London midday: Stocks extend losses after UK services data; payrolls eyed
London stocks had fallen further into the red by midday on Friday following the release of dismal UK services data, as investors eyed the latest US non-farm payrolls report amid ongoing concerns about the escalating coronavirus pandemic.
The FTSE 100 was down 1.2% at 5,413.75, with all eyes on the non-farm payrolls report, due at 1330 BST, along with the unemployment rate and average earnings, after figures released on Thursday revealed that US initial jobless claims surged by 6.6 million last week due to the pandemic.
London Capital Group analyst Jasper Lawler said: "Global coronavirus cases have topped one million and there is an unwillingness to hold market positions through the weekend for fear of more bad news.
"We’re waiting for the data to confirm what we already know. The record one hundred-month plus stretch of jobs growth in the US has come to screeching halt. The non-farm payroll figure for March is expected to turn negative. Because the data was collected in the first half of the month, its unlikely to capture the full damage from forced lockdowns and stay home advice. The really hideous stuff will probably show up in the April numbers."
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. This 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. The latest survey data were 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.
Tim Moore, economics Director at IHS Markit, said: "A record slump in UK service sector activity reported in March adds to the increasingly bleak economic statistics seen recently across the developed world.
"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 equity markets, Legal & General and Prudential were under the cosh after the European Union asked insurers to suspend dividend payments amid the coronavirus pandemic.
Defence company BAE Systems fell as it withdrew its dividend and put financial guidance on hold after the Covid-19 crisis began to cause major disruptions to its business.
Primark owner Associated British Foods lost ground 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.
Ascential slid after saying said 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, Stagecoach and FirstGroup all rallied 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.
FTSE 100 - Risers
London Stock Exchange Group (LSE) 7,066.00p 4.90%
Carnival (CCL) 628.20p 3.83%
Bunzl (BNZL) 1,545.00p 2.66%
Coca-Cola HBC AG (CDI) (CCH) 1,709.50p 2.24%
Hikma Pharmaceuticals (HIK) 2,222.00p 2.02%
Flutter Entertainment (FLTR) 6,972.00p 2.02%
AstraZeneca (AZN) 7,077.00p 1.39%
Relx plc (REL) 1,655.50p 1.07%
International Consolidated Airlines Group SA (CDI) (IAG) 201.70p 0.85%
Rio Tinto (RIO) 3,751.50p 0.81%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 254.40p -8.59%
Whitbread (WTB) 2,477.00p -8.53%
M&G (MNG) 110.10p -7.32%
Legal & General Group (LGEN) 164.65p -7.27%
Centrica (CNA) 31.55p -6.99%
Prudential (PRU) 876.80p -6.98%
Pearson (PSON) 490.60p -6.55%
Aviva (AV.) 235.00p -5.89%
Phoenix Group Holdings (PHNX) 544.80p -5.42%
Auto Trader Group (AUTO) 364.50p -5.32%
FTSE 250 - Risers
Go-Ahead Group (GOG) 903.50p 10.86%
Cairn Energy (CNE) 95.00p 7.95%
Premier Oil (PMO) 19.91p 7.62%
XP Power Ltd. (DI) (XPP) 2,680.00p 6.77%
William Hill (WMH) 68.34p 6.55%
GVC Holdings (GVC) 478.00p 6.22%
Vivo Energy (VVO) 68.10p 5.58%
Vietnam Enterprise Investments (DI) (VEIL) 347.00p 5.15%
WH Smith (SMWH) 1,030.00p 4.62%
Stagecoach Group (SGC) 69.25p 4.37%
FTSE 250 - Fallers
Aston Martin Lagonda Global Holdings (AML) 71.30p -21.08%
Crest Nicholson Holdings (CRST) 164.30p -11.62%
Hammerson (HMSO) 63.76p -11.44%
GCP Student Living (DIGS) 119.40p -11.42%
Vistry Group (VTY) 506.00p -9.32%
Redrow (RDW) 310.40p -8.27%
Ascential (ASCL) 206.40p -8.02%
Bellway (BWY) 1,914.00p -7.89%
Hochschild Mining (HOC) 104.00p -7.23%
Ashmore Group (ASHM) 297.00p -6.90%