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(Alliance News) - Stocks in London ended a positive week on a sour note Friday, with further quarantine travel restrictions put in place by the UK government hitting travel stocks hard.
In London, the FTSE 100 index ended down 95.58 points, or 1.6%, at 6,090.04 Friday. Despite Friday's red session, the blue chip index gained 0.5% this week.
The mid-cap FTSE 250 index was off 188.97 points, or 1.1%, at 17,735.62. The AIM All-Share index gave back 0.9% at 948.14.
The Cboe UK 100 index closed down 1.7% at 606.74. The Cboe 250 ended down 1.2% at 15,173.13, and the Cboe Small Companies closed down 0.2% at 9,6098.92.
SpreadEx's Connor Campbell said Friday was a "nasty" session in Europe.
He said: "There were numerous reasons why investors were feeling a bit angsty this Friday. Covid-19 has lurched back into the spotlight - it sounds silly that a global pandemic could not be the focus for a few sessions, but hey, that's how the markets work - sparking a wave of worry about the cost of the crisis."
Campbell noted markets were able to shrug off - an albeit expected - drastic GDP fall in the UK earlier this week, but overnight data from China of worse than forecast retail sales "posed more of a problem for traders".
Retail sales - a key indication of consumer sentiment - shrank by 1.1% on-year in July, falling short of forecasts and suggesting many are still reticent about going out to spend time and money, even as China appears to have the virus largely under control. The latest data follows a drop of 1.8% on-year for retail sales in June.
AJ Bell investment director Russ Mould added: "China was first in to the coronavirus crisis and arguably one of the first to come out of its first phase, so the fragile nature of its recovery offers an uncomfortable view of the future for other countries."
The negativity from China's retail sales data was compounded by a retail sales miss out of the US.
On a monthly basis, US retail sales rose 1.2% in July, easing from an upwardly revised 8.4 % growth in June. The figure missed market expectations, cited by FXStreet for a 1.9% increase.
Coronavirus infections continue to rage across the US, forcing state authorities to either shut down businesses again or pause reopenings.
Campbell commented: "The real issue in Europe, however, was the latest quarantine decision from the UK government, removing France, like Spain, from its travel corridor. And with reports Macron could do the same in retaliation, investors received an unwelcome reminder that countries may have ran before they could walk with things like holidays."
In London, International Consolidated Airlines Group lost 4.5% - the worst performer in the blue chip index. Shares in the British Airways parent were lower after the UK added France to its 14-day quarantine list.
People arriving in the UK after 0400 BST on Saturday will be required to spend 14 days in self-isolation due to rising numbers of coronavirus cases in France. The conditions also will apply to travellers returning to the UK from the Netherlands, Monaco, Malta, Turks & Caicos and Aruba.
The move, which applies throughout the UK, comes after Prime Minister Boris Johnson promised to be "absolutely ruthless" in decisions about imposing quarantine restrictions on countries.
The problem for airlines is that people's desire for a break in the sun may be outweighed by their fear of the logistical challenges of holing up for two weeks when they get back home, with decisions on which countries to add to the quarantine list often coming at short notice.
"If European governments were hoping to salvage something tangible from the 2020 summer holiday season these recent setbacks are unlikely to help, and with the days getting shorter, the window for buying time for the finances of countries like Spain, Italy and Greece is starting to close," CMC Markets Chief Market Analyst Michael Hewson said.
Irish budget carrier Ryanair Holdings lost 3.2%. UK peer easyJet gave back 7.0%. Dart Group, which owns the Jet2 airline, was shed 8.5%. Anglo-German holiday operator TUI lost 8.4%.
Hewson added: "Other shares linked to the aviation and travel sector were also sliding, with BP and Royal Dutch Shell under pressure over lower demand expectations, along with Rolls Royce, which has slipped back as well."
Shell 'A' shares gave back 2.6%, while the 'B' shares lost 2.5%. BP gave back 2.8% and Rolls-Royce lost 4.0%.
