(Alliance News) - Stock prices in London opened lower on Thursday following mixed economic data from China, while GVC Holdings fell to the foot of the FTSE 100 as the coronavirus pandemic hurt results and its CEO has decided to quit.
The FTSE 100 index was down 19.99 points, or 0.3%, at 6,272.66. The mid-cap FTSE 250 index was 71.66 points, or 0.4%, lower at 17,348.89. The AIM All-Share index was down 0.2% at 874.06.
The Cboe UK 100 index was down 0.5% at 625.54. The Cboe 250 was 0.4% lower at 14,713.54, and the Cboe Small Companies index was flat at 9,170.06.
In mainland Europe, the CAC 40 in Paris was down 0.4%, while the DAX 30 in Frankfurt was 0.5% lower.
The Japanese Nikkei 225 index ended down 0.8%. In China, the Shanghai Composite ended down 4.4%, while the Hang Seng index in Hong Kong is down 1.3%.
China saw forecast-beating economic growth in the second quarter after a record contraction in the previous three months, as businesses cautiously returned to normality after strict lockdowns across the country.
Gross domestic product expanded 3.2% in April to June, the National Bureau of Statistics said, smashing expectations and a massive improvement on the 6.8% contraction in the first quarter. The growth reading, while smashing the 1.3% growth tipped in an AFP poll of analysts, is still among the lowest rates on record on a quarterly basis.
However, while the reading was welcomed, analysts said investors had largely priced in a recovery and pointed to a worse-than-expected drop in retail sales in June - a small rise had been forecast - suggesting consumers are still reluctant to spend.
China retail sales in June fell 1.8% year-on-year, falling short of market expectations of a 0.3% increase. The retail sector has taken on an increasingly significant role in China's economy as leaders look for consumers, rather than trade and investment, to drive growth.
"An overall positive morning for data - including a return to growth for China - didn't mean as much to the markets as yesterday's vaccine updates, meaning European markets started the session in the red on Thursday," said Spreadex analyst Connor Campbell.
On the London Stock Exchange, British Land was the best blue-chip performer, up 1.7% after Jefferies raised the property company to Buy from Hold.
Rolls-Royce was up 1.3% after Panmure Gordon raised the jet engine maker to Buy from Hold.
SSE was up 1.3% after the energy company committed to paying dividends to shareholders, even as many other companies refrain from payouts due to the coronavirus crisis.
The Perth, Scotland-based firm said its five-year dividend plan to financial 2023 remains unchanged, including a planned payout of 80 pence plus RPI for the current year, incorporating a 24.4p interim dividend to be declared in November.
At the other end of the large-cap index, GVC Holdings was the worst performer, down 5.3% after the sports betting company felt the effects of Covid-19, which saw its shops shuttered during the lockdown.
For the six months to June 30, net gaming revenue fell 11%, while online net gaming revenue was up 19% despite overall performance being hindered by the cancellation of sporting events due to coronavirus. UK retail like-for-like net gaming revenue was down 86%, having been heavily hit due to closures.
In addition, GVC Chief Executive Kenny Alexander announced his retirement after a 13-year stint with the company. He will be replaced by Chief Operating Officer Shay Segev from Friday.
"GVC's efforts may not be enough to move profits from red to black, but its model has shown the benefits of diversification throughout the pandemic. With the likes of Ladbrokes and Coral betting shops shuttered and no sporting events during lockdown, total net gaming revenues in the UK for the second quarter plunged by 86%, resulting in a decline of 50% for the half-year. There was a similar story in Europe, with enforced store closures all but wiping out revenue," commented Interactive Investor's Richard Hunter.
The pound was quoted at USD1.2545 Thursday morning, down from USD1.2604 at the London equities close Wednesday.
On the economic front, the UK jobless rate remained unchanged in the three months to June from the previous 3.9% in May, according to the Office for National Statistics.
The UK unemployment rate was unchanged in the three months to May, according to figures from the Office for National Statistics.
The UK unemployment rate in the three months to May was 3.9%, unchanged from 3.9% in the three months to April, the ONS said. Market consensus forecast, cited by FXStreet, was for a rise to 4.2%.
Average earnings including bonuses in May fell 0.3%, following a 1.0% increase in the three months to April. The reading was slightly better than market forecasts for a fall of 0.4%. In addition, average earnings excluding bonuses rose 0.7% in May, slowing from 1.7% growth in April. The figure also beat the consensus estimate for an 0.5% increase.
"Despite today's surprise, there is little doubt that the worst is yet to come for the labour market. The support from the government has delayed the impact of the crisis on the labour market, which will start showing through as the furlough scheme tapers. Rishi Sunak will be hoping that the tapering happens in conjunction with rising demand which could save the jobs market from any harsh blows," said City Index analyst Fiona Cincotta.
The euro was changing hands at USD1.1400, soft from USD1.1419, ahead of the European Central Bank's interest rate decision at 1245 BST.
The ECB meeting comes on the eve of a crunch EU summit in Brussels on Friday and Saturday where leaders will wrangle over a proposed EUR750 billion recovery fund to kickstart the bloc's battered economy.
Against the yen, the dollar was trading at JPY106.95, firm from JPY106.88, in London.
Brent oil was trading at USD43.37 Thursday morning, flat from USD43.42 a barrel late Wednesday. Gold was quoted at USD1,808.57 an ounce, flat from USD1,809.00 an ounce.
The Organization of the Petroleum Exporting Countries and Russia are set to start rolling back record supply cuts agreed earlier in 2020, the Financial Times reported on Wednesday.
The oil cartel and its allies are set to scale back the cuts of 9.7 million barrels a day that took effect in May to 7.7 million barrels from August, the newspaper reported citing OPEC delegates.
OPEC is expected to taper further to cuts of 5.8 million barrels a day between January 2021 and April 2022, according to the FT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
