London close: Travel stocks drag benchmark lower

London stocks closed well into the red on Thursday, as a downbeat outlook from the US Federal Reserve and concerns about a second wave of Covid-19 weighed on sentiment.

The FTSE 100 ended the session down 3.99% at 6,076.70, and the FTSE 250 was 3.59% weaker at 16,973.67.

Sterling was weaker against both of its major trading pairs, falling 0.89% against the dollar to $1.2634, and sliding 0.88% on the euro to €1.1107.

“Usually, at least for the last decade, a dovish Federal Reserve would help boost risk sentiment. But we are in different times and however accommodative monetary policy remains, the market needs a lot more, like a patient hooked on painkillers,” said Neil Wilson, chief market analyst at Markets.com.

“Whilst the Fed last night committed to keeping rates at zero all the way through 2022, stocks - excluding the Covid-immune tech sector - are selling off.

“The Fed’s extremely downbeat assessment of the US economy and jobs market, combined with expectations for a slow recovery, left risk assets looking very exposed after a big run up last week.”

The mood was also soured by concerns about a rise in new cases of the coronavirus in some US states.

“An increase in cases in Florida, Texas and California have caused some alarm that while economies elsewhere appear to be getting on top of the virus, there are some pockets in the US economy which may take a lot longer,” said CMC Markets analyst Michael Hewson.

In equity markets, travel stocks were under the cosh again, with cruise operator Carnival down 12.14%, British Airways parent IAG off 8.81%, InterContinental Hotels Group 6.66% weaker, and travel company TUI falling 8.57%.

“Once again we find the travel stocks at the forefront of the losses, with risks of another surge in coronavirus cases bringing huge possible implications for the bottom line if countries begin to restrict movement once again,” said IG’s Joshua Mahony.

“Hard-hit stocks such as Carnival, Rolls-Royce, IAG, and easyJet are all on the back foot as they continue to lead the decline of value stocks.”

Ocado was also on the back foot, retreating 5.5%, after the online supermarket retailer said it had successfully raised just over £1bn to exploit the rapid change in internet grocery shopping habits sparked by the coronavirus crisis.

Investors handed Ocado £657m through a placing and £350m via a debt issue of unsecured bonds due to mature in 2027.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said that while there were reasons to respect Ocado’s decision to come back cap in hand, there’s no ignoring that this latest fundraising effort is "a bit irksome".

"It was only December when Ocado last asked for money to help fund the deal with Marks & Spencer.

“It’s surprising to see such huge sums, and dilutive new shares, being needed so soon.

“Half-year results in July should offer a bit more insight in terms of how quickly Ocado is burning through its cash.”

Comparison website Moneysupermarket was 6.24% lower after it said forward guidance for 2020 remains suspended as it is still too early to gauge when and how the consumer and provider sides of its marketplace will be back to normal.

Specialty chemicals company Johnson Matthey was off 6.57% after saying it will cut around 2,500 jobs and halve its dividend as it takes a hit from the pandemic.

Just Eat Takeaway reversed earlier gains to close down 3.07%, after agreeing to buy US-based Grubhub for $7.3bn (£5.8bn) in an all-share deal to create the world's biggest online food delivery company outside China.

On the upside, Polymetal rose 2.19%, Fresnillo added 1.15%, Centamin gained 7.64% and Hochschild Mining was 5.11% firmer, as gold prices rallied after the Fed comments.

Market Movers

FTSE 100 (UKX) 6,076.70 -3.99%
FTSE 250 (MCX) 16,973.67 -3.59%
techMARK (TASX) 3,675.76 -3.08%

FTSE 100 - Risers

Polymetal International (POLY) 1,536.00p 2.13%
Fresnillo (FRES) 776.20p 1.15%
London Stock Exchange Group (LSE) 8,094.00p 0.35%
Tesco (TSCO) 227.70p 0.31%
Rentokil Initial (RTO) 489.30p 0.23%
SEGRO (SGRO) 853.20p -0.16%
Flutter Entertainment (FLTR) 10,840.00p -0.41%
Reckitt Benckiser Group (RB.) 6,948.00p -0.43%
Unilever (ULVR) 4,336.00p -0.96%
Morrison (Wm) Supermarkets (MRW) 185.30p -1.25%

FTSE 100 - Fallers

Carnival (CCL) 1,190.00p -12.14%
Melrose Industries (MRO) 111.15p -10.22%
ITV (ITV) 76.00p -9.22%
Rolls-Royce Holdings (RR.) 321.60p -8.97%
Informa (INF) 444.30p -8.82%
International Consolidated Airlines Group SA (CDI) (IAG) 262.90p -8.81%
Royal Bank of Scotland Group (RBS) 117.50p -8.74%
Lloyds Banking Group (LLOY) 32.05p -8.50%
Standard Chartered (STAN) 414.00p -8.00%
Whitbread (WTB) 2,303.00p -7.92%

FTSE 250 - Risers

Centamin (DI) (CEY) 167.40p 7.38%
Hochschild Mining (HOC) 199.00p 4.46%
Plus500 Ltd (DI) (PLUS) 1,212.50p 4.30%
Petropavlovsk (POG) 27.80p 2.02%
NextEnergy Solar Fund Limited Red (NESF) 105.00p 1.35%
International Public Partnerships Ltd. (INPP) 165.00p 0.98%
Primary Health Properties (PHP) 149.40p 0.95%
Foresight Solar Fund Limited (FSFL) 111.00p 0.91%
Oxford Instruments (OXIG) 1,400.00p 0.86%
Softcat (SCT) 1,053.00p 0.77%

FTSE 250 - Fallers

Cineworld Group (CINE) 72.74p -17.06%
Aston Martin Lagonda Global Holdings (AML) 65.50p -15.16%
Senior (SNR) 77.45p -11.49%
Synthomer (SYNT) 274.60p -11.08%
Wood Group (John) (WG.) 195.50p -10.57%
Helios Towers (HTWS) 184.00p -10.24%
Virgin Money UK (VMUK) 96.84p -10.21%
Mitchells & Butlers (MAB) 201.00p -10.07%
Marston's (MARS) 64.05p -10.05%
FirstGroup (FGP) 53.15p -9.92%