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(Alliance News) - Stock prices in London were deeply in the red at midday on Wednesday as investors prepare for tighter measures to control coronavirus to be imposed on the European continent's leading economies.
People in France and Germany were bracing Wednesday for tough new curbs on their daily lives as Europe struggled to contain an alarming surge in coronavirus cases with winter looming.
French President Emmanuel Macron is to address the nation on Wednesday evening to present new measures, with doctors warning that many hospitals are just days away from being overrun with patients.
France's main newspapers and several radio stations cited various unnamed sources saying Macron had become convinced of the need for a nationwide four-week lockdown, which would be voted on in parliament on Thursday.
German Chancellor Angela Merkel is also expected to push for tighter restrictions in crisis talks with regional leaders Wednesday.
The proposed measures include closing restaurants and bars and putting strict limits on private and public gatherings while keeping schools, daycares and shops open, according to the Bild daily.
UK Prime Minister Boris Johnson is under growing pressure to impose heightened coronavirus restrictions as the UK recorded its highest daily Covid-19 death toll since May.
As total deaths involving the virus reach 61,000 across the UK, Downing Street did not deny a projection provided by government scientists which suggested the toll could remain high throughout the winter and result in more fatalities than in the spring.
Meanwhile, GlaxoSmithKline reported third-quarter earnings at midday, saying it is urgently advancing possible Covid-19 solutions with its partners.
The FTSE 100 stock index was down 101.81 points, or 1.8%, to 5,627.18 at midday Wednesday. The FTSE 250 was down 258.57 points, or 1.5%, at 17,329.14. The AIM All-Share was 1.2% lower at 960.46.
The Cboe UK 100 was down 1.9% at 559.68. The Cboe 250 was down 2.1% at 14,546.56. The Cboe Small Companies was down 0.9% at 9,577.09.
In Paris the CAC 40 index was down 3.0%, while the DAX 30 in Frankfurt was down 3.3%.
"Equity markets were lower once again as lockdown fears gripped Europe amidst a worsening Covid spread that threatened to impair the continent's biggest economies. Hospitalizations in many of the region's biggest members are starting to hit levels not seen since the peak of the crisis in April and governments are clearly becoming concerned that they have lost control of the pandemic response and fearful that it could swamp the medical system if the spread is not halted," analysts at BK Asset Management said.
On the London Stock Exchange, Next was the best performer, up 4.1%, after the clothing and homewares retailer raised its annual profit guidance after a strong third-quarter performance.
Next said full-price sales in the third quarter were better than it had anticipated and were up 2.8% against the same time last year. Total sales, including markdown sales, were up 1.4%.
The retailer said sales performance by product category remains "very similar to the second quarter", with Home and Childrenswear over-performing while demand for men's and women's formal and occasion clothing remains weak. Further, Next said online sales remain strong, both in the UK and overseas.
Next's central forecast for annual pretax profit is GBP365 million, higher than the GBP300 million guided with its interim results in September. In financial 2020, Next posted pretax profit of GBP748.5 million.
"Next is very good at being a public company - its levels of transparency and its communication with the market are second to none, and it also has a handy knack of managing expectations. By under-promising it has been able to over-deliver, signalling that sales over the summer came in better than forecast," said AJ Bell's Russ Mould.
GlaxoSmithKline reported a 14% decline in pretax profit in the third quarter to GBP1.67 billion from GBP1.95 billion a year before, as sales declined by 8% to GBP8.65 billion.
"R&D delivery has continued with three product approvals since Q2 results and presentation of new clinical data to support the start of Phase III development for our very promising RSV vaccines," Glaxo said. "We are also urgently advancing possible Covid-19 solutions with our partners, including clinical trials for antibody therapy VIR-7831 and three different adjuvanted vaccines. We expect to see data on all of these before the end of the year."
Glaxo shares were down 0.3% in London at midday.
DCC was up 0.3% after RBC Capital raised the Irish support services firm to Outperform from Sector Perform.
