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(Alliance News) - Stocks in London ended sharply lower on Thursday amid warnings over a worrying spike of coronavirus infections driven by the Delta variant, as restrictions in England are set to be lifted next week.
The World Health Organization's emergency committee warned that new concerning variants of Covid-19 were expected to spread around the world, potentially making it even harder to halt the pandemic.
"The pandemic is nowhere near finished," the committee warned in a statement following a meeting Wednesday on the pandemic situation.
Committee Chair Didier Houssin acknowledged to reporters that "recent trends are worrying".
For now, four concerning variants of Covid-19 are dominating the global pandemic picture, Alpha, Beta, Gamma and especially the rapidly-spreading Delta variant first detected in India.
But the committee warned that worse could lie ahead, pointing to "the strong likelihood for the emergence and global spread of new and possibly more dangerous variants of concern that may be even more challenging to control".
The FTSE 100 index closed down 79.19 points, or 1.1%, at 7,012.02. The mid-cap FTSE 250 index ended down 248.79 points, or 1.1%, at 22,501.25. The AIM All-Share index finished down 23.34 points, or 1.9% at 1,218.93.
The Cboe UK 100 index closed down 1.2% at 698.50. The Cboe 250 closed down 1.2% at 20,186.90, and the Cboe Small Companies ended down 0.6% at 15,149.00.
In Paris the CAC 40 and the DAX 30 in Frankfurt both ended down 1.0%.
"It's been another negative day for European markets, as they continue to trade in the range they've broadly been in for the past few months. While the DAX, and Stoxx600 have managed to put in marginal new record highs in recent days there has been a distinct lack of follow-through, which appears to speak to uncertainty about a trifecta of factors, a continued increase in virus cases, the pace of recovery which appears to be slowing, and the transitory nature or otherwise, of inflationary pressures," said CMC Markets analyst David Madden.
In the FTSE 100, Avast ended the standout performer, up 18%, after the cybersecurity firm and US peer NortonLifeLock confirmed they are in advanced talks regarding a possible combination.
A deal may be in form of a cash and share takeover offer by Norton for Avast, the two companies said. Possible terms were not disclosed.
The talks were first reported by the Wall Street Journal late on Wednesday. A deal could value Avast at around USD8 billion, assuming a typical premium to its closing market capitalisation on Wednesday of GBP5.20 billion, the WSJ said.
NortonLifeLock shares were down 4.0% in New York, giving it a market value of almost USD15 billion. For perspective, Avast's market capitalisation sits at GBP5.2 billion.
Tempe, Arizona-based Norton makes consumer cybersecurity software, as does Avast, which is based in Prague and listed on the London Stock Exchange.
Under UK takeover rules, Norton will have to make a firm offer by August 11, or announce it will not make an offer.
Experian closed up 2.5% after the credit checking agency raised its annual outlook after delivering a resilient performance in its first quarter.
Total revenue growth was 31% at actual exchange rates and 28% at constant exchange rates in the first quarter ended June 30. Organic revenue growth was 22%, and all regions and segments delivered growth for the period.
Experian said it now expects total revenue growth for the full financial year to March 31 in the range of 13% to 15%, and organic revenue growth to be between 9% and 11%. The company previously outlined total revenue growth between 11% and 13% and organic revenue growth between 7% and 9%.
Severn Trent ended flat after the utility left its outlook unchanged after a "strong start" to its financial year. In addition, Ofwat, the UK water industry watchdog, said the sector will commit GBP2.7 billion toward "building back greener".
Coventry-based Severn Trent hailed a "strong start to the year operationally" and affirmed annual guidance. It targets GBP1.78 billion to GBP1.81 billion of revenue in its Regulated Water & Waste Water business.
The unit includes its wholesale water and retail services arm. Revenue there came in at GBP1.62 billion in the year that ended March 31, so Severn Trent expects growth of as much as 12% in the current financial year.
At the other end of the large-caps, Just Eat Takeaway.com finished the worst performer, down 9.1%. The food delivery platform posted growth in second quarter orders, said it has gained market share in the UK, and added that its losses peaked in the first half and margins will pick up from here on in.
The company also boosted its annual guidance. It now expects order growth of "more than" 45% for 2021, excluding new US acquisition Grubhub, raised from its previous forecast of order growth of more than 42%. Total orders excluding the US rose 47% year-on-year to 212.4 million in the second quarter of 2021, from 144.9 million.
Just Eat Takeaway also provided pro forma figures, which include the US. The company sealed its Grubhub acquisition in mid-June, so the second quarter pro forma figures are presented as if the deal was completed back in January of last year. Just Eat Takeaway had acquired Grubhub for USD7.3 billion. Pro forma orders were 37% higher yearly at 279.7 million from 203.8 million.
