(Alliance News) -Â The FTSE 100's slide accelerated as Thursday's stock trading progressed in London, with dire second-quarter economic data from Germany and an even worse reading anticipated from the US later in the day darkening the mood.
The blue-chip equity index was down 104.00 points, or 1.7%, at 6,027.46 Thursday midday.
"A double-digit percentage decline in the German economy and abysmal results from Lloyds have put the cat among the pigeons this morning," said Chris Beauchamp, chief market analyst at IG.
The mid-cap FTSE 250 index was down 171.12 points, or 1.0%, at 17,076.54 and the AIM All-Share index was down 1.0% at 887.24.
The Cboe UK 100 index was down 1.7% at 601.08. The Cboe 250 was down 1.1% at 14,488.25 and the Cboe Small Companies down 0.2% at 9,117.37.
In mainland Europe, the CAC 40 in Paris was down 1.2% while the DAX 30 in Frankfurt dived 2.4% - with shares in German carmaker Volkwagen tumbling 5.9% on its interim results.
Beauchamp added: "Continuing indications of a rise in virus cases throughout Europe have added to the caution, with markets worrying that Q2 was not the last quarter of significant economic weakness."
Exactly six months after the World Health Organization declared an international emergency over the deadly pathogen, countries around the globe are seeing rises in infections that are damaging economies and forcing disruptive protection measures.
Several countries in Europe have slapped restrictions back on travel to and from Spain, while officials elsewhere bicker over the seriousness of the current outbreak.
UK Prime Minister Boris Johnson, fresh from announcing quarantine for travellers returning from Spain, suggested the rest of Europe could be facing a second wave â€“ despite his own country's dismal figures.
Laying bare Covid-19 economic toll in the second quarter, Germany on Thursday revealed a 10% quarter-on-quarter slump in GDP, the worst reading since the series began 50 years ago.
"This was the largest decline since the beginning of quarterly GDP calculations for Germany in 1970. It was much larger than during the financial market and economic crisis," Destatis said. The German economy shrank 4.7% in the first quarter of 2009.
Annually, Europe's largest economy shrank 12% in the second quarter after a 1.8% decline in the first.
The euro traded at USD1.1751 after the data, down on USD1.1767 late Wednesday.
Sterling was quoted at USD1.3001 Thursday midday, higher than USD1.2968 at the London equities close on Wednesday. Against the yen, the dollar was quoted at JPY105.07, flat versus JPY105.08.
To come is a second quarter GDP reading from the US at 1330 BST, alongside the weekly initial jobless claims.
"GDP is seen down 34.5% quarter-on-quarter annualised, the worst in history. Likewise, initial claims are seen stuck over 1.4 million. It's an ugly, ugly movie - and it is far from over yet," said Rabobank.
Wall Street is on course for a lower open ahead of the data, with the Dow Jones, S&P 500 and Nasdaq all called down 0.9%.
On the corporate side, traders await earnings from iPhone maker Apple, e-commerce giant Amazon.com and Google owner Alphabet, all due after the New York market close.
London also saw its own wave of earnings on Thursday morning, with Lloyds Banking shares down 7.4% at midday after the release of its half-year figures.
The lender reported a loss for the first half, as the "profound" effect from the coronavirus pandemic forced the lender into large credit impairments.
For the six months to June 30, the FTSE 100-listed lender recorded a pretax loss of GBP602 million, compared to a GBP2.90 billion profit the year before.
Lloyds took a GBP3.82 billion impairment charge in the period, sharply higher than the GBP579 million hit a year before. For 2020, Lloyds expects its impairment to be between GBP4.5 billion and GBP5.5 billion.
The sharp rise reflects a "significant deterioration" in the forward-looking economic outlook, the bank said.
Net income was down 16% year on year to GBP7.41 billion from USD8.82 billion, with net interest income dropping 11% to GBP5.48 billion from GBP6.15 billion.
