LONDON MARKET CLOSE: Stocks lower as virus cases surge in Europe

(Alliance News) - Stock prices in London ended in the red on Friday, as sentiment, already tetchy after US treasury yields hit 14-month highs late Thursday, was soured further by rising Covid-19 cases in Europe.

In addition, traders were wary after the US Federal Reserve said it would not extend the supplementary leverage ratio. The SLR allowed banks to hold less capital reserves, allowing them to inject the extra free cash back into the economy.

"Traders reacted by selling stocks as they took the view that if banks are more restricted in terms of capital requirements, that is likely to hold back the recovery somewhat," CMC Markets analyst David Madden noted.

The FTSE 100 index closed down 70.97 points, or 1.1%, at 6,708.71 and ended the week down 0.8%. The FTSE 250 ended down 148.25 points, or 0.7%, at 21,420.31, losing 0.4% this week.

The AIM All-Share fell 1.36 points, or 0.1% at 1,197.72, rising 0.5% over the week.

The Cboe UK 100 ended down 0.9% at 670.01, the Cboe UK 250 closed down 0.5% at 19,152.00, and the Cboe Small Companies lost 0.4% at 13,901.72.

The CAC 40 in Paris fell 1.1%, while the DAX 30 in Frankfurt lost 1.1%.

"The resurging coronavirus in Europe has led to concerns that economic recovery predictions might not come to fruition as fast as expected and seems to be contributing to a continued tug-of-war between stocks that would benefit from an economic reopening and those that stand to continue to thrive in a stay-at-home environment," TD Ameritrade Chief Market Strategist JJ Kinahan commented.

In London, some of the bigger winners during the Covid-19 pandemic ended higher on Friday. Online-only grocer and technology firm Ocado rose 2.1% and supermarket chain J Sainsbury rose 1.6%

At the other end of the large caps, travel stocks fell. Jet engine maker Rolls-Royce lost 4.9% and hotelier Whitbread fell 3.2%.

Mid-cap electrical goods seller AO World, and AIM-listed online retailer ASOS, beneficiaries from lockdowns, rose 3.5% and 1.7%, respectively.

Sanne Group ended top of the mid-caps, rising 9.8%. The fund administrator reported a leap in profit in 2020 thanks to increased demand for asset management services.

Pretax profit more than doubled to GBP20.5 million, from GBP9.6 million in 2019. Revenue increased 7.7% to GBP169.7 million from GBP157.5 million.

JD Wetherspoon fell 2.4%. The pub chain swung to an interim loss as pub closures due to tight UK restrictions continued to frustrate the company.

For the half year ended January 24, JD Wetherspoon swung to GBP61.4 million pretax loss from a GBP42.0 million profit the year before on revenue of GBP431.1 million, down 54% from GBP933.0 million.

JD Wetherspoon said it was not recommending interim dividend "in current circumstances", as the company complained bitterly about having to cope with Covid-19 rules with "no real basis in common sense or science".

"Less than half of the pubs in the Wetherspoons chain will be able to reopen in April; this is an empire that's been built to cater for city centre revellers and outdoor space is often limited," AJ Bell analyst Danni Hewson said.

Brent oil was quoted at USD64.07 a barrel at the London equities close on Friday, down from USD65.14 late Thursday.

A drone attack early Friday sparked a fire at an oil refinery in Saudi Arabia's capital Riyadh, the Saudi energy ministry said, in an assault claimed by Yemen's Huthi rebels.

"The Riyadh oil refinery was attacked by drones, resulting in a fire that has been brought under control," the ministry said in a statement, adding that no casualties were reported and oil supplies were not disrupted.

The rebels claimed to have targeted energy giant Saudi Arabian Oil Co, better known as Saudi Aramco, in Riyadh on Friday with six drones.

"A stronger dollar is weighing on oil prices, but it seems the brunt of the selling pressure due to crude demand concerns has now mostly been priced in. Europe looks like they could have another two months of staggered lockdowns," OANDA analyst Edward Moya noted.

France and Germany were set to resume AstraZeneca vaccinations on Friday after EU regulators gave the jab the all-clear. Spain, Italy, the Netherlands, Portugal, Lithuania, Latvia, Slovenia and Bulgaria also said they would resume vaccinations after the European Medicines Agency said on Thursday that the jab was "safe and effective".

Days of commotion around the Covid-19 jab associated with blood clot risks saw countries in Europe put their AstraZeneca programmes on pause.

Millions across France were preparing to enter a new month-long, limited lockdown from Saturday after the country recorded its highest new caseload in nearly four months. Non-essential businesses will close in Paris and other areas hit by the new restrictions.

Coronavirus infection numbers in Germany are rising at a "very clearly exponential rate" as highly contagious variants drive up case numbers in the EU's biggest country, health authorities said.

The pound was trading at USD1.3874 at the London equity market close on Friday, down from USD1.3949 on Thursday.

The euro fetched USD1.1901 at the European equities close on Friday, down from USD1.1935 on Thursday. Against the yen, the dollar was trading at JPY108.86, down from JPY108.95.

US tech stocks recovered on Friday, after being routed on Thursday as bond yields surged.

The tech-heavy Nasdaq Composite was up 0.8% at the time of the London equities close. The S&P 500 was 0.2% higher but the Dow Jones Industrial Average was 0.4% lower.

An ounce of gold fetched USD1,739.97 at the London equity market close on Friday, up from USD1,735.34 at the same time on Thursday.

Monday's economic calendar has eurozone current account data at 0900 GMT.

The local corporate calendar has annual results from Kingfisher and gold miner Centamin.

By Eric Cunha; ericcunha@alliancenews.com

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