London pre-open: Stocks seen lower amid second wave worries

London stocks were set to open lower on Wednesday amid worries about a second wave of coronavirus infections and as investors mull the latest UK GDP reading.

The FTSE 100 was called to open 52 points lower at 5,942.

CMC Markets analyst David Madden said: "Countries such as China, South Korea and Germany have eased up on lockdown restrictions, which was seen as progress, but sadly the countries have seen an increase in the rate of new Covid-19 cases. The rate of new infections hasn’t been huge, but it has been enough raise a few eyebrows. Governments have navigated their way through the pandemic so far, so it is likely they will be able to deal with any resurgences along the way.

"The UK government only recently mapped out plans to slowly unwind the lockdown restrictions. If other countries are encountering issues on account of reopening their economies, it might actually be useful from a health point of view. The pandemic is a major learning process for everyone, so the British government might be able to learn from other nations that are further along in the process."

Market participants will also be digesting the latest UK GDP figures out earlier, which showed a 2% decline in the first quarter. Capital Economics said: "March’s GDP figures showed that the UK economy was already in freefall within two weeks of the lockdown going into effect. And with the restrictions in place until mid-May and then only lifted very slightly, April will be far worse."

In corporate news, housebuilder Taylor Wimpey said it would reopen sales offices and show homes from May 22, initially for pre-booked appointments and with social distancing measures in place as the government's easing of coronavirus lockdown measures eased.

The company said sales rates have remained stable with signs of increased activity and customer interest over the last week.

Ferguson's revenue dropped by more than 15% in April as the Covid-19 crisis hit sales across the plumbing and heating company's business. Revenue fell 2.2% in Ferguson's third quarter, the company said in a trading update. After registering growth of 5.1% in the first two months of the period revenue fell 15.3% in April.

In the US Ferguson swung from 9.3% growth in March and April to a 9.3% revenue decline in April. In Canada revenue shrank 7.7% in the first two months of the quarter and by a third in April.

The biggest drop-off in business was in the UK where Ferguson is planning to split off its Wolseley business. After falling 10.3% in February and March UK revenue plunged by 60% in April, leading to a 26.5% drop for the quarter.

Holiday operator TUI said it would to cut up to 8,000 jobs globally as it called the Covid-19 pandemic the “unquestionably the greatest crisis” the industry has ever faced.

The UK’s biggest tour operator posted a wider first half loss of €845.8m compared to €289.1m a year ago.

“We are targeting to permanently reduce our overhead cost base by 30% across the entire group. This will have an impact on potentially 8,000 roles globally that will either not be recruited or reduced,” The Anglo-German company said.