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(Alliance News) - Stocks in London slumped in midday trading as improved local and international manufacturing data was overshadowed by rising coronavirus infections.
The FTSE 100 was down 35.87 points, or 0.6%, at 6,133.95 in midday trade.
The mid-cap FTSE 250 index was down 0,2% at 17,088.56. The AIM All-Share index was 0.6% lower at 878.69.
In mainland Europe, the CAC 40 in Paris was down 0.7%, while the DAX 30 in Frankfurt was 0.5% lower.
"A relatively quiet start to the day in Europe highlights the ongoing tug-of-war between those optimistic of the benefits that come with lockdown easing, playing off against fears of further restrictive measures if cases pick up in response," IG Senior Market Analyst Joshua Mahony said.
He continued: "The US remains the key hotspot for investors, with Florida and Texas potentially the first of many states that will require another a second bout of restrictions if the virus is to be brought under control. While traders have largely targeted US shares given the expectation of huge stimulus measures from Trump and Powell, we are now likely to see European markets outperform as a united front on financial support bolsters the impressive virus response seen over recent months."
In London, Smith & Nephew was sitting atop the FTSE 100, up 3.9%, despite the medical devices firm saying it expects second-quarter underlying revenue to plunge 29%. But it said this is in line with internal expectations.
Smith & Nephew said it was "encouraged" by its improving performance as the quarter progress, with underlying revenue declines of 47% in April, 27% in May, and around 12% in June.
"Performance was correlated strongly with the easing of lockdown restrictions and resumption of elective surgeries. Nevertheless, there continues to be significant uncertainty and geographical variation," the company said.
As a result Smith & Nephew continues to expect its first-half trading margin will be "substantially" down on the prior year.
In the midcaps, B&M European Retail was up 4.5%. The company reported double-digit revenue growth in the first quarter and said it intends to continue to grow profitability going forward.
In addition, B&M launched GBP350 million senior secured notes due 2025 offering. The notes will be offered in connection with the refinancing of some of the company's existing senior credit facilities and existing notes, it said.
Turning back to trading, the general merchandise retailer reported a "strong" start to the new financial year, which begun on March 29, as B&M's locations continue to prove "highly attractive" to customers.
Revenue growth in the quarter to June 27 was 28% to GBP1.15 billion, with B&M UK revenue growth of 34% to GBP987.8 million. On a like-for-like basis, revenue grew by 27% against 3.9% a year ago.
Babcock International advanced Babcock 4.0% after the aerospace & defence contractor named David Lockwood as its new chief executive officer, taking over Archie Bethel who will step down in September.
Lockwood will join Babcock's board on August 17, then become CEO on September 14. Lockwood was formerly CEO of Cobham, which was recently acquired by US private equity firm Advent International for GBP4.0 billion.
He was also the boss of former FTSE 250 technology firm Laird between 2012 and 2016. Laird, like Cobham, was acquired by Advent back in 2018 in a GBP1 billion deal.
Bethel's planned departure was announced back in February. He has been CEO since 2016 and has been at Babcock since 2004.
Anchored to the bottom of the FTSE 250, John Laing lost 11% at midday.
The infrastructure project investor expects a single-digit net asset value decline during a busy six months, which was hurt by the Covid-19 pandemic.
John Laing expects net assets at June 30, before deducting dividends, to have fallen. Its NAV per share at December 31 was 337p and stood at 325p at the end of June 2019.
Its first half NAV per share will take a 20p hit from "external factors, namely Covid-19". John Laing explained it has also increased discount rates at a number of assets, hurting NAV per share by 12p.
"External factors, including the exceptional impact of Covid-19 and reductions in power price forecasts, have more than offset the underlying portfolio performance and gains from foreign exchange," the investor said.
The pandemic has led to reduced power demand and tumbling energy prices.
SSP Group shed 4.6%, after it warned thousands roles could be slashed as the food kiosk operator deals with the fallout of Covid-19, which has battered the travel sector.
The Upper Crust brand owner said 5,000 roles from its 40,000 strong workforce will be made redundant as it embarks on a plan to "simplify and reshape" its UK operations. The slashed jobs will be from its UK operations and head office.
