more capital-intensive segment than motoring and, as such, the incremental benefit to group profit will be lower.”

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Shares in AIM-listed financial services company and City broker finnCap jumped 7%. Its equity capital markets division has benefited from a surge in the number of fundraisings by clients looking to invest in Covid-19 related activities or support their balance sheets.

This contributed to first-quarter revenues jumping to £9.8 million from £6.5 million a year earlier, making the period the best quarter the company has ever recorded. Shares rose 1.6p to 22.6p, despite a drop in profits for the year to March 31.