Britain's FTSE falls as bond sell-off, Johnson Matthey weigh

Britain’s top share index fell on Thursday, led lower by specialty chemicals maker Johnson Matthey after results, amid a broad sell-off in equities as bond yields ticked higher.

Johnson Matthey, the world’s largest maker of auto catalysts, fell 3.4 per cent, among the top FTSE 100 fallers.

The company posted a small rise in annual profit helped by higher sales of catalysts in Europe.

But some analysts are concerned about its debt levels while others said they were trimming their forecasts in view of the fact that the company is disposing of its research chemicals unit and booking higher pension service charges, while its metals unit has been weak.

Britain’s FTSE 100 was down 90.77 points, or 1.3 per cent, at 6,859.69 by 0813 GMT, and is now 3.8 per cent off of an all-time high hit in late April.

Many of the top fallers were “ex-dividend”, with National Grid, WPP and AB Foods trading without entitlement to their latest dividend payout, trimming 5.69 points off the index.

Utilities were also under pressure from a sell-off in bonds, which reduces the relative appeal of high-yielding stocks and raises debt costs for indebted companies.

Commodity stocks were also weaker, even as copper held at the $6,000 level, with gold pinned near a three year low and further downside to metal prices seen.

UBS trimmed its full year target for the FTSE 100 to 7,200 from 7,300, saying weakness in commodity stocks would hinder performance, even as it raised its target price for the STOXX Europe 600.

“We see FTSE 100 earnings falling 8 per cent this year (in the main, due to the fall in commodity prices), but rebounding 10 per cent in 2016,” analysts at UBS said in a note.

The sell-off on the FTSE was broad based, with all sectors in negative territory.

One of few gainers, budget airline easyJet rose 0.8 per cent, after reporting traffic figures that traders said were solid.

“Shares in easyJet are outperforming blue-chip rivals after monthly traffic statistics pointed to monthly passenger growth... coupled with load factors up 1 to 2 percentage points to exceed 91 per cent,” said Mike van Dulken, head of research at Accendo Markets.

“May’s passenger growth represents a bounce from a slower April and brings the budget airline’s growth back to the levels last seen in Feb/March.”

Yesterday, supermarket Morrisons was saved at the last minute from being kicked out of the blue chip index after its first rise in sales for nearly 18 months sent shares surging. Morrisons will remain in the FTSE 100 Index, narrowly avoiding an embarrassing relegation to the FTSE 250, which would have ended more than 14 years in the top flight. It had been on track to be kicked out of the

FTSE 100 after a tumultuous time for the group saw its share price tumble.

Mobile power company Aggreko will instead leave the top flight now, with satellite company Inmarsat replacing it.

Reuters