London close: Stocks finish weaker amid slew of dismal data
London stocks remained weaker by the close on Friday following the release of dismal UK services data, as investors digested a dismal US non-farm payrolls report amid ongoing concerns about the escalating coronavirus pandemic.
The FTSE 100 ended the session down 1.18% at 5,415.50, and the FTSE 250 was 2.34% weaker at 14,099.21.
Sterling was weaker against both of its major trading pairs, losing 1.28% against the dollar to last trade at $1.2237, and sliding 0.67% on the euro to €1.1340.
Investors spent the afternoon thumbing through a report showing a rapid deterioration in the US jobs market in March, as the Covid-19 pandemic began sweeping across the country and some state authorities moved to a lockdown.
According to the Department of Labor, nonfarm payrolls collapsed by 701,000, much wider than consensus forecasts for an 81,000 decline, as the unemployment rate shot to 4.4% in March from 3.5% in February, and much worse than consensus expectations for 3.8%.
The labour force participation rate also sank, to 62.7% from 63.4%.
Because the survey week ended on 14 March, ahead of many states' decisions to mandate social distancing measures, economists had only been anticipating a relatively small deterioration in the jobs market, although far worse was already expected for the April report.
“This is terrible but unfortunately it’s nothing compared to what’s coming in April," said Ian Shepherdson at Pantheon Macroeconomics.
“For April, we think payrolls will drop by 14 million to 17 million, driving the unemployment rate to 12% to 14%.
“Note that the survey response rates were much lower than usual, so the payroll number could be revised substantially … though any March revisions will be nothing compared to the April collapse.”
Investors were also digesting the latest services data out of China, which showed that the sector remained in contraction territory.
The Caixin/Markit services purchasing managers’ index rose to 43 in March from a record low of 26.5 the month before and ahead of expectations for a reading of 39.0.
However, it was still well below the 50.0 mark that separates contraction from expansion and marked the weakest reading since the survey began in 2005.
On home shores, a survey showed the services sector suffered its worst decline on record in March as the coronavirus outbreak took its toll.
The IHS Markit/CIPS final UK services purchasing managers’ index printed at 34.5, coming in below a flash estimate of 35.7 and down sharply from 53.2 in February.
That marked the fastest decline in activity since the survey began in July 1996.
A reading below 50 indicates contraction, while a reading above signals expansion, with the latest survey data collected between 12 and 27 March.
Reductions in activity were broad-based across the sector, with only the technology services subcategory recording pockets of continued business expansion, the survey found.
“A record slump in UK service sector activity reported in March adds to the increasingly bleak economic statistics seen recently across the developed world,” said Tim Moore, economics Director at IHS Markit.
“Emergency public health measures to combat the Covid-19 pandemic continue to mothball business operations, force aggressive cutbacks on non-essential expenses and trigger distress for household finances.
“The severe impact on service sector activity in March was by no means limited to consumer-facing businesses or those directly hit by international travel restrictions.”
In equities, Legal & General fell 10.05% and Prudential was 2.38% weaker, after the European Union asked insurers to suspend dividend payments amid the coronavirus pandemic.
Ascential slid 14.17% after saying it was pulling its final 4p dividend and cancelling the Cannes Lions advertising conference in response to the virus outbreak.
On the upside, Go-Ahead rose 12.88%, Stagecoach was 4.52% firmer, and FirstGroup was 10.11% higher after the government said it will cover the losses of bus companies over the next three months to ensure services can continue to run, with a new £167m fund.
Defence company BAE Systems reversed earlier losses to close up 0.38%, after withdrawing its dividend and put financial guidance on hold as the Covid-19 crisis began to cause major disruptions to its business.
Primark owner Associated British Foods also clawed back from earlier losses, after saying that its chief executive and finance director had volunteered to take a 50% pay cut as full-year earnings are now expected to be "much lower" than envisaged at the start of the financial year due to Covid-19.
FTSE 100 - Risers
London Stock Exchange Group (LSE) 7,200.00p 6.89%
Hikma Pharmaceuticals (HIK) 2,279.00p 4.64%
Sainsbury (J) (SBRY) 213.40p 4.20%
Morrison (Wm) Supermarkets (MRW) 185.70p 3.74%
Bunzl (BNZL) 1,550.00p 2.99%
Relx plc (REL) 1,686.50p 2.96%
Halma (HLMA) 1,889.50p 2.58%
AstraZeneca (AZN) 7,144.00p 2.35%
Flutter Entertainment (FLTR) 6,994.00p 2.34%
Tesco (TSCO) 223.90p 2.33%
FTSE 100 - Fallers
Legal & General Group (LGEN) 159.70p -10.05%
Rolls-Royce Holdings (RR.) 251.60p -9.59%
Pearson (PSON) 477.80p -8.99%
Whitbread (WTB) 2,471.00p -8.75%
ITV (ITV) 54.42p -8.17%
Barratt Developments (BDEV) 384.30p -7.93%
Phoenix Group Holdings (PHNX) 530.40p -7.92%
M&G (MNG) 109.40p -7.91%
Taylor Wimpey (TW.) 101.50p -7.14%
Smiths Group (SMIN) 1,060.50p -6.81%
FTSE 250 - Risers
Premier Oil (PMO) 22.84p 23.46%
Go-Ahead Group (GOG) 920.00p 12.88%
FirstGroup (FGP) 52.30p 10.11%
Drax Group (DRX) 174.70p 9.53%
Playtech (PTEC) 177.30p 8.71%
GVC Holdings (GVC) 483.70p 7.49%
William Hill (WMH) 68.80p 7.27%
Energean Oil & Gas (ENOG) 677.00p 7.12%
Vietnam Enterprise Investments (DI) (VEIL) 350.00p 6.67%
Cairn Energy (CNE) 92.30p 4.89%
FTSE 250 - Fallers
Hammerson (HMSO) 53.92p -25.11%
G4S (GFS) 69.92p -24.26%
Bakkavor Group (BAKK) 64.90p -18.47%
Ascential (ASCL) 192.60p -14.17%
Aston Martin Lagonda Global Holdings (AML) 77.95p -13.72%
Sabre Insurance Group (SBRE) 275.50p -12.97%
Micro Focus International (MCRO) 322.60p -12.46%
Crest Nicholson Holdings (CRST) 164.50p -11.51%
Beazley (BEZ) 328.20p -10.77%
4Imprint Group (FOUR) 1,638.00p -10.30%