London close: Stocks finish weaker as EC slashes forecasts
London stocks closed well below the waterline on Tuesday, as the European Commission slashed its growth forecasts, with concerns about a rise in new coronavirus cases continuing to weigh on sentiment
The FTSE 100 ended the session down 1.53% at 6,189.00, and the FTSE 250 was off 1.14% at 17,350.04.
Sterling was stronger against both of its major trading pairs, last rising 0.61% against the dollar to $1.2568, and advancing 0.74% on the euro to €1.1128.
“Stock markets are deep in the red as sentiment has turned 180 degrees from yesterday’s very bullish move,” said CMC Markets analyst David Madden.
“Equities pushed lower in early trading and the mood has been bearish throughout the session. Yesterday’s bullish move was Chinese led and that optimism has fizzled out today.”
Madden noted that the positive moves on Monday were going to be difficult to replicate, as it was fuelled by an editorial in a securities journal owned by the Chinese government, encouraging citizens there to purchase domestic stocks.
“Now that the excitement is over, dealers have to face the fact the pandemic isn’t going to go away anytime soon.”
Earlier in the day, Brussels cut its economic forecasts and warned the European Union would suffer a deeper-than-expected recession because of the Covid-19 crisis.
The European Commission said the lifting of sweeping lockdown measures across the continent was happening at a slower pace than assumed in its spring forecasts, published in May.
It was now predicting that the pandemic’s impact on economic activity would be "more significant" than anticipated.
The eurozone was now forecast to contract by 8.7% in 2020, compared to an earlier forecast for a decline of 7.7%, and grow by 6.1% in 2021.
Looking at the wider European Union economy, that was now predicted to contract by 8.3% this year and grow by 5.8% next year.
Brussels had initially predicted a decline of 7.4% for 2020.
As far as the UK is concerned, GDP was forecast to decline by 9.7% in 2020.
Worries about a resurgence of coronavirus also dented the mood amid a rise in new infections in the US in states such as Florida, Texas and Arizona.
In Australia, the Victorian capital Melbourne was placed on a fresh six-week lockdown after the state recorded 191 daily cases.
“Elsewhere, South Africa’s total number of cases has passed 200,000 - the highest figure in Africa,” said Spreadex analyst Connor Campbell.
“Of course then there’s the US, the gold standard of coronavirus mismanagement.”
Campbell said that Between Friday and Sunday alone, that country saw 200,000 fresh infections, with the number of cases in Florida alone doubling from 100,000 to 200,000 in less than a fortnight.
“All this before considering the impact the weekend’s 4th July celebrations will have on the infection rate.”
In equity markets, Premier Inn owner Whitbread was 5.39% weaker as it said UK first quarter like-for-like sales slumped, reflecting the full impact of the coronavirus lockdown, although it reported good summer demand for tourist destinations.
Like-for-like sales for the three months to May 28 fell 79.8% across Whitbread’s British hotel and pub estate, while total group sales fell 79.4%.
Software company Micro Focus lost 19.58% after saying it swung to an interim loss as it recorded a goodwill impairment charge related to the pandemic.
JD Sports Fashion reversed earlier gains to finish 1.05% weaker, as it said footfall was weaker in stores reopened after lockdown and called for "rental realism" from landlords but reported record profit for the year to the start of February.
On the upside, contracts-for-difference platform Plus500 added 3.3% after it appointed David Zruia as chief executive and reported bumper first-half trading and customer gains returned to normal levels after a costly spike.
FTSE 100 - Risers
GVC Holdings (GVC) 817.40p 3.60%
Evraz (EVR) 301.50p 1.89%
Coca-Cola HBC AG (CDI) (CCH) 2,006.00p 1.67%
Antofagasta (ANTO) 976.00p 1.67%
Polymetal International (POLY) 1,601.00p 1.62%
Persimmon (PSN) 2,412.00p 0.58%
Fresnillo (FRES) 885.20p 0.55%
Aviva (AV.) 284.90p 0.53%
Hikma Pharmaceuticals (HIK) 2,235.00p 0.49%
M&G (MNG) 171.00p 0.47%
FTSE 100 - Fallers
Whitbread (WTB) 2,305.00p -5.53%
Smurfit Kappa Group (SKG) 2,522.00p -4.18%
Informa (INF) 452.70p -4.09%
Land Securities Group (LAND) 566.00p -3.71%
Associated British Foods (ABF) 1,951.00p -3.70%
British Land Company (BLND) 388.00p -3.60%
Compass Group (CPG) 1,137.50p -3.56%
Pennon Group (PNN) 1,067.50p -3.44%
HSBC Holdings (HSBA) 395.15p -3.30%
Standard Chartered (STAN) 442.20p -3.30%
FTSE 250 - Risers
CLS Holdings (CLI) 201.00p 3.72%
Plus500 Ltd (DI) (PLUS) 1,379.00p 3.30%
Kaz Minerals (KAZ) 513.60p 2.19%
Ferrexpo (FXPO) 175.00p 2.10%
Crest Nicholson Holdings (CRST) 212.20p 2.02%
XP Power Ltd. (DI) (XPP) 3,620.00p 1.97%
G4S (GFS) 121.75p 1.62%
Ascential (ASCL) 289.80p 1.61%
Savills (SVS) 791.50p 1.28%
888 Holdings (888) 174.80p 1.27%
FTSE 250 - Fallers
Micro Focus International (MCRO) 352.80p -19.58%
Hammerson (HMSO) 83.82p -7.26%
TUI AG Reg Shs (DI) (TUI) 366.90p -6.76%
Polypipe Group (PLP) 419.00p -6.68%
Babcock International Group (BAB) 296.70p -6.02%
Shaftesbury (SHB) 522.50p -5.09%
Provident Financial (PFG) 168.70p -4.64%
Energean (ENOG) 550.00p -4.35%
Capital & Counties Properties (CAPC) 148.30p -4.32%
Ibstock (IBST) 178.60p -4.29%