LONDON MARKET CLOSE: Stocks Fall As Virus Resurgence Fears Damp Mood

(Alliance News) - London stocks ended Tuesday's session lower as concerns began to gather again over a second wave of Covid-19 infections, with the virus situation worrying in the US and Australia's second largest city in lockdown.

"Second wave anxiety is putting a downer on the economic enthusiasm that accompanied the lifting of restrictions around the world," said Craig Erlam at Oanda.

The FTSE 100 index closed down 96.04 points, or 1.5%, at 6,189.90. The FTSE 250 ended down 199.99 points, or 1.1%, at 17,350.04, and the AIM All-Share closed down 7.69 points, or 0.9%, at 883.07.

The Cboe UK 100 ended down 1.5% at 617.13, the Cboe UK 250 closed down 1.0% at 14,775.48, and the Cboe Small Companies ended down 0.3% at 9,339.60.

The US is still "knee-deep" in its first wave of coronavirus infections and must act immediately to tackle the recent surge, the country's top infectious diseases expert said Monday.

Anthony Fauci said the number of cases had never reached a satisfactory baseline before the current resurgence, which officials have warned risks overwhelming hospitals in the country's south and west.

The death toll from the virus in the US hit 130,000 Monday, according to a tally by Johns Hopkins University, and the number of infections is nearing three million. A worrying number of new cases were reported amid a resurgence that has forced several states to suspend phased economic reopenings.

Officials have warned that some of the country's hospitals are in danger of being overwhelmed by the influx of Covid-19 patients. Hospital beds are full in parts of Texas, while calls for fresh stay-at-home orders are growing.

And in Australia, more than five million residents of Melbourne will be locked down for six weeks after coronavirus cases surged in the country's second-biggest city.

State Premier Daniel Andrews said the lockdown would begin at midnight Wednesday and last at least six weeks, as he warned residents "we can't pretend" the coronavirus crisis is over.

Positively, though, Beijing on Tuesday reported zero new coronavirus cases for the first time since the emergence of a cluster in the Chinese capital in June that prompted fears of a domestic second wave. Beijing's health commission said on Tuesday it detected only one asymptomatic case the previous day, which China does not include in its confirmed cases counts.

Stocks in New York were mixed at the London equities close, with the DJIA down 0.7%, the S&P 500 index flat, and the Nasdaq Composite up 0.6%.

In European equities on Tuesday, the CAC 40 in Paris ended down 0.7%, while the DAX 30 in Frankfurt ended down 0.9%.

The European Commission has warned the effects of the coronavirus pandemic on the EU's economy will be even more devastating than initially thought.

In the 19 euro area countries, gross domestic product should contract by 8.7% this year, according to the calculations of EU economic experts, significantly deeper than the 7.7% decline predicted in May. For the whole 27-country EU, a downturn of 8.3% is expected in 2020.

The eurozone can anticipate a return to GDP growth at 6.1% next year, while the whole EU should see a rebound of 5.8%.

The euro stood at USD1.1297 at the European equities close Tuesday, down against USD1.1312 at the same time on Monday.

The pound edged up to USD1.2586 at the London equities close Tuesday from USD1.2492 at the close on Monday ahead of the UK chancellor's mini budget.

Homeowners will receive GBP2 billion in financial incentives to insulate their homes as part of an economic recovery scheme set to be announced by the chancellor. The funding is part of an expected GBP3 billion green package Rishi Sunak will unveil on Wednesday to create jobs, upgrade buildings and protect the environment as part of efforts to rebuild the economy after Covid-19.

The scheme will also include a GBP1 billion programme to transform schools, hospitals and other public buildings so they are greener and more energy efficient.

Against the yen, the dollar was trading at JPY107.52 compared to JPY107.49 late Monday.

Brent oil was soft, quoted at USD43.26 a barrel at the London equities close Tuesday from USD43.43 late Monday. Gold surged to USD1,793.61 an ounce at the London equities close Tuesday against USD1,784.81 at the close on Monday.

At the bottom of the FTSE 100 on Tuesday was Whitbread, ending down 5.5% as it reported a serious blow to first quarter sales from Covid-19.

The company, which owns the Premier Inn hotel chain, said 24 of its UK restaurants and more than 270 of its UK hotels are open again after the Covid-19 lockdown with the majority of the rest reopening in July. All 19 of its German hotels are open again.

However, as expected given that lockdown restrictions forced almost all of Whitbread's estate to close from the end of March, sales fell sharply in the 13 weeks ended May 28.

UK like-for-like sales dropped 80%, including an 81% drop in Food & beverage sales and 79% fall in Accommodation sales. Total UK sales were also down 80% with a 79% Accommodation drop and 80% decline for Food & beverage.

FTSE 250-listed Micro Focus International slumped 20% as its loss widened substantially in the first half of its financial year following a USD922 million impairment charge on Covid-19 compared to no such charge the year before.

The Berkshire-headquartered software and consultancy company posted a USD1.04 billion pretax loss for the six months ended April 30, hugely widened from a loss of only USD99.6 million the year before.

This resulted from exceptional USD922.2 million goodwill impairment charge "attributable to the increased economic uncertainty as a result of Covid-19, which has led to an increase in the pre-tax discount rate and expected disruption to new sales activity and timing pressure on renewals." No such charge was seen in financial 2019.

Polypipe ended down 6.7% amid plans to cut 250 jobs - or 8% of its workforce - as its forecast predicts demand in the construction industry will be significantly hurt throughout 2021.

The company - which makes plastic piping systems for plumbing, drainage, heating and ventilation - said forecasts from the Construction Products Association show that residential new build demand in 2021 is likely to be 20% lower than 2019 levels, Housing RMI 15% lower than 2019 levels, and commercial demand 18% lower than 2019 levels, even with recovery in the second half of 2021.

Turning to current trading, Polypipe said its has seen an improvement in its revenue, with income from June 30% below 2019 levels compared to a 66% decline recorded in April. Overall, revenue for the six months to June 30 was 24% lower year-on-year.

Plus500 added 3.3%. The contracts for difference trader said it has appointed Interim Chief Executive David Zruia to the post on a permanent basis, and added that it has experienced a sharp rise in revenue for the six months to June 30.

Zruia has been interim CEO since mid-April, and joined Plus500 in 2010 and was later appointed chief operating officer in 2013.

Turning to trading, Plus500 said it has onboarded a record number of new customers in the first half. Plus500 added 198,176 new customers in the first half, compared to 47,540 the year before.

As a result, Plus500 said its revenue is expected around USD564.2 million, significantly higher than the USD148.0 million reported the year before. The company said its second quarter revenue was about USD247.6 million versus USD94.1 million the year before.

Plus500 saw a record interim customer income, the company said, of about USD556.9 million - up sharply from USD175.0 million the year before.

boohoo fell a further 12% after Monday's 23% slump. The online fashion retailer on Monday distanced itself from a purported supplier after an undercover reporter from the Sunday Times newspaper observed working practices at a Leicester factory which violated government-required social distancing measures and minimum wage requirements.

In the corporate calendar for Wednesday are full-year results from transport operator FirstGroup and online estate agent Purplebricks. Housebuilder Barratt Developments puts out a trading statement.

By Lucy Heming; lucyheming@alliancenews.com

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