(Alliance News) - Stock prices in London opened sharply lower with oil majors weighing on the FTSE 100, after BP reawakened fears of weaker demand for energy in the wake of the coronavirus crisis.
Investor sentiment was dealt a further blow as 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. The move came as more than a dozen US states, including populous Texas and Florida, reported their highest-ever daily case totals, while Rome has also seen a fresh spike.
The FTSE 100 index was down 119.16 points, or 2.0%, at 5,986.02.
The mid-cap FTSE 250 index was down 275.75 points, or 1.6%, at 16,801.59. The AIM All-Share index was down 6.14 points, or 0.7%, at 860.85.
The Cboe UK 100 index was down 1.8% at 10,126.43. The Cboe 250 was down 1.6% at 14,452.10, and the Cboe Small Companies was down 0.5% at 9,643.59.
In mainland Europe, the CAC 40 in Paris was down 2.4% while the DAX 30 in Frankfurt was down 2.3%.
In the FTSE 100, Bunzl was the only stock to open in the green, up 5.0%, after the distribution and logistics firm said it expects to report higher revenue for the first half of 2020, 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.
At the other end of the large-cap index, BP was down 4.4% 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.
Peer Royal Dutch Shell 'A' and 'B' shares were down 2.5% and 2.4%, respectively, in a negative read-across.
Brent was quoted at USD37.44 a barrel Monday morning, down from USD38.44 late Friday, having traded at around the USD55 mark before prices collapsed in March.
BP has revised its long-term price assumptions, lowering them and extending the period covered to 2050 so that it is now consistent with its long-term target of becoming a net-zero company by 2050.
BP said this will lead to non-cash impairment charges and write-offs in the second quarter ending June 30, estimated to be in an aggregate range of USD13.0 billion to USD17.5 billion post-tax.
In addition, BP has revised investment appraisal long-term price assumptions which are now an average of around USD55 a barrel for Brent and USD2.90 per one million British thermal units of Henry Hub gas from 2021 to 2050.
China-exposed luxury goods retailer Burberry Group was down 2.5%. Data showed China retail sales improved further after collapsing at the start of the year, but officials warned the country faced a rocky recovery as it emerges from the coronavirus crisis.
Retail sales remained in negative territory, shrinking 2.8% in May, and while it was also worse than the expected 2% fall estimated, it was much better than the 7.5% contraction suffered in April.
Consumer spending is increasingly crucial for the Chinese economy as leaders look to transition it from one driven by investment and exports, and has taken on more importance with overseas markets battered by the virus. But sluggish spending indicates people are still anxious about returning to their normal lives.
Jiang Yuan, deputy director of the industry department at the NBS, noted Monday that the recovery of some industries and products weakened in May, adding that "the external environment is complex, and the stable operation of the industrial economy still faces many difficulties and uncertainties".
In the FTSE 250, Cineworld Group opened up the best performer, 5.0% higher, after the movie theatre operator on Friday terminated its takeover of Canada's Cineplex, agreed before the Covid-19 crisis took hold.
Cineworld said the CAD2.8 billion, about GBP1.6 billion, was dropped after "certain breaches" of the acquisition deal. The London-based firm did not outline the specifics of what parts of the transaction it believes Cineplex ran afoul of, but noted that Cineplex has denied any such breaches.
The Japanese Nikkei 225 index ended down 3.5%. In China, the Shanghai Composite ended down 1.1%, while the Hang Seng index in Hong Kong is down 1.8%.
The pound was quoted at USD1.2470 Monday morning, down from USD1.2527 at the London equities close Friday.
Thousands of non-essential shops across England are reopening their doors to customers for the first time in almost three months in the latest easing of the coronavirus lockdown rules.
With official figures showing the economy shrank by a fifth in April, ministers are desperate to get businesses going again to stave off another wave of job losses.
Chancellor of the Exchequer Rishi Sunak - who is reported to be considering a value-added tax cut to stimulate spending - acknowledged further redundancies were inevitable as the government's furlough scheme begins to unwind.
Ministers are under intense pressure from Conservative members of Parliament to go further by easing the two-metre social-distancing so the hard-pressed hospitality sector can also reopen. UK Prime Minister Boris Johnson confirmed at the weekend that he had ordered a "comprehensive" Downing Street review of the regulation.
Meanwhile, Johnson will meet EU chiefs by video link Monday to try to breathe new life into stalled post-Brexit trade talks, with both sides entrenched in long-held positions. The conference with European Commission President Ursula von der Leyen and European Council Chief Charles Michel will review progress in the talks on future EU-UK relations.
It is the first time Johnson has personally taken part in the talks which began in March, just weeks after Britain left the EU on January 31 after 47 years in the European project.
The euro was quoted at USD1.1237 early Monday in London, flat from USD1.1235 late Friday. Against the yen, the dollar was quoted at JPY107.12, lower from USD107.35
Gold was trading at USD1,725.72 an ounce, up from USD1,704.02.
The economic events calendar on Monday has eurozone trade data at 1000 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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