(Alliance News) - London stocks started Wednesday's session on a downbeat note after a warning from US infectious disease expert Anthony Fauci raised fears that an easing of Covid-19 lockdowns could lead to a second wave of infections.
Meanwhile, the pound inched higher despite figures showing the UK economy contracted by 5.8% in March.
The FTSE 100 index was down 61.30 points, or 1.0%, at 5,933.47 early Wednesday. The mid-cap FTSE 250 index was down 193.61 points, or 1.2%, at 15,979.43 and the AIM All-Share index was up 0.3% at 822.05.
The Cboe UK 100 index was down 1.1% at 10,034.86. The Cboe 250 was down 1.0% at 13,607.48, and the Cboe UK Small Companies down 0.2% at 8,938.29.
In mainland Europe, the CAC 40 in Paris was down 1.3%, while the DAX 30 in Frankfurt was down 1.5% early Wednesday.
"US equities slumped as panic regarding a second wave of coronavirus infection following the business reopening dashed the investor sentiment amid the US's top infectious disease expert Anthony Fauci warned that reopening the economy too early could have serious consequences," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"Over the past 48 hours, the investor sentiment made a sharp U-turn from excitement of business reopening to the anxiety that the things could go terribly wrong," Ozkardeskaya continued. "And this time, governments and central banks are left with limited ammunition to fight back an aggravated global health and economic crisis."
Anthony Fauci, the top infectious disease expert in the US, warned bluntly of "really serious" consequences of suffering, death and deeper economic damage if state and local officials lift stay-at-home orders too quickly, even as President Donald Trump pushes them to act to right a free-falling economy.
The US recorded 1,894 more coronavirus deaths, bringing the total to 82,246, according to a Johns Hopkins University tally on Tuesday.
Fauci's evidence before a Senate committee came as more than two dozen states have begun to lift their lockdowns as a first step toward economic recovery.
In New York on Tuesday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 1.9% and the S&P 500 and Nasdaq Composite both 2.1% lower.
In Asia on Wednesday, the Japanese Nikkei 225 index ended down 0.5%. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong is flat.
In the economic calendar on Wednesday, there is eurozone industrial production at 1000 BST, and US producer prices are at 1330 BST.
Already released, official data showed the UK economy shrank in the first three months of the year, led by a sharp fall in March.
UK gross domestic product fell 2.0% sequentially in the first quarter after a flat reading for the fourth quarter of 2019. Annually, first quarter GDP fell by 1.6%.
Though dire, the latest figures were better than expected by the market. Consensus, according to FXStreet, had seen a quarter-on-quarter decline of 2.5% and an annual fall of 2.1%.
In the month of March alone, the economy shrank by 5.8% month-on-month, having fallen 0.2% in February and advanced 0.1% in January.
Sterling edged up to USD1.2288 after the data, but remained lower than USD1.2310 at the London equities close on Tuesday.
"Admittedly the 2% quarterly decline is less severe than we saw in other parts of Europe, where lockdowns kicked in earlier in March, and in some cases measures were more stringent. However, there's little doubt that the worst is still to come. The second quarter is likely to see a decline in GDP in excess of 10%, and with the vast majority of lockdown measures likely to persist into June, the risk is that the damage is greater," said ING.
The euro traded at USD1.0844 early Wednesday, lower than USD1.0870 late Tuesday. Against the yen, the dollar was quoted at JPY107.08 versus JPY107.28.
Gold was quoted at USD1,703.40 an ounce early Wednesday, soft on USD1,707.15 on late Tuesday in London. Brent oil was trading at USD29.28 a barrel, down from USD29.80.
In London early Wednesday, Ferguson was the top blue-chip performer, up 2.5%. The plumbing and heating supplies firm said strong momentum in February and March was brought to a halt in April due to Covid-19.
Third-quarter revenue growth, from continuing operations, was 0.9%. This was due to combined growth of 7.3% in February and March, partially offset by a 11% slump in April.
"We have taken steps to manage our cost base and protect cash flow given the uncertain outlook both in the short-term during the crisis phase but also to ensure the business is appropriately sized for the post Covid-19 environment. We are confident these actions coupled with the strength of our balance sheet will serve us well in the coming months and years," said Chief Executive Kevin Murphy.
Taylor Wimpey was up 2.3% as the housebuilder said its sales rates have remained stable since its last update.
During the UK lockdown period, the housebuilder has sold 408 homes net of cancellations, averaging a net private sales rate of 0.30 homes per outlet per week. It will be reopening sales offices and show homes from May 22 for pre-booked appointments.
It expects to recall the majority of its sales staff from furlough by May 18 and most other staff by the end of the month.
In the FTSE 250, Aston Martin Lagonda Global Holdings was up 1.9% despite seeing its quarterly loss widen.
Andy Palmer, president & CEO, said Covid-19 and the resulting global economic shutdown had a "material impact" on the auto maker's performance in the quarter.
First-quarter wholesale volumes were down 45% year-on-year to 578 with revenue down 60% to GBP78.6 million. The luxury car maker's pretax loss widened to GBP118.9 million from GBP17.3 million.
The uncertainty surrounding the duration and impact of the Covid-19 pandemic makes it "not possible to provide a clear view on the full year outlook", the company said, and as a result Aston Martin has withdrawn its guidance for the year
"The company is proceeding on the assumption that trading remains challenging and is therefore implementing measures to take further actions on operating costs and focus on controlling cash," Aston Martin added.
By Lucy Heming; lucyheming@alliancenews.com
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Ferguson (FERG)
Taylor Wimpey (TW.)
Aston Martin Lagonda (AML)