London close: Stocks finish weaker after Germany, US GDP figures
London stocks finished well into the red on Thursday, dipping below the 6,000 point level, following a disastrous GDP release from the United States, and disappointing results from the likes of Lloyds.
The FTSE 100 ended the session down 2.31% at 5,989.99, and the FTSE 250 was off 1.34% at 17,017.05.
Sterling was trading stronger, last rising 0.42% on the dollar to $1.3051, and advancing 0.35% against the euro to €1.1062.
Fresh data during the afternoon revealed the extent of economic damage in the US in the second quarter, even if at a marginally slower than expected pace, alongside a fall in prices.
Preliminary data from the Department of Commerce showed that gross domestic product fell at a quarterly annualised pace of 32.9% over the three months to June, which was slightly better than the consensus forecasts for a 34% drop, but was still the worst reading in 80 years.
The latest economic growth figures out of Germany had dented sentiment earlier in the day, as GDP there fell by a record 10.1% quarter-on-quarter in the second quarter as the Covid-19 crisis took its toll, according to Destatis.
That marked the biggest decline since records began in 1970, and was steeper than the 9% drop expected by economics and much worse than the 4.7% contraction seen in the first quarter of 2009 during the financial crisis.
“Things got real nasty on Thursday afternoon, with the US stomping into the session with an ugly GDP reading and a power-hungry president,” said Spreadex analyst Connor Campbell.
“Though it wasn’t exactly a surprise, and came in a smidge better than consensus forecasts, there is arguably no way to greet news of a 32.9% contraction in the second quarter - at the annualised rate - than with a cliff dive into the red.”
Campbell said that number - the worst since the 1940s - caused the Dow Jones to fall close to 500 points, leaving the index in danger of sinking under 26000 for the first time in three weeks.
“Remember, that US GDP reading comes after a worse than forecast 10.1% contraction in the German economy, meaning the markets were already in a foul mood.”
Investors were wading through a deluge of results, with Lloyds Banking Group closing down 7.81% after it set aside a further £2.4bn for bad debts in the second quarter, as it swung to a heavy first-half loss and braced for a "significant deterioration" in the economic outlook amid the coronavirus pandemic.
Standard Chartered was in the red by 6.23% as it increased its bad loans provision to almost $1.6bn in the first half.
The emerging markets-focussed bank reported credit impairments of $611m in the second quarter, up from $176m a year ago and in addition to $956m reported in the first quarter.
Royal Dutch Shell was 5.72% weaker after swinging to a heavy net first-half loss, but paying a dividend as Covid-19 hammered oil and gas prices.
Technology-led services and payments specialist Equiniti tumbled 18.44% after saying it swung to a first-half pre-tax loss as its business took a hit from the pandemic.
Car dealership Inchcape was off 12.11% after saying it would be cutting jobs globally as it swung to a first-half loss due to coronavirus shutdowns.
On the upside, BAE Systems rose 5.89% after the arms maker said full-year profits would be lower due to the pandemic, but that it expected a good second half as it reinstated dividend payments.
Pharmaceuticals giant AstraZeneca was ahead 1.58% after its first-half numbers beat analysts’ expectations.
Pest control and hygiene services company Rentokil Initial gained 1.59% even as it said first-half adjusted pre-tax profit fell 11% as the temporary closure of some businesses due to lockdowns took its toll on the business.
FTSE 100 - Risers
BAE Systems (BA.) 505.00p 5.89%
Rentokil Initial (RTO) 557.60p 1.68%
AstraZeneca (AZN) 8,751.00p 1.58%
Flutter Entertainment (FLTR) 11,730.00p 1.25%
Hikma Pharmaceuticals (HIK) 2,150.00p 1.03%
Whitbread (WTB) 2,286.00p 0.57%
Schroders (SDR) 2,981.00p 0.44%
Pearson (PSON) 539.20p -0.07%
SEGRO (SGRO) 951.60p -0.08%
Ocado Group (OCDO) 2,053.00p -0.29%
FTSE 100 - Fallers
Lloyds Banking Group (LLOY) 26.21p -7.62%
Standard Chartered (STAN) 394.10p -6.23%
Legal & General Group (LGEN) 211.20p -6.09%
Royal Dutch Shell 'B' (RDSB) 1,108.20p -5.72%
Royal Dutch Shell 'A' (RDSA) 1,158.80p -5.54%
NATWEST GROUP PLC ORD 100P (NWG) 105.95p -4.98%
Melrose Industries (MRO) 89.40p -4.93%
Prudential (PRU) 1,112.00p -4.79%
Anglo American (AAL) 1,883.60p -4.57%
Smiths Group (SMIN) 1,363.00p -4.42%
FTSE 250 - Risers
Vesuvius (VSVS) 431.20p 13.59%
Ultra Electronics Holdings (ULE) 2,390.00p 9.23%
Shaftesbury (SHB) 514.00p 3.50%
PPHE Hotel Group Ltd (PPH) 1,100.00p 3.29%
FirstGroup (FGP) 34.12p 3.02%
Hastings Group Holdings (HSTG) 206.60p 2.99%
UK Commercial Property Reit Limited (UKCM) 67.00p 2.92%
Future (FUTR) 1,430.00p 2.88%
Trainline (TRN) 408.00p 2.84%
Hilton Food Group (HFG) 1,096.00p 2.82%
FTSE 250 - Fallers
Equiniti Group (EQN) 116.00p -18.44%
Inchcape (INCH) 425.40p -12.11%
Just Group (JUST) 43.76p -7.41%
Petrofac Ltd. (PFC) 140.50p -7.05%
Virgin Money UK (VMUK) 91.82p -6.86%
Greggs (GRG) 1,236.00p -6.79%
Pantheon International (PIN) 2,035.00p -6.28%
Wizz Air Holdings (WIZZ) 3,300.00p -5.98%
Hochschild Mining (HOC) 259.60p -5.46%
TUI AG Reg Shs (DI) (TUI) 306.50p -5.28%