Stocks in mainland Europe weren't faring much better. The CAC 40 index in Paris lost 1.6%, while the DAX 30 in Frankfurt ended down 0.7%.
The eurozone economy crashed 12% in the second quarter of 2020, according to figures from Eurostat on Friday.
This quarter-on-quarter decline was the worst reading since the series started in 1995. In the first three months of the year, gross domestic product fell 3.6% sequentially.
Year-on-year, the eurozone economy shrank 15% in the three months to June, again the sharpest decline seen since 1995 and a deterioration from the 3.1% fall posted for the first quarter. Two quarters in a row of contraction mean the eurozone economy has entered into recession.
Back in London, Greencore shed 6.4% after it confirmed there has been an outbreak of coronavirus at a company facility around Northampton.
The convenience foods manufacturer said a "significant number" of employees have tested positive for Covid-19 and are now self-isolating.
"We are liaising closely with PHE East Midlands, Northamptonshire County Council and Northampton Borough Council, who are fully supportive of the controls that we have on site. In each case we have immediately conducted contact tracing and instructed potentially affected colleagues to self-isolate," Greencore said.
Greencore supplies convenience foods to major UK supermarkets.
In happier news, Rank Group added 1.2%, ahead of UK casinos being allowed to reopen on Saturday.
Casinos, bowling alleys and casinos were on the list of UK businesses that will be allowed to welcome customers back for the first time on Saturday after months of lockdown.
Hollywood Bowl Group gained 16%, while Ten Entertainment Group ended up 2.0%.
Stocks in New York were searching for direction at the London equities close on Friday, with stimulus concerns and upcoming trade talks with China in focus. The DJIA was up 0.1%, the S&P 500 index was slightly higher, but the Nasdaq Composite was down 0.2%.
The pound was quoted at USD1.3104 at Friday's equities close in London, firm from USD1.3084 at the same time Thursday.
The euro was priced at USD1.1832, firm from USD1.1830. Against the yen, the dollar was quoted at JPY106.48 in London, lower from JPY106.90.
In commodities, Brent oil was trading at USD44.70 a barrel Friday, down from USD45.18 a barrel Thursday evening in London.
Gold was quoted at USD1,945.10 an ounce Friday evening, slightly lower from USD1,947.60 an ounce at the London equities close Thursday.
Over the weekend, headlines will be dominated by negotiators from the US and China, on Saturday, discussing the "phase one" trade deal signed earlier this year.
Washington and Beijing's January deal represented a partial truce in their months-long trade war, and obligated Beijing to import an additional USD200 billion in American products over two years, ranging from cars to machinery to oil to farm products.
But purchases of those goods have been lagging, while US President Donald Trump has stepped up rhetoric against China ahead of what's expected to be a tough fight for a second term in the November elections, raising questions about the deal's fate as well as the possibility of a second phase of the truce.
"The outcome of the trade talk will signal if both sides are willing to continue to keep the deal, which will signal whether the relationship will deteriorate further," said Iris Pang, chief economist for greater China at financial services giant ING.
Neither the US nor the Chinese government confirmed the talks to AFP but the deal mandates meetings every six months after it takes effect, which would be Saturday.
In a relatively quiet economic calendar next week, Monday sees a second quarter GDP print from Japan, with the company's industrial production following in the morning.
Wednesday's focus will be on UK consumer and producer price index prints, with eurozone consumer prices to follow. In the evening, minutes from the US Federal Reserve's latest Open Market Committee meeting will be published.
On Friday, the excitement returns with a slew of flash PMIs, with France, Germany, the eurozone and the UK going in the morning followed by the US in the afternoon.
Monday's corporate calendar in the UK, food producer Cranswick will issue first quarter results and gene editing firm Horizon Discovery Group will publish half-year results.
By Paul McGowan; paulmcgowan@alliancenews.com
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