London open: Stocks retreat amid Covid-19 second wave worries

London stocks fell in early trade on Thursday as investors fretted about a second wave of coronavirus infections, a UK recession and souring Sino-US relations.

At 0840 BST, the FTSE 100 was down 1.4% at 5,824.23.

Spreadex analyst Connor Campbell said: "It would seem that this week has been something of a wake-up call for the markets, the gradual optimism that had been building thanks to lockdown easing in more and more countries erased by the threat of a second wave of cases, repeated warning of a prolonged recession and freshly brewing tensions between the US and China.

"Europe took its cue from Wednesday evening’s stateside trading. By the end of the session the Dow Jones was down more than 500 points - that’s a near 1,000 point decline in the space of two days, forcing the index back below 23,250."

Sentiment took a hit after Federal Reserve Chair Jerome Powell appeared to take negative interest rates off the table, instead urging further fiscal stimulus - something that may be hard to come by given the fractious state of US politics at the moment, Campbell said.

He also highlighted tweets by Donald Trump, in which the US President said dealing with the US's rival superpower is "a very expensive thing to do" and that "100 trade deals" wouldn’t make up for the losses caused by the "Plague from China".

"The situation between the two nations is in danger of spiralling out of control - Trump’s comments came after a report in the Global Times stating Beijing is ‘extremely dissatisfied’ with America’s ‘abuse of litigation’ against China over the Covid-19 epidemic, and that the country is ‘mulling punitive countermeasures against US officials, entities and state officials’," said Campbell.

In equity markets, housebuilders were under pressure after the Royal Institution of Chartered Surveyors said house prices could take a year to get back to pre-coronavirus levels. Barratt Developments, Persimmon and Taylor Wimpey were all lower.

Persimmon retreated even as it said it would re-open sales offices in England on Friday as the UK government eased lockdown restrictions.

Stagecoach was under the cosh after a downgrade to ‘sell’ from ‘buy’ at Citi, which cut price targets across the peer group as it pointed to an expected shift in consumer preference away from public transport. National Express, Go-Ahead and FirstGroup were also sharply lower.

Housebuilder and regeneration partner Countryside Properties lost ground after it reported a fall in half-year profit and revenue as it pointed to lost completions and land sales in March due to the coronavirus pandemic.

On the upside, Hargreaves Lansdown was the top performer on the FTSE 100 after saying it was sticking with its dividend policy as the investment platform reported £4bn of net new business for the four months to the end of April.

Private equity giant 3i was also in the black as it reported a full year total return of £253m, down from £1.25bn as net asset value fell to a better-than-expected 804p a share from 815p. The company also committed to an annual dividend of 35p a share.

Elsewhere, Watches of Switzerland and Sirius Real Estate both rallied on well-received trading updates.

Market Movers

FTSE 100 (UKX) 5,824.23 -1.35%
FTSE 250 (MCX) 15,680.55 -1.24%
techMARK (TASX) 3,591.96 -1.22%

FTSE 100 - Risers

Hargreaves Lansdown (HL.) 1,726.50p 8.45%
3i Group (III) 777.40p 3.68%
Meggitt (MGGT) 232.50p 0.26%
M&G (MNG) 119.35p 0.08%
Standard Chartered (STAN) 390.10p 0.05%
Flutter Entertainment (FLTR) 9,890.00p -0.14%
HSBC Holdings (HSBA) 403.70p -0.22%
Ocado Group (OCDO) 2,094.00p -0.29%
London Stock Exchange Group (LSE) 8,014.00p -0.37%
Fresnillo (FRES) 691.00p -0.40%

FTSE 100 - Fallers

InterContinental Hotels Group (IHG) 3,006.00p -4.63%
Barratt Developments (BDEV) 460.00p -3.91%
Whitbread (WTB) 2,458.00p -3.72%
Persimmon (PSN) 2,074.00p -3.58%
Taylor Wimpey (TW.) 137.25p -3.28%
Evraz (EVR) 234.70p -3.26%
Barclays (BARC) 94.83p -3.24%
Smith & Nephew (SN.) 1,530.00p -3.20%
International Consolidated Airlines Group SA (CDI) (IAG) 168.40p -3.05%
Glencore (GLEN) 134.54p -2.83%

FTSE 250 - Risers

Watches of Switzerland Group (WOSG) 233.00p 5.67%
Bakkavor Group (BAKK) 69.80p 4.96%
Oxford Instruments (OXIG) 1,222.00p 3.91%
TR Property Inv Trust (TRY) 310.00p 3.33%
Sirius Real Estate Ltd. (SRE) 66.80p 2.45%
Contour Global (GLO) 163.80p 2.37%
Marks & Spencer Group (MKS) 87.96p 1.92%
BlackRock World Mining Trust (BRWM) 329.00p 1.23%
Finsbury Growth & Income Trust (FGT) 797.00p 1.01%
Personal Assets Trust (PNL) 43,700.00p 0.81%

FTSE 250 - Fallers

Stagecoach Group (SGC) 52.60p -10.70%
Rank Group (RNK) 120.40p -8.23%
Greencore Group (GNC) 156.00p -7.25%
Countryside Properties (CSP) 344.20p -6.82%
FirstGroup (FGP) 51.05p -5.90%
Go-Ahead Group (GOG) 1,085.00p -4.82%
Marston's (MARS) 28.60p -4.67%
Aston Martin Lagonda Global Holdings (AML) 30.50p -4.57%
Elementis (ELM) 58.50p -4.57%
National Express Group (NEX) 191.90p -4.34%