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(Alliance News) - Stocks in London ended sharply lower on Thursday after another round of grim US jobless claims figures served as a bleak reminder of the economic toll the coronavirus has inflicted on the global economy.
The FTSE 100 index closed down 214.04 points, or 3.5%, at 5,901.21. The FTSE 250 ended down 380.88 points, or 2.3%, at 16,454.46 and the AIM All-Share closed down 3.16 points, or 0.4% at 810.34.
The Cboe UK 100 ended down 3.7% at 9,984.70.80, the Cboe UK 250 closed down 2.9% at 14,151.30, and the Cboe UK Small Companies ended up 0.1% at 9,081.70.
In Paris the CAC 40 ended down 2.1%, while the DAX 30 in Frankfurt ended down 2.2%.
IG Group said: "Yesterday's optimism appears to have been short-lived, with the substantial upside seen in response to the positive Gilead drug trial fading dramatically. While positive news in relation to treating the virus does provide the basis for a more optimistic view of the recovery, there is no doubt that this economic suffering will be drawn out if the views of central bankers are anything to go by.
"The ECB and FOMC are both largely in the same boat, with both Lagarde and Powell willing to do whatever it takes to help steady the ship for the rough seas ahead. However, there is only so much sugar-coating that can be done given the ongoing measures that need to remain in place to avoid a second wave."
On the London Stock Exchange, Reckitt Benckiser ended the best blue-chip performer, up 3.6% after the household goods firm enjoyed a bumper first quarter.
Reckitt said its "2020 performance is now expected to be better than original expectations" but conceded the "outlook for the balance of 2020 remains uncertain". Total Reckitt sales climbed 12% to GBP3.54 billion in the quarter to March 31. On a like-for-like basis, sales were 13% higher. The largest sales rise came from over-the-counter health products. These jumped by about a third to GBP618 million. It helped the company to a 13% sales hike in the Health unit to GBP2.19 billion. In Hygiene, sales jumped 11% to GBP1.36 billion.
"Given a vaccine is at least a year away, and hygiene is showing to be a serious Covid defender, it's not implausible to think that sales will remain higher, but for how long and how high, is unclear," said Hargreaves Lansdown analyst Emilie Stevens.
Flutter Entertainment closed up 3.2% after the gambling firm said it will complete its Stars Group acquisition next week after obtaining shareholder approval.
This follows approval from shareholders in both companies as well as all necessary regulatory clearances.
Hikma Pharmaceuticals closed up 1.7% after the drugmaker said its year started well despite tough market conditions and reiterated its annual guidance. Hikma still expects to report low-to-mid single-digit revenue growth from its Injectables business in 2020 as a result of demand across all of its markets as well as the launch of new products.
In 2019, Injectables revenue grew 8% to USD894 million. On top of this, Hikma's Injectables core operating margin is forecast to be between 35% and 37% in 2020, down from 38% in 2019. The company's Injectables business is performing well globally, with higher demand in Europe and the US - partly driven by Covid-19.
AstraZeneca closed up 1.4%. The Anglo-Swedish drugmaker and Oxford University announced a deal to make and distribute a potential Covid-19 vaccine. The collaboration is focused on the university's ChAdOx1 nCoV-19 vaccine, currently in development by the Jenner Institute and Oxford Vaccine Group. Phase 1 clinical trials began last week in healthy volunteers and data could be out as soon as next month, with late-stage trials following by the middle of 2020. Pharmaceutical giant Astra will be responsible for the vaccine's development, manufacturing and distribution.
At the other end of the large-cap index, Royal Dutch Shell 'A' and 'B' shares closed down 11% after the oil major announced its first dividend cut since the second world war as it grapples with lower oil prices.
The Anglo-Dutch firm slashed its first-quarter dividend to 16 US cents from 47 cents. Shell's first-quarter current cost of supplies earnings attributable to shareholders, excluding items, were USD2.9 billion, down 46% on a year ago due to a drop in oil, gas and liquefied natural gas prices as well as lower sales volumes.
The oil giant produced 3.7 million barrels of oil equivalent per day, down 1% on a year before.
Lloyds Banking Group closed down 7.3% after the lender reported a sharp fall in profit in the first quarter, which was blamed on a significant rise in credit loss impairments.
Lloyds recorded pretax profit of just GBP74 million, which is down 95% on the GBP1.60 billion seen the same period the year before. Lloyds took a GBP1.43 billion impairment charge in the quarter, up from GBP275 million a year before, but the lender stressed its loan book remains "robust and well positioned".
The euro stood at USD1.0874 at the European equities close, up from USD1.0855 late Wednesday after European Central Bank chief Christine Lagarde said the bank's trillion-euro response could be expanded and prolonged into 2021.
