London midday: Stocks turn lower as unemployment claims surge
London stocks had fallen into the red by midday on Tuesday as data revealed a surge in unemployment claims.
The FTSE 100 was down 0.8% at 6,000.07, having surged a day earlier on news of a potential vaccine by US biotechnology company Moderna.
Data released earlier by the Office for National Statistics showed UK unemployment surged to a 24-year-high of 2.1m in April as employers laid off workers at a record pace during the Covid-19 crisis.
The extra 856,500 jobless claims during April was the biggest increase since records began in 1971 and sent unemployment to its highest since 1996. The share of the labour market claiming out-of-work benefits rose to 5.8% from 3.5%.
The figures show the sudden collapse of activity as the government shut down businesses in late March to stem the spread of Covid-19. First-quarter employment rose 211,000, supported by a healthy labour market in January and February.
Andrew Wishart, UK economist at Capital Economics, said: "With thousands of people already laid off as a result of the coronavirus lockdown, we forecast that the unemployment rate will jump from 4% to almost 9% in the coming months. Most of that jump should quickly be reversed once the lockdown ends, but we still expect the unemployment rate to remain elevated over the next few years."
In equity markets, tobacco giant Imperial Brands was under the cosh after it slashed its dividend by a third as it tried to speed up debt reduction and strengthen its balance sheet, although it did not cite the coronavirus as a reason. The interim dividend was cut to 41.7p a share from 62.56p a year ago, implying an annual payout of 137.7p. Adjusted operating profit fell 7.7% to £1.47bn.
Catering group Compass was in the red after saying it was raising £2bn of equity from investors to strengthen its finances after the Covid-19 shutdown caused revenue to almost halve in April.
Chilean copper miner Antofagasta was weaker as it announced it was cutting its 2019 final dividend in light of the pandemic and the measures taken to slow its spread.
On the upside, DCC rallied after the marketing and support services company increased its final dividend as it reported a rise in annual profit and "robust" trading in April and May.
British Airways and Iberia owner IAG flew higher, while insurer Beazley advanced after saying it had raised £247m in a placing at 315p per share - a 4.9% discount to the closing share price on Monday - "to support ongoing organic growth".
Market Movers
FTSE 100 (UKX) 6,000.07 -0.80%
FTSE 250 (MCX) 16,321.69 0.56%
techMARK (TASX) 3,692.14 0.16%
FTSE 100 - Risers
DCC (DCC) 6,324.00p 5.68%
International Consolidated Airlines Group SA (CDI) (IAG) 197.55p 5.00%
Land Securities Group (LAND) 564.80p 2.28%
Standard Life Aberdeen (SLA) 226.20p 2.08%
Auto Trader Group (AUTO) 509.60p 1.92%
Intertek Group (ITRK) 4,793.00p 1.87%
Ocado Group (OCDO) 1,937.00p 1.76%
British Land Company (BLND) 353.60p 1.73%
JD Sports Fashion (JD.) 554.00p 1.58%
M&G (MNG) 119.55p 1.53%
FTSE 100 - Fallers
Compass Group (CPG) 1,049.50p -9.02%
Imperial Brands (IMB) 1,520.00p -8.05%
Antofagasta (ANTO) 818.20p -4.35%
SSE (SSE) 1,231.00p -4.20%
Rolls-Royce Holdings (RR.) 260.90p -4.15%
Centrica (CNA) 37.76p -4.07%
Intermediate Capital Group (ICP) 1,092.00p -3.19%
Next (NXT) 4,468.00p -2.85%
Fresnillo (FRES) 784.80p -2.51%
Carnival (CCL) 991.80p -2.29%
FTSE 250 - Risers
PPHE Hotel Group Ltd (PPH) 1,205.00p 13.15%
BMO Commercial Property Trust Limited (BCPT) 63.30p 9.33%
Beazley (BEZ) 359.20p 8.39%
UDG Healthcare Public Limited Company (UDG) 673.50p 8.02%
Hyve Group (HYVE) 14.10p 7.80%
Contour Global (GLO) 174.00p 7.41%
Cairn Energy (CNE) 117.70p 6.42%
Forterra (FORT) 212.50p 6.36%
Network International Holdings (NETW) 405.80p 5.95%
Hammerson (HMSO) 62.20p 5.50%
FTSE 250 - Fallers
Petropavlovsk (POG) 24.90p -4.96%
National Express Group (NEX) 201.40p -4.55%
Marks & Spencer Group (MKS) 83.88p -4.03%
Greencore Group (GNC) 145.20p -3.90%
The Renewables Infrastructure Group Limited (TRIG) 122.60p -3.77%
Dixons Carphone (DC.) 69.40p -3.61%
Apax Global Alpha Limited (APAX) 128.40p -3.17%
Future (FUTR) 951.00p -2.86%
Greencoat UK Wind (UKW) 137.40p -2.83%
JPMorgan Indian Investment Trust (JII) 483.50p -2.81%