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(Alliance News) -Â London stocks remained in negative territory by midday on Thursday but off the session's lows, while the pound firmed as investors await measures to cushion the UK labour market from new government restrictions on activity meant to combat Covid-19.
The blue-chip FTSE 100 was down 24.07 points, or 0.4%, at 5,875.19 midday Thursday - in the red but off its morning lows, having traded more than 1% lower in opening dealings.
The FTSE 250 index was down 34.20 points, or 0.2%, at 16,958.79 by midday. The AIM All-Share index was down 0.7% at 942.55.
The Cboe UK 100 index was down 0.5% at 584.47. The Cboe 250 was down 0.1% at 14,377.98, and the Cboe Small Companies down 0.3% at 8943.57.
"The large losses that were registered in the US last night have damped the mood in Europe today," said David Madden, market analyst at CMC Markets.
In mainland Europe, the CAC 40 in Paris was down 0.1% and the DAX 30 in Frankfurt was up 0.2% Thursday afternoon. Germany's leading stock index was posting minor gains after figures from the Ifo showed business confidence reached 93.4 in September, improving from August's 92.5.
Wall Street is on course for a subdued start on Thursday, with the Dow Jones Industrial Average called down 0.1%, the S&P 500 down 0.2% and the Nasdaq Composite down 0.6%. This marks a steadying from Wednesday, when the Dow lost 1.9%, the S&P 500 tumbled 2.4% and the Nasdaq index shed 3.0%.
The dollar was mostly higher against major currency pairings on Thursday in a sign of the day's cautious mood, though the pound firmed ahead of new a UK government plan to protect jobs.
The euro traded at USD1.1645 on Thursday, lower than USD1.1685 late Wednesday. Against the yen, the dollar was quoted at JPY105.42, higher against JPY105.30.
Sterling was quoted at USD1.2765 Thursday, firm on USD1.2755 at the London equities close on Wednesday.
UK Chancellor of the Exchequer Rishi Sunak will outline his plans to protect jobs on Thursday as the opposition insisted more needed to be done to bolster the economy as the Covid-19 crisis intensifies.
Sunak will address the Commons at midday after cancelling this year's Budget.
With the furlough work scheme due to finish at the end of October, he will announce measures aimed at protecting millions of jobs in sectors hit by the latest government guidance on Covid-19.
As the number of new cases rose by more than 6,000, new restrictions on socialising came into force in England on Thursday, and the much-delayed coronavirus contact tracing app was finally launched.
Sunak's intervention comes after increasing pressure from business groups, MPs and unions to extend the furlough scheme. Number 11 said work on the scheme had been taking place in parallel with Budget preparations with a focus on jobs to avoid the expected three million unemployed.
CMC's Madden said: "There is speculation about reduced working hours to encourage employers to keep staff on. Wage subsidies have also been mentioned as a possible option. Persimmon, Taylor Wimpey and Barratt Developments are all bucking the wider negative trend possibly because traders are anticipating some sort of fiscal boost from Sunak."
Housebuilder Barratt Developments was the top performer in the FTSE 100 at midday, up 3.8%, while peer Persimmon rose 3.7% and Taylor Wimpey was up 2.5%.
At the bottom of the blue-chips was Smiths Group, sinking 7.9% after posting a lower interim profit.
The defence and medical technology firm said revenue from continuing operations for the year to July 31 was up 2% to GBP2.55 billion, though down 1% on an underlying basis. Pretax profit more than halved to GBP133 million, however, from GBP304 million the year before.
Smiths Group said profit was hit by lower volumes in the second half as well as additional costs to support business continuity, and the firm also took GBP31 million in restructuring costs and GBP24 million in write-downs.
Russ Mould, investment director at AJ Bell, commented: "The understandable lack of any earnings guidance for the 2021 financial year, emphasis on investment for the company's long-term future (which could weigh on short-term profits) and the absence of a firmer timetable for the delayed, and long-awaited, spin-off of the Medical division are all possible reasons for the share price slide."
Fresnillo shares fell 3.6%, as the gold miner continued to track the price of the precious metal lower.
Gold was quoted at USD1,854.60 an ounce on Thursday, lower than USD1,868.00 on Wednesday. The safe haven asset is down 5% since the start of the week.
"With the USD dollar re-establishing itself as the go-to safe harbour in stormy seas, gold is falling out of favour. If the stock market falls further, the highly leveraged gold positions could be the first to buckle again to cover broader drawdowns," commented AxiCorp's Stephen Innes.
Brent oil was trading at USD41.81 a barrel, declining from USD42.16 late Wednesday.
Back on the LSE, Pets at Home shares shot up 22% after lifting its profit outlook.
At the end of July, Pets at Home said sales momentum had returned to all areas of its business in the last eight weeks of the first quarter ended July 16, as customer shipping habits returned to normal and services were reinstated.
This momentum has remained within the group's Retail and Veterinary operations during the second quarter to date, with double digit like-for-like sales growth in the eight weeks ended September 10.
Despite Covid-19-related uncertainties, including the risk of a second UK national lockdown, Pets at Home expects underlying pretax profit for the year ending late March 2021 to be ahead of market expectations.
At the other end of the FTSE 250 index was Cineworld. Shares slumped 10% after the company reported swinging to a USD1.6 billion interim loss.
For the six months to the end of June, Cineworld posted a pretax loss of USD1.64 billion, compared to a profit of USD139.7 million the year before. Adjusted earnings before interest, taxes, depreciation and amortisation fell by 93% year-on-year to USD53.0 million from USD758.6 million.
This was on revenue that declined by 67% to USD712.4 million from USD2.15 billion, as admissions dropped by 65% to 47.5 million from 136.0 million. From late March to late June, all of Cineworld's sites were closed.
To date, 561 out of 778 sites have been reopened. Currently, the group has had a steady performance from reopened sites in Rest of World territories, as well as an admission build up in the UK and US from new releases such as Tenet and smaller, more local films.
To come in Thursday's economic calendar are weekly US initial jobless claims at 1330 BST.
By Lucy Heming;Â lucyheming@alliancenews.com
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