The ECB's Pandemic Emergency Purchase Programme, launched last month, "might be extended further than the end of 2020" depending on "the length of the crisis", Lagarde told reporters in a telephone press conference.
ECB forecasts suggest euro area GDP could fall by between 5% to 12% this year - with much depending on the duration of containment measures.
The forecasts come just hours after Eurostat said the eurozone economy contracted 3.8% quarter-on-quarter in the first three months of 2020, and shrank 3.5% in the wider European Union. Annually, GDP fell 3.3% in the euro area and by 2.7% in the EU.
The Frankfurt-based central bank earlier on Thursday kept its interest rates on main refinancing operations, the marginal lending facility, and the deposit facility unchanged at 0.00%, 0.25% and minus 0.50%, respectively.
However, it will reduce the interest rate on targeted longer-term refinancing operations over June 2020 to June 2021 to 50 basis points below the average interest rate on the Eurosystem's main refinancing operations over the same period.
Further, a new series of non-targeted pandemic emergency longer-term refinancing operations will be conducted to support liquidity conditions in the euro area and enable the "smooth function" of money markets.
"The newly announced and signalled ECB measures should help contain the EUR risk premium, with the missteps of the ECB March meeting not repeated. We don't expect EZ fiscal issues to be the main EUR driver in 2020. As broader USD weakness kicks in over coming months, the euro, unconstrained by EZ risk premia, should be able to move to EUR/USD 1.15 this summer," said analysts at ING.
Against the yen, the dollar was trading at JPY106.94, firm against JPY106.58 late Wednesday.
Stocks in New York were mostly lower at the London equities close following another spike of jobless claims in the wake of coronavirus shutdowns.
The DJIA was down 0.8%, the S&P 500 index down 0.7%, but the Nasdaq Composite was up 0.2%.
The US Labor Department said more workers were sent to the unemployment line last week bringing the number of layoffs to around 30 million in six weeks.
According to the government department's weekly initial jobless claims figures, another 3.84 million US workers filed for unemployment benefits during the week ending April 24. The figure was higher than market expectations for a 3.50 million rise.
In addition, US personal spending contracted by 7.5% in March, the largest decline on record, while personal income fell 2.0%.
The pound was quoted at USD1.2601 at the London equities close, up sharply from USD1.2434 at the close Wednesday as the greenback weakened following the US unemployment figures.
On the US corporate front, Comcast reported a sharp drop in first-quarter earnings, as the NBCUniversal parent warned of more pressure to come amid global lockdowns and economic downturn.
For the quarter ended March 31, revenue edged lower to USD26.61 billion from USD26.86 billion in the first quarter of 2019. Net income fell almost 40% to USD2.15 billion from USD3.55 billion. Earnings per share fell to USD0.46, down 40% from USD0.77.
The stock was down 5.0% on Wall Street.
Twitter reported positive earnings for its first quarter of the year despite an expected downturn due to the coronavirus.
For the quarter to March 31, revenue rose to USD808 million from USD786.9 million in the first quarter of 2019. Advertising revenue came in at USD682 million, up from USD679.4 million last year. The San Francisco, California-based firm said monetizable daily active users grew to 166 million in the first quarter, up from 152 million at the end of the fourth quarter.
In terms of outlook, the social media platform did not provide guidance for the second quarter and is still suspending full-year guidance. However, the company noted that its plans to build a new data centre will likely be delayed, reducing capital expenditure spend in 2020.
The stock was down 6.5% in New York.
American Airlines was down 5.0% in New York after the carrier posted a USD2.20 billion quarterly loss in the wake of a profound industry downturn.
Ahead in the US earnings calendar on Thursday, trillion-dollar market cap club members Apple and Amazon will report earnings after the closing bell in New York.
Brent oil was quoted at USD26.50 a barrel at the London close, up sharply from USD22.90 at the close Wednesday, amid hopes that the global economy is moving towards a slow reopening.
"Oil prices are looking very constructive because over the next month or two, supply will meet demand. Oversupply worries are slowly easing and with the exception of sudden dislocations in the oil market, crude prices could continue to stabilise," said OANDA markets analyst Edward Moya.
Gold was quoted at USD1,704.48 an ounce at the London equities close, flat from USD1,702.03 late Wednesday.
The economic events calendar on Friday has manufacturing PMI readings from the UK and US at 0930 BST and 1445 BST respectively. Financial markets in China and across Europe will be closed Friday for the Labour Day holiday.
The UK corporate calendar on Friday has first-quarter results from state-backed lender Royal Bank of Scotland Group.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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