At the other end of the large caps, Rolls-Royce was the worst performer, down 54% at 101.00 pence following the first day's admission to trading of 6.4 million new ordinary shares in relation to the 10-for-3 rights issue announced in early October.
In the FTSE 250, Kaz Minerals was the best performer up 9.5% at 625.00p. The miner agreed to a GBP3.0 billion takeover offer made by Nova Resources, which already holds a 39% stake in the company.
Nova Resources is a company owned by a consortium comprising Kaz Minerals Chair Oleg Novachuk and Non-Executive Director Vladimir Kim. Under the acquisition's terms, Nova will acquire Kaz Minerals for 640 pence per share, reflecting a 12% premium to the group's closing price of 570.8p on Tuesday.
The acquisition is conditional on gaining at least 75% in shareholder approval at both the court meeting and general meeting, which is expected to be held either in December or early January 2021. Kaz expects the deal to be completed in the first half of 2021.
So far Nova Resources has obtained irrevocable acceptances from around 29.0 million shares in Kaz, a further 6.1% of the company's shares, giving the bidders acceptances or ownership of 45% of the company.
At the other end of the midcaps, Ibstock was the worst performer, down 10%, after the clay brick maker said it expects to report a sharp fall in earnings for 2020.
In the three months to the end of September, the Leicestershire-based company noted a continued recovery in demand, with trading conditions improving on robust activity levels in the Repair, Maintenance & Improvement market. Revenue for the quarter was 88% of the figure from the same period the year before.
Despite the recovery in business in the third quarter, Ibstock said it expects adjusted earnings before interest, taxes, depreciation and amortisation for 2020 to be around GBP50 million, a 59% fall from GBP122 million the year before.
For the first half of 2020, Ibstock's adjusted Ebitda fell by 84% to GBP10 million, on revenue that declined by 36% to GBP131 million, due to a halt in UK construction activities.
The dollar was higher against major counterparts amid the risk-off mood in Europe, driven by a spike in Covid-19 infection rates and uncertainty over next week's US presidential election.
The pound was quoted at USD1.2972 on Wednesday at midday, down sharply from USD1.3067 at the London equities close Tuesday. The euro stood at USD1.1746, down sharply from USD1.1830.
Against the yen, however, the dollar was trading down at JPY104.24 from JPY104.43 on Tuesday.
"The euro is on the backfoot during early Wednesday trading, losing ground versus other major currencies, especially against the safe havens of the US dollar and Japanese yen. Risk aversion is the prevailing mood on the markets, as the second wave of the pandemic dominates headlines and reports point to the possibility of new national lockdowns in Germany and France, while on the other side of the Atlantic uncertainty over the outcome of next week's presidential election is also feeding into the risk-off sentiment," said analysts at activTrades.
Brent oil was quoted at USD39.51 a barrel Wednesday midday, sharply lower from USD41.20 at the London equities close Tuesday. Gold was quoted at USD1,892.42 an ounce, down against USD1,908.04.
US stock market futures were pointed sharply lower as coronavirus cases rise and as the election draws ever closer.
Nearly 70 million people had already voted in the US presidential election as of Tuesday, meaning voters have cast more than half of the total ballots counted in the 2016 election. According to data from the US Elections Project, some 69.5 million people have already used early voting options.
The Dow Jones Industrial Average was called down 1.8%, the S&P 500 down 1.4% and the Nasdaq Composite down 1.0%.
Ahead on Wednesday, the chief executives of platforms Google, Facebook and Twitter will testify before a Senate committee about their moderation practices.
The Senate Commerce Committee hearing will give lawmakers a chance to confront social media's most influential figures a week before the election and potentially set the stage for reform of the contentious Section 230 law.
Jack Dorsey of Twitter and Mark Zuckerberg of Facebook - summoned alongside Sundar Pichai of Google parent Alphabet - have said proposed reforms could lead to more harmful and abusive content online, and would limit rather than expand free expression.
Critics of Big Tech have claimed that because they have enormous power over information, they are virtual monopolies which should be regulated.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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