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(Alliance News) - The FTSE 100 struggled to find its groove on Friday and looks set to end the month of July in the red, following dire economic data from Europe and the UK government being forced to impose lockdown measures in Manchester, its third largest city.
The blue-chip equity index was down 6.90 points, or 0.1%, at 5,983.09 Friday midday.
"July has been a second bad month in a row for investors in UK stocks with the FTSE 100 index now trading at lows last seen in late-May. The market has most certainly lost momentum and is slowly drifting down as many companies continue to struggle from the pandemic," said AJ Bell Investment Director Russ Mould.
Mould however noted that the large-cap index at one point had climbed 0.5% on Friday, before slipping back into negative territory.
Smaller stocks were mixed. The mid-cap FTSE 250 index was up 171.12 points, or 0.6%, at 17,113.35, but the AIM All-Share index was down 0.6% at 887.07.
The pound was quoted at USD1.3136, improved from USD1.3036 at the London equities close, adding further pressure on the dollar-earner-heavy FTSE 100.
The Cboe UK 100 index was marginally lower at 596.12. The Cboe 250 was up 0.6% at 14,538.43 and the Cboe Small Companies climbed 0.5% to 9,141.14.
In mainland Europe, the CAC 40 in Paris was up 0.2%, while the DAX 30 in Frankfurt gained 0.5%. Shares were up despite Eurostat reporting a big contraction in the eurozone's economy.
The eurozone's economy suffered a heavy fall in the second quarter, as the Covid-19 crisis deepened, forcing member states to impose lockdowns.
Gross domestic product in the euro single-currency area dropped 12% quarter-on-quarter, according to flash estimates by Eurostat, and by 15% annually. This follows the first quarter when GDP sank 3.6% quarter-on-quarter and 3.1% annually.
"These were by far the sharpest declines observed since time series started in 1995," Eurostat said
Separate data on Friday showed annual inflation in the euro area was 0.4% in July, according to Eurostat consumer price index estimates. Excluding energy, food, alcohol & tobacco, core CPI was 1.2% higher annually in July, according to the estimates, versus 0.8% in June.
The euro stood at USD1.1844 midday Friday in London, up from USD1.1781 at Thursday's equities close in Europe.
Against the yen, the dollar was trading at JPY104.66, down from JPY105.08 at the London equities close on Thursday.
Stocks in New York are called higher. The Dow Jones Industrial Average is called up 0.2%, likewise the S&P 500. The tech-heavy Nasdaq Composite index is called up 0.9%.
The corporate calendar in the US has second-quarter earnings from oil majors Chevron and Exxon Mobil.
Brent oil fetched USD43.44 early Friday, improved from USD42.72 at the London equities close on Thursday.
In the UK, Health Secretary Matt Hancock announced on Thursday evening that "immediate action" was needed across Greater Manchester and parts of east Lancashire and West Yorkshire to keep people safe. The stricter lockdown measures, announced via Hancock's Twitter feed at around 9pm and later posted online, mean members of different households are not be able to meet indoors.
FTSE 250 transport operator FirstGroup, which operates about 150 bus services in Manchester, was 0.6% lower.
Gold changed hands at USD1,974.32 midday Friday, up from USD1,941.55 an ounce at the London market close on Thursday.
Blue-chip miner Fresnillo was among the better performers in the FTSE 100 on Friday, rising 2.0%.
At the other end of the large cap index, International Consolidated Airlines Group shed 6.1% as it reported the malaise in the travel sector continued in its second quarter.
Revenue for the three months to June 30 was GBP703 million, plunging 89% year-on-year and its pretax loss for the quarter was GBP2.32 billion, swinging from a profit of GBP921 million. For the six months to June, pretax loss was EUR4.21 billion, swinging from a profit of GBP1.01 billion the year prior.
IAG Chair Antonio Vazquez - who reached nine years in office last January - will retire early January 2021, the British Airways parent said. He will be succeeded by Independent Director Javier Ferran.
A stacked updated from IAG also unveiled plans for a bumper, but unsurprising, EUR2.75 billion fundraise. CMC Markets analyst David Madden noted there already was "chatter" that the airline company would turn to an equity raise.
"Boosting cash positions has been common for travel companies. easyJet launched a rights issue last month, and Lufthansa received a state bailout. Air travel has been rocked by the pandemic and with fears of a second wave circulating, the industry faces tough times ahead," Madden said.
IAG does not expect demand for airline travel to return to pre-pandemic levels until 2023.
Budget carriers Ryanair and easyJet were 3.6% and 2.3% lower, respectively.
It's been a difficult week for travel firms, as the UK imposed quarantine measures on travellers returning from areas of Spain which have seen rising virus cases.
BT Group and Intertek also weighed on the large cap index, down 3.2% and 2.9%, respectively.
BT's first quarter earnings suffered from a lack of live sport, and the telecommunications firm forecast a fall in annual revenue. In the three months to June 30, BT's revenue fell 6.8% to GBP5.25 billion and its pretax profit fell 13% to GBP561 million.
It forecast adjusted revenue to fall between 5% and 6%. Adjusted earnings before interest, tax, depreciation and amortisation are expected between GBP7.2 billion and GBP7.5 billion, at best a 5.1% decline.
The company named a new head for its Enterprise unit, turning to Rob Shuter, the outgoing chief executive officer of Johannesburg-listed telecoms firm MTN Group.
Testing specialist Intertek held its interim payout at 34.2 pence a share but profit during the first half slumped by more than a third. In the six months ended June 30, revenue slipped 7.8% year-on-year to GBP1.33 billion and pretax profit plunged 37% to GBP130.8 million.
"The speed at which the pandemic has unfolded and the lack of visibility on the lifting of lockdown restrictions around the world today continues to make it difficult to assess the full impact of Covid-19 and to provide guidance for 2020," CEO Andre Lacroix said.
NatWest became the latest major UK bank to report a first half loss, following a sharp rise in impairments.
In the six months to June 30, NatWest - which recently changed its name from Royal Bank of Scotland Group - sunk to an operating pretax loss of GBP770 million compared to a GBP2.69 billion profit a year before.
NatWest recorded a loss attributable to shareholders of GBP705 million from a GBP2.04 billion profit a year before.
Impairment losses totalled GBP2.86 billion in the first half, versus GBP323 million a year prior. The FTSE 100-listed lender upped its impairment provisions at the end of the first half to GBP6.1 billion from GBP4.2 billion at the end of March and GBP3.7 billion at the end of 2019.
The lender's shares did gain 1.0%, however.
Pets At Home was atop the mid-cap index, rising 15%.
Total revenue in the quarter ended July 16 was down 1.0%, but the pet care firm saw like-for-like sales bounce toward the end of the quarter. In the four weeks to June 19, like-for-like sales were up 15%, recovering from a 23% fall in the four weeks to March 27.
John Wood Group climbed 3.2%, after Goldman Sachs raised its stock to Buy from Neutral.
By Eric Cunha; ericcunha@alliancenews.com
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