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London open: Stocks edge lower as investors mull GDP

Tue, 30th Jun 2020 08:03

(Sharecast News) - London stocks edged lower in early trade on Tuesday as investors mulled a record decline in UK GDP, amid ongoing concerns about the coronavirus pandemic.
At 0840 BST, the FTSE 100 was 0.3% lower at 6,209.38, while sterling was down 0.2% against the dollar at 1.2269 after data from the Office for National Statistics showed the economy recorded its largest contraction in more than four decades in the first quarter of 2020, as consumers cut spending in the first few days of the Covid-19 lockdown.

Gross domestic product fell by a more-than-expected 2.2% in the largest fall since the third quarter of 1979. The ONS had previously estimated a 2% drop but revised its figure after data showed a record 6.9% plunge in March.

But with the data only showing nine days of the lockdown, the second quarter was expected to show the pandemic's full impact on the economy.

The Bank of England earlier this month warned the economy may have contracted by 20% in the first half of 2020.

EY ITEM Club chief economic adviser Howard Archer said it was "evident that the UK economy witnessed a record GDP contraction in the second quarter", forecasting a 17% slump quarter-on-quarter.

"The EY ITEM Club also expects the economy to return to clear growth in the third quarter with GDP expanding close to 10% quarter-on-quarter. This assumes a further gradual easing of lockdown restrictions across the UK," he said.

Meanwhile, worries about the impact of the coronavirus crisis continued to weigh on investors' minds as Leicester became the first city in England to be put under a local lockdown.

CMC Markets analyst Michael Hewson said: "The reality is that Covid-19 is here for the foreseeable future and while an increase in infections is not particularly desirable, as long as it doesn't translate into a higher fatality rate then the worst that can happen is likely to be localised lockdowns."

Looking ahead to the rest of the day, market participants will be eyeing a speech by Prime Minister Boris Johnson, who is set to announce a £5bn boost to infrastructure spending.

In equity markets, RELX and Kingfisher were among the worst performers after rating downgrades at Exane and Investec, respectively.

InterContinental Hotels was also in the red as it said revenue per available room fell 75% in the second quarter but that the trend was improving and 90% of its hotels were now open.

Shell was under pressure as it said it expects to take a $20bn - $27bn hit to second quarter pre-tax profits from impairments after revising its outlook for commodity prices and margin outlook amid the pandemic.

Housebuilder Redrow slid as it said annual profits would be "substantially" lower after scaling back its London operations and factoring in the impact of Covid-19.

Rotork was under the cosh after it said group order intake in the first half will be between 16% and 18% lower than the previous year's £362m on an organic constant currency basis, while revenue will be 11% to 13% lower on the year.

On the upside, Smiths Group rallied as it said it would cut jobs as part of a plan to reduce costs by £70m as the engineering company reported a slowdown in business because of Covid.

Standard Life Aberdeen was up after announcing that chief executive officer Keith Skeoch was stepping down, to be replaced by Stephen Bird, who was previously CEO of global consumer banking at Citigroup.

Cineworld also gained as it announced that the reopening of its UK and US cinemas will be delayed from 10 to 31 July "in line with recent adjustments to the schedule of upcoming movie releases".

Market Movers

FTSE 100 (UKX) 6,209.38 -0.26%
FTSE 250 (MCX) 17,196.55 -0.01%
techMARK (TASX) 3,730.76 0.08%

FTSE 100 - Risers

Smiths Group (SMIN) 1,365.00p 5.16%
Standard Life Aberdeen (SLA) 275.00p 3.42%
GVC Holdings (GVC) 763.80p 2.83%
Flutter Entertainment (FLTR) 10,980.00p 1.48%
Informa (INF) 470.50p 1.29%
Ferguson (FERG) 6,544.00p 1.21%
Melrose Industries (MRO) 117.95p 1.20%
Scottish Mortgage Inv Trust (SMT) 819.50p 1.17%
London Stock Exchange Group (LSE) 8,442.00p 0.96%
BHP Group (BHP) 1,664.40p 0.92%

FTSE 100 - Fallers

Relx plc (REL) 1,871.50p -1.68%
Kingfisher (KGF) 219.60p -1.57%
Standard Chartered (STAN) 432.70p -1.48%
Hikma Pharmaceuticals (HIK) 2,235.00p -1.46%
Rolls-Royce Holdings (RR.) 286.00p -1.24%
Royal Dutch Shell 'A' (RDSA) 1,323.20p -1.24%
SSE (SSE) 1,375.00p -1.22%
HSBC Holdings (HSBA) 380.20p -1.20%
Taylor Wimpey (TW.) 140.45p -1.06%
Royal Dutch Shell 'B' (RDSB) 1,257.60p -1.04%

FTSE 250 - Risers

Cineworld Group (CINE) 60.78p 6.04%
Carnival (CCL) 963.00p 4.79%
Spirent Communications (SPT) 240.00p 4.12%
William Hill (WMH) 122.15p 2.78%
Rathbone Brothers (RAT) 1,418.00p 2.16%
Syncona Limited NPV (SYNC) 244.50p 2.09%
Gamesys Group (GYS) 876.00p 1.98%
Aberforth Smaller Companies Trust (ASL) 941.00p 1.84%
Micro Focus International (MCRO) 435.90p 1.80%
PayPoint (PAY) 623.00p 1.80%

FTSE 250 - Fallers

Redrow (RDW) 431.20p -6.75%
Rotork (ROR) 274.20p -4.06%
Petropavlovsk (POG) 29.95p -3.39%
TI Fluid Systems (TIFS) 185.20p -3.34%
Oxford Instruments (OXIG) 1,392.00p -3.20%
Sirius Real Estate Ltd. (SRE) 72.00p -3.10%
XP Power Ltd. (DI) (XPP) 3,490.00p -2.51%
Vivo Energy (VVO) 81.10p -2.17%
Hammerson (HMSO) 84.34p -2.09%
AO World (AO.) 143.20p -2.05%

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