LONDON MARKET CLOSE: Stocks Stay Red As Covid Fear Dogs Investors

(Alliance News) - Stock prices in London finished Tuesday in the red as investors proved unable to fully shake off "entrenched" Covid-19 fears.

The FTSE 100 index closed 1.1%, or 63.02 points lower at 5,728.99. The FTSE 250 ended 1.5%, or 265.59 points, lower at 17,587.71, and the AIM All-Share closed 0.4%, or 3.85 points lower, at 972.53.

The Cboe UK 100 ended down 0.9% at 570.36, the Cboe 250 closed down 1.6% at 14,858.05, and the Cboe Small Companies ended 0.3% lower at 9,663.97.

"European stock markets sold off again as worries about the health crisis have become more entrenched. Yesterday was a brutal session for equities as the jump in Covid-19 cases in Europe and the US, plus tougher restrictions, hammered traders' confidence in the markets. Today, things started out on a relatively quiet note, especially for the FTSE 100, but the coronavirus fears resurfaced," said David Madden, market analyst at CMC Markets.

UK Prime Minister Boris Johnson is under pressure from scores of Conservative members of parliament to detail a "road-map out of lockdown" as more people in England come under the toughest coronavirus restrictions.

Johnson has been warned by a group of 50 Tory backbenchers representing northern constituencies that the pandemic is threatening his election pledge to "level-up" the country.

More than eight million people in England – predominantly in the North – will be under the most stringent Covid-19 restrictions by the end of the week, with Warrington the latest area to be placed in Tier 3.

UN agency's figures showed that 465,319 cases were declared on Saturday alone, half of them in Europe. Covid-19 has now claimed the lives of 1.1 million people and infected more than 42 million globally.

Company-wise, HSBC Holdings ended up 3.4% after it reported a sharp drop in third-quarter profit, but was "pleased" with significantly reducing its credit losses and is considering a "conservative" shareholder payout in 2020.

In the three months to September 30, the Asia-focused lender's pretax profit dropped 37% year-on-year to USD3.07 billion from USD4.84 billion.

Revenue fell 11% to USD11.93 billion from USD13.36 billion.

Looking ahead, HSBC expects lower global interest rates will continue to put pressure on its net interest income. Based on current interest rates, its expects further net interest income headwinds in the fourth quarter, with some stabilisation as it moves into 2021.

"The group's capital and liquidity ratios strengthened further in the quarter despite the challenging economic conditions. A decision on whether to pay a dividend for the 2020 financial year will depend on economic conditions in early 2021, and be subject to regulatory consultation. We will seek to pay a conservative dividend if circumstances allow," CEO Noel Quinn said.

BP reported a sharp year-on-year drop in third-quarter earnings but an improvement on the previous second quarter in the absence of exploration write-offs and recovering demand.

The London-based oil major said the gradual recovery in oil demand is set to continue; however, the shape and pace of recovery from the Covid-19 pandemic remains uncertain as it depends on the further spread of the virus.

Underlying replacement cost profit, the company's preferred measure, was USD86 million for the three months to September 30, compared with a loss of USD6.68 billion in the second quarter, and USD2.25 billion profit for the third quarter of 2019.

Total revenue for the third quarter amounted to USD44.20 billion, up from USD31.19 billion in the previous quarters, but down from USD69.29 billion a year ago.

BP declared a third-quarter dividend of 5.25 US cents, halved from 10.25 cents in the third quarter last year. Its shares closed 2.1% lower.

St James's Place reported a rise in closing funds under management for the third quarter of 2020; however net inflows were much lower year-on-year.

Shares in St James's place finished 0.5% lower.

As at September 30, the wealth manager had GBP118.70 billion in funds under management, 5.2% higher from GBP112.82 billion on the same date a year before. Over the first nine months of 2020, the figure reflected a 1.5% increase.

Gross inflows however dropped by 18% to GBP3.05 billion in the recent quarter from GBP3.74 billion in the prior-year quarter. As a result, net inflows dropped by 31% to GBP1.44 billion from GBP2.11 billion.

The total net investment return for the quarter was GBP1.58 billion, led by a GBP0.86 billion return for the Pension class and GBP0.41 billion for the Unit Trust, ISA & Discretionary Fund Management class.

Whitbread said it will focus on long-term returns following the expected slump in performance in the first half of its financial year due to closures in the hospitality sector brought on by Covid-19 restrictions.

Dunstable, England-based Whitbread swung to a pretax loss in the six months to August 27 of GBP724.7 million from a profit of GBP219.9 million in the prior year's six months to August 29. Revenue was down 77% to GBP250.8 million from GBP1.08 billion a year before.

The Premier Inn hotel chain owner said its performance in the first half was in-line with expectations and reflects the closure of the vast majority of its businesses during the lockdown period from the end of March.

Whitbread did not declare an interim dividend, down from 32.7 pence each a year prior. The company said it hopes to return to paying dividends again following the normalisation of the group's financial position and performance.

Its shares finished 2.0% lower.

In Paris the CAC 40 ended 1.8% lower, while the DAX 30 in Frankfurt closed down 0.9%.

The pound was quoted at USD1.3067 at the London equities close, up from USD1.3017 at the same time on Monday.

The euro stood at USD1.1830 at the European equities close, up from USD1.1818 a day before.

Against the yen, the dollar was trading at JPY104.43, down from JPY104.85 late Monday.

Stocks in New York were mixed at the London equities close. The DJIA was down 0.5% and the S&P 500 index was down 0.1%, while the Nasdaq Composite was up 0.5%.

US President Donald Trump hailed a "momentous day" on Monday, shortly after the Senate confirmed Amy Coney Barrett as a justice on the Supreme Court in a narrow 52-48 vote.

The confirmation gives the top court a six-to-three conservative majority and is a win for Trump, who nominated Barrett shortly after the death last month of former justice Ruth Bader Ginsburg, a liberal icon.

Republicans in the Senate moved swiftly to fill the vacancy before next week's presidential election.

Brent oil traded lower and was quoted at USD41.20 a barrel at the equities close from USD40.38 at the same time the prior day.

Gold was trading higher. The precious metal was quoted at USD1,908.04 an ounce at the London equities close against USD1,903.80 on Monday.

The economic calendar for Wednesday has a French consumer confidence survey read-out and housing starts at . Spanish retail sales are due GMT. Italian non-EU foreign trade is due at GMT, followed by Italian PPI at GMT. The Irish retail sales index print is scheduled for 1100 GMT.

Over in the US, the MBA weekly mortgage applications survey is due at GMT, then advance international trade in goods at GMT, before finally the EIA weekly petroleum status report at GMT.

Wednesday's corporate calendar, meanwhile, has FTSE 100 drug maker GlaxoSmithKline's third quarter results at midday. Elsewhere in the FTSE 100, retailer Next will release a trading statement.

In the FTSE 250, infrastructure investor John Laing Group and clay bricks and concrete products manufacturer Ibstock also put out trading statements on Wednesday.

Elsewhere, biotechnology-focused investor International Biotechnology Trust will post its annual results and chemicals company Itaconix will post half-year results.

By Anna Farley; annafarley@alliancenews.com

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