London close: Stocks finish red amid dire manufacturing data

London stocks closed well into the red on Friday, after US President Donald Trump threatened China with new tariffs in retaliation for the coronavirus pandemic, while investors digested dire UK manufacturing data.

The FTSE 100 ended the session down 2.34% 15 5,763.06 and the FTSE 250 was off 1.86% at 16,148.34, while most European markets were closed for May Day.

Sterling was weaker against both of its major trading pairs, falling 0.62% on the dollar to $1.2516, and sliding 1% against the euro to €1.1382.

Sentiment was undermined by uninspiring updates from Apple and Amazon overnight, as Apple’s fiscal second-quarter sales and profit beat expectations, although the iPhone maker said it was unable to issue guidance for the coming quarter due to a lack of visibility.

Amazon, meanwhile, warned that coronavirus costs could lead to an operating loss in the second quarter.

The mood was also dented after US president Trump said he’d seen evidence that Covid-19 originated in a Chinese lab, and threatened further tariffs on Beijing.

“Phase one of the US-China trade deal was signed in January, after much to-ing and fro-ing, to say the least,” said CMC Markets analyst David Madden.

“It is possible we could be in for another prolonged period of tough tariff talk.

“Some people might think this is just a ploy by Mr Trump to make himself look good ahead of the Presidential election, but either way it has prompted traders to trim their exposure to stocks.”

On home shores, the latest manufacturing figures added to the downbeat tone.

The IHS Markit/CIPS manufacturing purchasing managers’ index fell to a record low of 32.6 in April from 47.8 in March, coming below the flash reading of 32.9 and consensus expectations of 32.8, as the virus outbreak and efforts to slow its spread took their toll.

Manufacturing production, new orders and employment all contracted at the fastest rates in the survey’s 28-year history, while vendor lead times lengthened to the greatest extent so far.

The survey found that the pandemic dented demand from overseas, leading to a series-record drop in new export business.

“Huge swathes of industry were hit hard by company closures, weak global demand, lockdowns and social distancing measures in response to Covid-19,” said Rob Dobson, director at IHS Markit.

“The only pockets of growth were seen at firms making medical and food products.”

Dobson said supply-chains also felt the full force of the outbreak, as average supplier delays rose to the greatest extent seen since PMI records began.

“International goods flows were constrained by delays in air freight, shipping and border control issues, and staff shortages often limited production.”

On the corporate front, Shell was under pressure for the second day running, falling 6.72% after slashing its dividend on Thursday for the first time in 80 years.

Its shares were also hit by a downgrade to ‘hold’ from ‘buy’ at Berenberg.

British Airways owner International Airlines Group flew 3.11% lower as it said its Iberia and Vueling airlines had agreed to borrow just over €1bn (£880m) from banks with backing from the Spanish government to support them during the Covid-19 crisis.

It also emerged late on Thursday that its BA operation may not return to London Gatwick Airport - where it primarily serves leisure destinations - following the pandemic.

Lloyds Bank was down 1.72% as it said chief operating officer Juan Colombás has agreed to delay his retirement to help the bank deal with the fallout of the coronavirus crisis.

Going the other way, Royal Bank of Scotland rose 2.44% even after it said that first-quarter profit almost halved as the state-backed lender set aside £802m for bad debts fuelled by the Covid-19 crisis.

Operating profit before tax for the three months to the end of March fell to £519m from £1.01bn a year earlier, while revenue rose to £3.16bn from £3.03bn.

Housebuilder Barratt Developments ticked up 2.27% after saying it would resume housebuilding on half its sites on May 11, but those in Scotland would remain shut for the time being.

Market Movers

FTSE 100 (UKX) 5,763.06 -2.34%
FTSE 250 (MCX) 16,148.34 -1.86%
techMARK (TASX) 3,496.92 -2.24%

FTSE 100 - Risers

Royal Bank of Scotland Group (RBS) 113.25p 2.44%
Informa (INF) 449.80p 2.41%
Flutter Entertainment (FLTR) 10,000.00p 2.36%
Barratt Developments (BDEV) 530.80p 2.27%
Taylor Wimpey (TW.) 149.40p 1.60%
Next (NXT) 4,762.00p 0.76%
United Utilities Group (UU.) 908.80p 0.73%
Ocado Group (OCDO) 1,615.00p 0.65%
Diageo (DGE) 2,765.50p 0.56%
Tesco (TSCO) 236.30p 0.51%

FTSE 100 - Fallers

Carnival (CCL) 1,003.50p -8.44%
Royal Dutch Shell 'A' (RDSA) 1,231.60p -7.05%
Royal Dutch Shell 'B' (RDSB) 1,200.00p -6.72%
Meggitt (MGGT) 262.80p -5.91%
easyJet (EZJ) 568.00p -5.84%
Prudential (PRU) 1,063.00p -5.80%
3i Group (III) 742.20p -5.33%
Rolls-Royce Holdings (RR.) 313.10p -5.12%
Hikma Pharmaceuticals (HIK) 2,251.00p -5.02%
Glencore (GLEN) 138.56p -4.98%

FTSE 250 - Risers

Hilton Food Group (HFG) 1,210.00p 8.39%
McCarthy & Stone (MCS) 73.80p 4.24%
PayPoint (PAY) 685.00p 3.63%
Airtel Africa (AAF) 41.45p 3.23%
Forterra (FORT) 248.00p 2.90%
Petrofac Ltd. (PFC) 202.40p 2.79%
Bellway (BWY) 2,711.00p 2.14%
The Renewables Infrastructure Group Limited (TRIG) 125.60p 1.95%
Redrow (RDW) 469.40p 1.78%
Helios Towers (HTWS) 127.40p 1.76%

FTSE 250 - Fallers

BMO Commercial Property Trust Limited (BCPT) 66.50p -12.84%
Cineworld Group (CINE) 60.00p -10.20%
Signature Aviation (SIG) 176.95p -9.60%
Future (FUTR) 935.00p -9.40%
Senior (SNR) 59.75p -8.08%
Hammerson (HMSO) 65.00p -7.91%
Equiniti Group (EQN) 158.40p -7.70%
Petropavlovsk (POG) 24.10p -7.31%
Premier Oil (PMO) 30.28p -7.20%
Micro Focus International (MCRO) 448.60p -6.87%