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(Alliance News) - News of a Covid-19 outbreak in Beijing ensured London stocks traded in the red on Monday as fears of a second wave of global infection resurfaced, highlighting how difficult the path to lifting lockdowns in Europe will be.
Weighing on London's FTSE 100 index was BP as it revealed it expects to take USD17.5 billion in exceptional charges due to the recent oil price crash and weak demand.
The FTSE 100 index was down 65.53 points, or 1.1%, at 6,039.65. The FTSE 250 was down 62.26 points, or 0.4%, at 17,015.08, and the AIM All-Share was down 0.8% at 860.51.
The Cboe UK 100 was down 0.9% at 10,223.47, the Cboe UK 250 was down 0.4% at 14,628.18, and the Cboe Small Companies down 0.6% at 9,626.34.
In European equities on Monday, the CAC 40 in Paris was down 0.8, while the DAX 30 in Frankfurt was down 0.9%.
Stocks were dented after China reported its highest daily number of new coronavirus cases in months on Sunday, triggering fears of a second wave of infections as more European countries prepare to reopen their borders.
The shock resurgence in domestic infections has rattled China, where the disease emerged late last year but had largely been tamed through severe restrictions on movement that were later emulated across the globe.
Beijing has carried out mass testing after 36 of China's 57 new cases on Sunday were linked to a wholesale food market in the capital. The city has raced to quash the new outbreak, issuing travel warnings, closing the market, deploying paramilitary police and putting nearby housing estates under lockdown.
Craig Erlam, senior market analyst at Oanda, commented: "The numbers are still very low in the Chinese capital, but the risks are high which may explain the apprehension we're seeing in the markets this morning."
Adding to the concern, Italy is fighting new outbreaks of its own, Iran and India have reported worrying increases in deaths and infections, and the pandemic is gathering pace in Latin America.
In the US, more than a dozen states - including populous Texas and Florida - have in recent days reported their highest-ever daily case totals.
Wall Street is set for a downbeat start to the week. The Dow Jones is called down 2.1%, the S&P 500 down 1.8% and the Nasdaq down 1.5%.
In the latest data release to show how Covid-19 is hammering world trade, eurozone exports and imports slumped sharply in April.
Euro area exports fell 29% year-on-year to EUR136.6 billion, while imports tumbled 25% to EUR133.7 billion. As a result, the bloc recorded a EUR2.9 billion surplus with the rest of the world in April, just a fraction of the EUR15.5 billion surplus generated a year ago.
Intra-euro area trade fell 32% to EUR122.4 billion in April.
The euro was quoted at USD1.1251 on Monday in London, firm against USD1.1235 late Friday. The pound was quoted at USD1.2528 Monday midday, unchanged from USD1.2527 at the London equities close Friday.
Against the yen, the dollar was quoted at JPY107.34, flat on USD107.35
Gold edged up amid Monday's risk-off mood, quoted at USD1,709.45 an ounce at midday, up from USD1,704.02 late Friday.
Elsewhere in the commodities space, Brent oil was unchanged at USD38.44 on Monday.
BP shares were down 3.5% at midday after the oil major said it will record up to USD17.5 billion in exceptional charges for the second quarter of 2020 due to the recent oil price crash and weak demand.
Brent oil traded around the USD55 mark before prices collapsed in March.
The London-based oil major said it sees the prospect of the coronavirus pandemic having an enduring impact on the global economy, with the potential for weaker demand for energy for a "sustained period".
Further, BP believes there are growing expectations that the aftermath of the pandemic will accelerate the pace of transition to a lower-carbon economy and energy system, as countries seek to "build back better" so that their economies will be more resilient in the future.
Russ Mould, investment director at AJ Bell, commented: "Today's update from BP feels like it is softening shareholders up for a dividend cut when the company posts its second-quarter results at the beginning of August."
Peer Royal Dutch Shell was lower as well, with 'A' shares down 1.0% and 'B' shares down 1.2%.
Also in the red at midday in London were blue-chip airlines, with International Consolidated Airlines down 2.9% and easyJet down 2.5%. The travel stocks were lower as Covid-19 second wave fears grew.
"The declines seen in European airline stocks this morning serves to highlight the fear that a second coronavirus wave could scupper summer entirely, causing another bout of detrimental cancellations and refunds throughout the travel industry," said Joshua Mahony, senior market analyst at IG.
At the top of the FTSE 100 was Bunzl, up 7.8% after the distribution and services firm said it expects to report higher revenue for the first half of its financial year despite the ongoing Covid-19 pandemic.
The London-headquartered company is forecasting a 6% rise in revenue at actual and constant exchange rates for the six months ending June 30. Adjusting for the different number of trading days year-on-year, revenue is set to increase by around 5% at constant exchange rates due to a 2% rise in underlying revenue and a 3% contribution from recent acquisitions.
As a consequence of an altered product mix sold in the period, including an increase in the proportion of imported own-brand product, the overall interim operating margin is set "to be modestly higher" versus the prior year, Bunzl said.
FTSE 250-listed Cineworld was up 0.9% as it terminated its takeover of Canada's Cineplex.
Cineworld said the CAD2.8 billion, about GBP1.6 billion, deal was dropped after "certain breaches" of the acquisition deal. The takeover would have created North America's largest chain of movie theatres to better compete with AMC Entertainment.
But the coronavirus pandemic has closed theatres for months, and the continued appeal of cinemas is in doubt as major media companies are investing heavily in streaming services.
Toronto, Ontario-based Cineplex hit back on Friday saying it intends to commence legal proceedings promptly against Cineworld and seek damages for breach of contract.
By Lucy Heming; lucyheming@alliancenews.com
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