Market report: Sputtering Rolls-Royce gives jolty ride

What happened to the FTSE, pound and UK companies on the markets today?

A worker secures a protective cover to a turbofan engine manufactured by Rolls-Royce Credit: Nathan Laine/Bloomberg

Collapsing investor confidence shaved another 14pc off Rolls-Royce’s share price on Tuesday, as the engineer’s Covid-19 agony continued.

The engine-maker, which has taken a severe hit amid a pandemic-induced crisis in the global aviation sector, fell 34.4p to 206.7p, leaving it down 70pc this year.

Analysts at Credit Suisse said Rolls-Royce’s plans to undertake £2bn in disposals was likely to reduce the need for it to raise money by selling shares, but warned of volatility in its forecasts and a lack of visibility on its balance sheet.

They cut their price target on the group, which last week reported a £5.4bn loss for the first half of 2020.

Rolls-Royce had a familiar companion among the FTSE 100’s biggest fallers – British Airways-owner IAG dropped 13.8p to 202.5p amid a generally poor showing for travel shares. The group took a knock amid signs Portugal could soon be added to Britain’s quarantine list. Adding to its woes, JPMorgan analysts cut their rating on the group to “neutral”.

It was a poor day for the FTSE 100, which caught up with Europe’s losses on Monday and then added some of its own, significantly underperforming a largely flat set of continental indices.

Mining companies were the biggest bright spot among London-listed groups, with heavyweights such as BHP, Anglo American, Glencore and Antofagasta all jumping as purchasing managers’ index figures from around the world showed factories experiencing huge jumps in demand.

Gold miners shone across the board, as the metal’s price continued to push back towards $2,000 an ounce. Fresnillo was the FTSE 100’s biggest riser, climbing 57.5p to £13.20, while Polymetal also rose and Hochschild gained group among mid-caps.

On the FTSE 250, furniture and homewares retailer Dunelm climbed 62p to £14.91, after it said sales had been “strong” over the past two months, leaving its year-to-date performance “materially ahead” of its initial expectations. Year-on-year sales growth during July was at 59pc, which the FTSE 250 group attributed to pent up demand and the timing of its summer sale. Sales were up 24pc in August.

Royal Bank of Canada’s Richard Chamberlain said the group has “been able to benefit from the working-from-home trend this year.”.

Tuesday's closing prices will be used to determine the movement in the latest reshuffle of London’s main market, including movements in and out of the FTSE 100.

Broadcaster ITV’s fate was sealed with a further drop of 3.7p to 57.1p. Already by far the smallest company among London’s blue-chips, its place is most likely to be taken by B&M European Retail. The official decisions will be announced after the close today, with the results set to be implemented on Sept 21.