London close: Stocks finish weaker as eurozone GDP, virus risks weigh
London stocks finished well into the red on Friday, as weak eurozone growth figures offset stellar earnings from the US technology sector earlier.
The FTSE 100 ended the session down 1.54% at 5,897.76, and the FTSE 250 was off 0.5% at 16,932.65.
Sterling was stronger against both of its major trading pairs, last rising 0.38% against the dollar to $1.3146, and advancing 0.52% against the euro to €1.1110.
The benchmark had started the day in the green, as investors digested solid earnings from the likes of Apple, Amazon and Facebook overnight, but data released during the morning put a dampener on the mood, as eurozone GDP shrank at its fastest rate on record in the second quarter, down 12.1%.
“Markets have reversed course on the final day of the week, with early gains for indices on both sides of the Atlantic being given back,” said IG chief market analyst Chris Beauchamp.
“While the Nasdaq has remained strong thanks to the bumper crop of earnings from Big Tech last night, other earnings reports have not been as positive, putting pressure on the broader market.
“To add to this, the UK’s move away from further easing of lockdowns and yet more bad GDP data from around the globe have also put bullish sentiment on the back foot, and further reduced the desire to move back into stocks at month end.”
Beauchamp said a “tough August” was beckoning for stock markets, with a flat performance perhaps the best that investors could hope for.
“US virus cases continue to rise too, as Florida reports a rise in deaths for the fourth consecutive day.
“Europe going back into lockdown would be bad enough, but the US doesn’t seem to be anywhere ending its first set of restrictions.”
Worries about a resurgence of Covid-19 cases across Europe and in the UK weighed, with new restrictions implemented across Northern England after a spike in cases, and the planned relaxation of some restrictions across England over the weekend postponed.
Elsewhere, the latest survey from Nationwide showed house prices bounced back in July, boosted by pent-up demand after the coronavirus lockdown ended.
Annual house price growth recovered to 1.5% from a 1.6% decline in June.
On the year, prices were up 1.5% compared to a 0.1% dip the month before.
Nationwide’s chief economist Robert Gardner said the pick-up in prices "reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions".
"Pent-up demand is coming through, where decisions taken to move before lockdown are progressing,” he explained.
“Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.
"Our own research, conducted in May, indicated that around 15% of people surveyed were considering moving as a result of life in lockdown."
He said there trends look set to continue in the near term, with the recently-announced stamp duty holiday serving to bring some activity forward.
However, Gardner also warned that this could be "something of a false dawn".
"Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down.
“If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”
In equity markets, precious metals miners Fresnillo, Polymetal and Hochschild all shone as gold prices continued to rally, with those stocks ahead 1.99%, 0.99% and 3.47%, respectively.
NatWest managed to finish 0.047% firmer, despite saying that first-half profits evaporated as the bank was forced to set aside an extra £2bn for bad loans in the second quarter due to the Covid-19 pandemic.
The impairment loss was up from £802m in the first quarter.
NatWest, formerly RBS, reported a £770m pre-tax loss compared with a £2.7bn profit a year ago.
Russ Mould, investment director at AJ Bell, said the rise in the share price needed be seen in the context of a big sell-off earlier this week following gloomy updates from other listed banks.
Pets At Home rocketed 21.45%, after it posted a smaller-than-expected drop in first-quarter revenue.
On the downside, British Airways and Iberia parent IAG was 5.79% lower after it posted a second-quarter operating loss before exceptional items of €1.36bn as the Covid-19 pandemic led to a 95.3% drop in passenger capacity.
It also said it would tap financial markets for €2.75bn in fresh equity.
Low-cost carriers easyJet and Wizz Air also retreated, falling 5.63% and 2.35%, respectively.
BT was in the red by 8.6% as it reported a 13% drop in first-quarter pre-tax profit, with revenue down 7% due to the impact of Covid-19, which weighed on BT Sport revenue.
FTSE 100 - Risers
Land Securities Group (LAND) 576.60p 3.19%
Avast (AVST) 578.50p 2.86%
3i Group (III) 889.60p 2.44%
British Land Company (BLND) 366.10p 2.41%
RSA Insurance Group (RSA) 429.10p 2.17%
Fresnillo (FRES) 1,232.50p 1.99%
Hargreaves Lansdown (HL.) 1,749.00p 1.89%
SEGRO (SGRO) 969.20p 1.85%
London Stock Exchange Group (LSE) 8,490.00p 1.65%
Sage Group (SGE) 729.40p 1.59%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 164.75p -9.00%
BT Group (BT.A) 98.58p -8.60%
Rolls-Royce Holdings (RR.) 231.60p -5.59%
British American Tobacco (BATS) 2,524.50p -4.97%
Imperial Brands (IMB) 1,276.00p -4.85%
Whitbread (WTB) 2,180.00p -4.64%
Melrose Industries (MRO) 85.26p -4.63%
Intertek Group (ITRK) 5,378.00p -4.34%
Rentokil Initial (RTO) 534.20p -4.20%
ITV (ITV) 56.68p -3.96%
FTSE 250 - Risers
Pets at Home Group (PETS) 311.40p 21.45%
Sabre Insurance Group (SBRE) 303.50p 9.96%
Equiniti Group (EQN) 126.40p 9.42%
Spirent Communications (SPT) 280.00p 8.53%
BMO Commercial Property Trust Limited (BCPT) 58.50p 7.73%
TBC Bank Group (TBCG) 792.00p 6.02%
Bank of Georgia Group (BGEO) 777.00p 5.71%
AO World (AO.) 167.40p 4.49%
Workspace Group (WKP) 615.00p 4.24%
Vivo Energy (VVO) 72.90p 4.10%
FTSE 250 - Fallers
TUI AG Reg Shs (DI) (TUI) 288.10p -6.00%
Carnival (CCL) 826.60p -5.70%
easyJet (EZJ) 493.20p -5.63%
Vesuvius (VSVS) 408.00p -5.38%
SSP Group (SSPG) 205.60p -4.99%
Virgin Money UK (VMUK) 87.46p -4.75%
Frasers Group (FRAS) 251.80p -4.62%
Petropavlovsk (POG) 36.20p -4.61%
Grafton Group Units (GFTU) 643.50p -4.31%
Travis Perkins (TPK) 1,108.50p -3.98%