London close: Stocks finish weaker as investors digest new job support
London stocks finished in the red on Thursday, as investors digested details of Chancellor Rishi Sunak’s new measures to replace the furlough scheme.
The FTSE 100 ended the session down 1.3% at 5,822.78, and the FTSE 250 was off 1.12% at 16,802.69.
Sterling was stronger against its major trading pairs, last rising 0.3% against the dollar to $1.2764, and advancing 0.2% on the euro to €1.0935.
“Health concerns are playing on dealers’ minds and the rising number of new Covid-19 cases in the UK is concerning,” said CMC Markets analyst David Madden.
“The UK Chancellor of the Exchequer, Rishi Sunak, announced plans to assist the economy.”
Sunak announced during the afternoon that the government would top up the wages of "viable jobs" when the furlough scheme ends, in a bid to stave off a potential wave of redundancies this autumn.
Under the six-month scheme, which starts in November, employees in “viable jobs” must work at least a third of their normal hours and be paid for that work.
The government will then top up that pay, with the government and employer each paying staff at a third of their normal rate, capped at £698 per month.
All small and medium-sized enterprises are eligible for the scheme, whether or not they have already furloughed staff.
Larger businesses must show that revenues have fallen during the crisis, however.
“Only three weeks ago the government implored us to get back to the office to support city centres - what’s strange is that they did this without realising that cases would rise,” said Neil Wilson, chief market analyst at Markets.com.
“Their risk tolerance for the spread is extremely low, which indicates a government operating on the fly.”
In equity markets, Smiths Group was down 7.51% after it posted a drop in annual profit but reinstated its dividend and said business was stabilising.
Engine maker Rolls-Royce lost 7.57% and GKN owner Melrose was off 2.46% amid concerns about the impact of Covid-19 on the airline industry.
British Airways and Iberia owner IAG, InterContinental Hotels and easyJet were also trading lower, by 5.33%, 0.82% and 3.34%, respectively.
Cineworld sank 14.76% after saying it swung to a loss in the first half after its cinemas were forced to close in March due to the pandemic and warned it would need to raise additional liquidity if its cinemas were shut again.
On the upside, Pets at Home surged 27.79% after saying full-year underlying pre-tax profit is set to be ahead of current market expectations of £73m as sales momentum returns across the business.
National Express was also up 12%, after it said in an update that it has traded slightly above its previously-guided base case.
FTSE 100 - Risers
Pearson (PSON) 536.60p 6.22%
Persimmon (PSN) 2,426.00p 3.91%
Barratt Developments (BDEV) 455.00p 3.24%
Polymetal International (POLY) 1,701.00p 1.14%
NATWEST GROUP PLC ORD 100P (NWG) 99.60p 1.12%
WPP (WPP) 580.00p 1.05%
Rio Tinto (RIO) 4,812.50p 0.72%
Rightmove (RMV) 616.20p 0.66%
B&M European Value Retail S.A. (DI) (BME) 475.10p 0.63%
British American Tobacco (BATS) 2,815.00p 0.46%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 150.10p -7.57%
Smiths Group (SMIN) 1,324.50p -7.51%
International Consolidated Airlines Group SA (CDI) (IAG) 95.24p -5.33%
Hargreaves Lansdown (HL.) 1,540.50p -4.61%
M&G (MNG) 146.10p -3.82%
Homeserve (HSV) 1,228.00p -3.77%
GVC Holdings (GVC) 851.20p -3.58%
Schroders (SDR) 2,652.00p -3.50%
Standard Life Aberdeen (SLA) 210.00p -3.01%
Morrison (Wm) Supermarkets (MRW) 174.90p -2.98%
FTSE 250 - Risers
Pets at Home Group (PETS) 388.00p 27.79%
National Express Group (NEX) 140.00p 12.00%
Sirius Real Estate Ltd. (SRE) 76.80p 7.00%
Fisher (James) & Sons (FSJ) 1,178.00p 5.94%
Renishaw (RSW) 5,190.00p 5.84%
Vivo Energy (VVO) 72.00p 5.42%
Premier Foods (PFD) 91.40p 4.70%
Bellway (BWY) 2,230.00p 4.42%
Marshalls (MSLH) 630.00p 4.32%
Redrow (RDW) 379.00p 3.95%
FTSE 250 - Fallers
Cineworld Group (CINE) 41.50p -14.76%
Airtel Africa (AAF) 57.40p -7.15%
IG Group Holdings (IGG) 774.50p -6.97%
Coats Group (COA) 51.60p -5.75%
Carnival (CCL) 878.80p -5.61%
Savills (SVS) 778.50p -5.49%
Ferrexpo (FXPO) 173.30p -5.34%
Micro Focus International (MCRO) 253.60p -5.30%
Paragon Banking Group (PAG) 303.80p -5.26%
Liontrust Asset Management (LIO) 1,190.00p -5.24%