"Our expectation is that by the autumn only around 20% of units in the UK will have opened. We have therefore come to the very difficult conclusion that we will need to simplify and reshape our UK business, and we are now starting a collective consultation on a proposed reorganisation," SSP warned.
SSP forecasts these measures to cost between GBP8 million and GBP10 million.
More promisingly, it has noticed a recovery in recent trading. June sales were down 90% annually, faring better than April and May sales which had fallen 95%.
The June showing was down to "stronger performances in Continental Europe and North America reflecting the gradual easing of lockdowns in these regions offset by the UK and Rest of World, where sales remain below this level".
The company said it still expects an operating loss between GBP180 million and GBP250 million for the second half of the year ending September.
In economic news, the UK manufacturing sector stabilised in June, following recent steep downturns caused by the Covid-19 pandemic, data from IHS Markit showed.
The IHS Markit/CIPS purchasing managers' index rose to 50.1 in June from 40.7 in May, which followed a record low of 32.6 in April. June's flash reading had been 50.1.
June's rise marked a record jump, IHS Markit noted, with manufacturing production growing for the first time in four months.
The seasonally adjusted IHS Markit Eurozone manufacturing purchasing managers' index rose to a four-month high of 47.4, up from 39.4 in May, and the flash reading for June of 46.9, which was also FXStreet's consensus expectations.
Manufacturing activity declined to a much lesser degree in June compared to the previous months, with the drop in production caused by ongoing weakness in new order books.
Overnight, IHS Markit showed the Chinese manufacturing sector improved in June, the second month in a row of improvement.
The headline Caixin seasonally adjusted purchasing managers' index, a composite indicator intended to provide a snapshot of the manufacturing economy's operating conditions, stood at 51.2 in June compared to 50.7 in May.
Japan's manufacturing sector improved slightly in June compared to May but remained firmly in contraction territory.
The headline au Jibun Bank purchasing managers' index edged higher at 40.1 in June compared to May's 38.4.
AJ Bell's Investment Director Russ Mould said: "For the same reason that markets didn't take much notice of backward-looking apocalyptic economic data in the spring, more positive data seen recently is also being put to one side as investors instead look ahead to a potential coronavirus second wave and tensions over Hong Kong."
Police said they arrested more than 30 people on Wednesday in a busy Hong Kong shopping district for violating a new national security law imposed by China.
The first arrest was a man displaying the slogan "Hong Kong Independence." The crime now comes with a potential heavy prison sentence.
The pound was quoted at USD1.2412 midday Wednesday, higher from USD1.2384 at the London equities close Tuesday.
The euro was quoted at USD1.1207, down from USD1.1246 late Tuesday in London. Against the yen, the dollar was trading at JPY107.48, soft on JPY107.77.
Looking ahead, stocks in Wall Street are being clouded by rising coronavirus infections in the country. The Down Jones Industrial Average is pointed down 0.4%, the S&P 500 0.3% lower and the tech-heaving Nasdaq Composite called down 0.2%.
The US recorded 1,199 fatalities from the coronavirus over the past 24 hours, as the country's death toll began to climb again, the Johns Hopkins University tally showed Tuesday.
The number of daily deaths had not exceeded 1,000 since June 10. The country has suffered 127,322 deaths overall, according to the Baltimore-based institution.
The US also registered 42,528 new cases of coronavirus over the past 24 hours. Due to increased death tolls and case numbers, many US states, particularly in the south and west, have had to pause their reopening processes.
On Tuesday, the state of Texas broke its daily record, reporting 6,975 new cases of Covid-19.
Brent oil was trading at USD42.40 a barrel Wednesday midday, up from USD41.66 a barrel at the London equities close Tuesday. Gold was priced at USD1,785.90 an ounce, higher than USD1,782.27.
Still to come Wednesday, US ADP employment is at 1315 BST, with an IHS Markit manufacturing PMI for the US at 1445 BST and the ISM's manufacturing data at 1500 BST.
By Paul McGowan; paulmcgowan@alliancenews.com
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