Donald Brown, senior investment manager at Brewin Dolphin, said: "Lloyds' pre-tax loss is worse than analyst expectations and, like Barclays earlier in the week, it has had to set aside a large amount of capital to offset the potential impact of Covid-19 on its loan book, with bad debts expected to rise sharply...the underlying tone of the statement is gloomy, as the bank seeks a new CEO to guide the group forward."
Lloyds Chief Executive Antonio Horta-Osorio plans to step down as CEO in 2021, at which point he will have held the role for 10 years.
Standard Chartered was down 4.3%. The bank said it is feeling the "acute impact" of the coronavirus pandemic, forcing the lender to increase its impairments and resulting in a fall in profit in the first half.
In the six months to June 30, the emerging markets-focused lender recorded pretax profit of USD1.63 billion, down 33% on the USD2.41 billion reported a year before.
Greater China & North Asia saw underlying pretax profit slip 15% year-on-year to USD1.13 billion. ASEAN & South Asia profit plunged 40% to USD456 million. In Europe & Americas, however, StanChart saw profit jump to USD356 million from just USD13 million a year before.
StanChart's credit impairments were raised dramatically, curtailing profit. The lender upped its impairments to USD1.58 billion from USD254 million a year before.
Royal Dutch Shell 'A' shares were down 1.9% and 'B' shares down 2.0% after the oil major took a USD16.8 billion impairment in the second quarter.
Adjusted earnings - previously referred to as CCS earnings attributable to shareholders excluding identified items - slumped to just USD638 million in the second quarter from USD3.46 billion a year ago.
Including the USD16.8 billion impairment charge - taken "as a result of revised medium- and long-term price and refining margin outlook assumptions in response to the Covid-19 pandemic and macroeconomic conditions as well as energy market demand and supply fundamentals" - Shell posted a loss attributable to shareholders of USD18.13 billion versus income of USD3.00 billion a year ago.
"Second quarter 2020 results reflected lower realised prices for oil, LNG and gas, lower realised refining margins, Oil Products sales volumes and higher well write-offs, compared with the second quarter 2019. This was partly offset by very strong crude and oil products trading and optimisation results as well as lower operating expenses," said Shell.
Brent oil was trading at USD43.10 a barrel midday Thursday, down on USD43.42 late Wednesday. Gold was quoted at USD1,954.96 an ounce, soft against USD1,955.22.
BAE Systems received a more upbeat response to its earnings, shares rising 3.2% after maintaining its dividend.
Farnborough, England-based BAE posted a GBP689 million pretax profit for the six months ended June 30, down 11% from GBP776 million a year before.
While revenue rose 5.9% to GBP9.18 billion from GBP8.67 billion a year prior, operating costs increased by 7.0% to GBP8.45 billion from GBP7.90 billion, depressing operating profit to GBP801 million from GBP836 million.
BAE kept its dividend at 9.4p per share.
Including its two recent acquisitions, BAE predicts its annual sales will increase by a low-single digit percentage from 2019, thanks to increased volumes from the F-35 combat jet, Combat Vehicles, and electronic defence portfolio growth. This is expected to offset the commercial businesses shortfall.
AstraZeneca was up 2.6% after the pharmaceutical firm posted a rise in earnings for the first half of 2020, as it also said Tagrisso has been granted Breakthrough Therapy Designation in the US for the treatment of patients with early-stage non-small cell lung cancer.
For the six months ended June 30, AstraZeneca posted revenue of USD12.63 billion, up 14% from USD11.31 billion recorded for the first half of 2019. Pretax profit was USD1.89 billion, doubled from USD899 million the year prior.
Core earnings per share rose 24% to USD2.01.
The Cambridge-based company said its performance was primarily driven by the performances of the new medicines within Emerging Markets and Oncology, as sales surged during the lockdown helped by a diverse product range which now includes a potential Covid-19 vaccine.
Looking ahead, Astra said its 2020 full-year guidance was unchanged at high single-digit to low double-digit percentage growth in revenue and mid- to high-teens growth in core EPS. It also promised a "broad and equitable" supply of any Covid-19 vaccine that it develops during the pandemic at no profit.
By Lucy Heming;Â firstname.lastname@example.org
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