London midday: Stocks pare losses as housebuilders rally
London stocks were still in the red by midday on Friday but off lows amid a solid performance in the housebuilding sector, after a potential treatment for Covid-19 failed in its first trial and as investors digested dire UK retail sales data.
The FTSE 100 was down 0.7% at 5,786.38.
Sentiment took a hit following reports late on Thursday that Gilead Sciences’ antiviral drug remdesivir failed in its first randomised clinical trial, dashing hopes that it could potentially be used as a treatment for coronavirus patients.
Joshua Mahony, senior market analyst at IG, said: "A preliminary announcement from Gilead had boosted sentiment last week, yet that has now been undermined after Chinese trials were abandoned due to underwhelming outcomes.
"With many speculating that a vaccine is unlikely to come this year, the economic pain that comes with continued social distancing measures is likely to continue for a long time yet. Donald Trump’s speculation that distancing measures could need to run into early-summer are a reminder that this economic crunch isn’t going away anytime soon."
There wasn’t much to be cheery about on the macroeconomic front either, as the latest figures from the Office for National Statistics showed retail sales suffered their worst decline ever in March due to the coronavirus pandemic.
Retail sales slumped 5.1% in March from February, versus expectations for a 4% fall. On the year, retail sales were down 5.8% against expectations of a 4.7% drop.
Clothing sales were hit particularly badly, sliding 34.8% on the month, while food stores saw the strongest rate of growth on record last month, up 10.4% as people stockpiled ahead of the lockdown.
The government lockdown forcing non-essential stores to close was implemented from 23 March.
Rhian Murphy, head of retail sales at the ONS, said: "Retail sales saw their biggest monthly fall since records began over 30 years ago with large declines in clothing and fuel, only partially offset by strong food sales.
"Online-only retailers saw strong growth though, with many high street stores also unsurprisingly seeing a boost to web sales."
Thomas Pugh, UK economist at Capital Economics said the 5.1% month-on-month fall suggests that consumption declined by at least 4% quarter-on-quarter in the first quarter.
"As the lockdown was only introduced in the middle of March, however, a further big decline is almost guaranteed in April," he said.
In equity markets, Meggitt lost ground after a downgrade to ‘sell’ at Societe Generale.
Luxury fashion brand Burberry was in the red as it said that its senior leaders and directors will take a voluntary pay cut to preserve cash during the coronavirus pandemic and that it will maintain base pay for all employees unable to fulfil their roles because of closures. It also said it will not rely on government support for jobs in the UK, where more than a third of its employees are based.
On the upside, a strong performance from the housebuilding sector helped to bring stocks off their earlier lows, with Barratt Developments and Taylor Wimpey the top two gainers on the FTSE 100.
Persimmon was also trading higher after saying it would start a phased re-opening of its construction sites from April 27 as the industry started to emerge from the coronavirus lockdown.
Elsewhere, Beazley was boosted by an upgrade to ‘buy’ at Jefferies.
Market Movers
FTSE 100 (UKX) 5,786.38 -0.69%
FTSE 250 (MCX) 15,799.81 0.04%
techMARK (TASX) 3,496.66 -0.43%
FTSE 100 - Risers
Barratt Developments (BDEV) 526.20p 2.02%
Taylor Wimpey (TW.) 150.70p 1.96%
JD Sports Fashion (JD.) 501.80p 1.66%
Reckitt Benckiser Group (RB.) 6,506.00p 1.59%
Flutter Entertainment (FLTR) 9,030.00p 1.57%
RSA Insurance Group (RSA) 344.50p 1.38%
Auto Trader Group (AUTO) 453.30p 1.11%
Ocado Group (OCDO) 1,605.50p 0.94%
Vodafone Group (VOD) 108.66p 0.87%
Associated British Foods (ABF) 1,892.00p 0.69%
FTSE 100 - Fallers
Intertek Group (ITRK) 4,798.00p -5.03%
Meggitt (MGGT) 251.60p -4.84%
easyJet (EZJ) 561.00p -4.12%
Compass Group (CPG) 1,292.50p -3.82%
Whitbread (WTB) 2,692.00p -3.36%
International Consolidated Airlines Group SA (CDI) (IAG) 217.70p -3.16%
InterContinental Hotels Group (IHG) 3,372.00p -3.12%
Aviva (AV.) 231.10p -2.90%
Burberry Group (BRBY) 1,301.50p -2.84%
Rolls-Royce Holdings (RR.) 308.40p -2.80%
FTSE 250 - Risers
Aston Martin Lagonda Global Holdings (AML) 57.30p 6.60%
Travis Perkins (TPK) 1,021.00p 6.27%
Ibstock (IBST) 198.00p 6.00%
Vivo Energy (VVO) 73.60p 5.90%
AJ Bell (AJB) 365.00p 5.80%
Airtel Africa (AAF) 37.80p 5.44%
Grafton Group Units (GFTU) 630.50p 5.08%
Greencore Group (GNC) 175.40p 4.16%
PureTech Health (PRTC) 256.00p 4.07%
Rank Group (RNK) 162.60p 3.70%
FTSE 250 - Fallers
Cineworld Group (CINE) 53.20p -9.22%
Marston's (MARS) 30.50p -6.44%
Wood Group (John) (WG.) 168.00p -6.22%
TUI AG Reg Shs (DI) (TUI) 281.20p -5.80%
Mitchells & Butlers (MAB) 150.60p -4.80%
Dixons Carphone (DC.) 63.80p -4.78%
Hyve Group (HYVE) 21.05p -4.54%
Ninety One (N91) 160.00p -3.50%
Premier Oil (PMO) 26.43p -3.36%
Bank of Georgia Group (BGEO) 900.00p -3.33%