On AIM, ASOS slumped 18% after the online fashion retailer warned of slower growth, predicting Covid-19 uncertainty may result in volatility.
In the four-month period to June 30, which ASOS labels as P3, growth in the final weeks of the trading stretch was muted. The London-based retailer put this down to the virus and poor weather in the UK. During the four-month period, revenue rose 27% annually to GBP1.29 billion from GBP1.01 billion. The figure includes delivery costs and third-party revenue. Stripping out such items, retail sales alone were 26% higher at GBP1.24 billion.
For the whole of the financial year, adjusted pretax profit growth is still expected to be in line with expectations. The figure excludes the contribution of newly acquired Topshop brands, as well as integration costs. ASOS said it anticipates a measure of volatility to continue in the near term, given the rapidly evolving Covid situation worldwide.
Sterling was lower against the dollar as investors weighed the latest UK labour market figures against hawkish comments from the Bank of England.
The pound was quoted at USD1.3855 at the London equities close, down from USD1.3870 at the close Wednesday.
The unemployment rate for the three months to May was 4.8%, up from 4.7% for the three months to April. This was ahead of market expectations, according to FXStreet, which saw the unemployment rate remaining unchanged. The jobless rate started 2021 at 5.0%, representing the three months to January.
Sterling fell to an intraday low of USD1.3813 following the release of the UK jobless figures.
However, the pound's roller-coaster ride continued after two members of the BoE's Monetary Policy Committee pointed to potential easing of monetary policy.
Michael Saunders, who sits on the bank's nine-strong MPC, said it is no longer clear that all the factors driving inflation higher are only temporary.
In a speech on the inflation outlook, Saunders warned that if no action is taken by the Bank to rein in quantitative easing or interest rates, then CPI is likely to remain above the 2% target in two to three years' time, potentially spiking at 4% later this year.
He said: "If activity and inflation indicators remain in line with recent trends and downside risks to growth and inflation do not rise significantly...then it may become appropriate fairly soon to withdraw some of the current monetary stimulus in order to return inflation to the 2% target on a sustained basis."
Saunders said this could mean the Bank stopping purchases under its QE programme "in the next month or two and-or further monetary policy action next year".
There now appears to be a growing number of rate-setters backing that view, with bank deputy governor Dave Ramsden saying on Wednesday that QE may need to be reversed sooner than he had expected to rein in inflation.
The pound spiked to an intraday high of USD1.3900 on the back of the hawkish comments before settling back down.
The euro stood at USD1.1814 at the European equities close, lower from USD1.1825 late Wednesday. Against the yen, the dollar was trading at JPY110.00, flat from JPY110.02 late Wednesday.
Stocks in New York were lower at the London equities close as investors digested slowing economic growth in China and latest jobless claims numbers, as bank earnings season drew to a close.
The DJIA was down 0.1%, the S&P 500 index down 0.3% and the Nasdaq Composite down 0.7%.
China's growth slowed to 7.9% in the second quarter, down from 18.3% in the previous three months when the economy roared back to life after last year's pandemic-enforced shutdown.
The latest figures suggest China should be on track to meet its growth target of more than six percent this year.
China's National Bureau of Statistics said the world's second-largest economy continued to "recover steadily", but sounded a note of caution over external uncertainties and the uneven domestic economic rebound.
On the US economic front, initial jobless claims in the ticked down in the most recent week, the Department of Labor reported.
In the week ending July 10, the figure for seasonally adjusted initial claims was 360,000, a decrease of 26,000 from the previous week's revised level. This is the lowest level for initial claims since mid-March 2020, before the pandemic took a firm grip on the jobs market, when it was 256,000.
The previous week's level was revised up to 386,000 from 373,000.
On Wall Street, Morgan Stanley reported a "very strong" second quarter, as the investment bank was able to shrug off a poor performance from its Securities unit on the back of Wealth Management growth.
In the three months to June 30, the New York-headquartered investment bank and financial services firm recorded net attributable income of USD3.51 billion, up 10% from USD3.20 billion a year before.
Diluted earnings per share slipped to USD1.85 from USD1.96. The James Gorman-led bank ended the second quarter with 1.83 billion shares, up from 1.58 billion the year before.
The stock was up 1.2% in New York.
Brent oil was trading at USD74.22 a barrel at the equities close, down sharply from USD76.16 at the close Wednesday.
Gold was quoted at USD1,824.33 an ounce at the London equities close, little changed against USD1,822.70 late Wednesday.
The economic events calendar on Friday has an interest rate rate decision from the Bank of Japan overnight, eurozone inflation readings at 1000 BST and US retail sales print at 1330 BST.
The UK corporate calendar on Friday has first-quarter results from UK fashion house Burberry Group and from asset manager Ninety One.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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