London open: Stocks fall but drinks maker Diageo bucks trend

London stocks fell in early trade on Thursday following heavy losses in Asia and on Wall Street, as worries about the Covid-19 pandemic and the vaccine rollout dented sentiment.

At 0900 GMT, the FTSE 100 was down 1.3% at 6,481.51.

Spreadex analyst Connor Campbell said: "In what could the first major post-Brexit row between the UK and EU, both sides are at odds over the distribution of the Oxford/AstraZeneca vaccine.

"A shortage of preparations in the European bloc has led to a public spat with Astra, including Brussels dismissing the company’s claim that the UK has first dibs on locally-produced doses. As for the UK government, it appears to have no interest in a compromise, with reports suggesting that only after 100 million doses have been manufactured for the British population will plants in Oxford and Staffordshire be open to supply other nations.

"The argument appears to have undermined confidence in not only the vaccine rollout itself, but the market optimism that came alongside its development."

Overnight, US stocks sank as Reddit retail investors continued to disrupt Wall Street.

CMC Markets analyst Michael Hewson said: "Large hedge fund short positions were getting liquidated, prompting margin calls, and the cashing out of more profitable positions to fund the losses being caused by the Reddit surge in the likes of heavily shorted stocks like GameStop as well as AMC Entertainment, owners of Odeon cinemas amongst others, which have seen huge gains, amidst big eye watering price swings.

"With large numbers of small investors swarming over heavily shorted stocks in what looked like a coordinated move, the frenzy raises all sorts of questions with respect to possible market manipulation."

In UK equity markets, Prudential slumped after announcing plans to separate its US business through a demerger and saying it is considering raising $2.5bn to $3bn in new equity.

The company said shares in Jackson would be distributed to Prudential shareholders after the demerger, which is expected in the second quarter of 2021.

Miners lost ground, with BHP, Glencore, Rio Tinto and Antofagasta all weaker.

EasyJet was also under the cosh after the budget airline said it expected to fly no more than 10% of 2019 capacity in the second quarter as tighter coronavirus restrictions triggered an 88% slump in revenue for the three months.

Paragon Banking Group and Victrex were in the red as their stock went ex-dividend.

On the upside, drinks company Diageo rallied after it increased its interim dividend as it reported first-half operating profit down 8.3% to £2.2bn.

Tate & Lyle was also on the rise after it hailed a "strong" third-quarter performance, with volume growth in each business and group revenue up 8% compared to the same period a year ago.

Market Movers

FTSE 100 (UKX) 6,481.51 -1.31%
FTSE 250 (MCX) 19,992.43 -1.41%
techMARK (TASX) 4,065.58 -1.40%

FTSE 100 - Risers

Diageo (DGE) 2,941.50p 3.10%
Sainsbury (J) (SBRY) 255.60p 1.07%
Tesco (TSCO) 246.80p 0.78%
Hikma Pharmaceuticals (HIK) 2,437.00p 0.29%
Reckitt Benckiser Group (RB.) 6,452.00p 0.28%
Anglo American (AAL) 2,359.00p 0.19%
British American Tobacco (BATS) 2,787.00p 0.13%
Avast (AVST) 489.00p 0.04%
RSA Insurance Group (RSA) 676.20p 0.03%
NATWEST GROUP PLC ORD 100P (NWG) 147.75p 0.00%

FTSE 100 - Fallers

Prudential (PRU) 1,275.00p -4.92%
Scottish Mortgage Inv Trust (SMT) 1,227.00p -3.46%
Intermediate Capital Group (ICP) 1,635.00p -3.37%
Ashtead Group (AHT) 3,536.00p -3.12%
Pershing Square Holdings Ltd NPV (PSH) 2,420.00p -3.01%
Land Securities Group (LAND) 621.40p -2.74%
Smith & Nephew (SN.) 1,569.00p -2.73%
Barratt Developments (BDEV) 657.20p -2.64%
Lloyds Banking Group (LLOY) 32.38p -2.62%
Royal Dutch Shell 'B' (RDSB) 1,293.20p -2.59%

FTSE 250 - Risers

Tate & Lyle (TATE) 682.80p 3.30%
Petrofac Ltd. (PFC) 126.90p 2.88%
Cineworld Group (CINE) 82.36p 2.44%
Hammerson (HMSO) 23.28p 2.11%
Babcock International Group (BAB) 217.20p 1.50%
Man Group (EMG) 148.75p 0.98%
Apax Global Alpha Limited (APAX) 198.60p 0.91%
Hilton Food Group (HFG) 1,024.00p 0.59%
PZ Cussons (PZC) 241.00p 0.42%
NextEnergy Solar Fund Limited Red (NESF) 103.60p 0.39%

FTSE 250 - Fallers

Paragon Banking Group (PAG) 447.40p -6.17%
Pets at Home Group (PETS) 394.60p -5.37%
AO World (AO.) 285.50p -4.83%
Airtel Africa (AAF) 76.60p -4.25%
Sirius Real Estate Ltd. (SRE) 89.60p -3.76%
Aggreko (AGK) 582.00p -3.72%
Ferrexpo (FXPO) 275.00p -3.71%
Victrex plc (VCT) 2,322.00p -3.65%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 409.00p -3.42%
Rank Group (RNK) 122.00p -3.33%