London open: Stocks fall as EU rescue fund talks drag on
London stocks fell in early trade on Monday as EU talks over a rescue fund dragged on, amid ongoing concerns about a rise in new coronavirus cases in the US and elsewhere.
At 0850 BST, the FTSE 100 was down 0.9% at 6,233.54, with EU leaders due to resume talks about a €750mln rescue package later in the day amid divisions over the split between loans and grants.
Neil Wilson, chief market analyst at Markets.com, said: "The frugal four are holding out and have a new ally in Finland, so make that the Frugal Five Get the EU into Trouble, if there is ever a book written about it. Hungary and Poland are also unhappy about tying aid to the rule of law. Hungarian Prime Minister Viktor Orban pointedly blamed the ‘Dutch guy’, meaning Dutch PM Rutte, and threatened to veto rule of law of conditionality.
"EU Council President Charles Michel is touting a new deal with €390bn in grants, after the Frugal Five proposed a €700bn fund split equally between loans and grants which fell well short of what most other countries are hoping for. This is already down from the €500bn first imagined by Macron and Merkel.
"Clearly cohesion is weak, but the EU is usually capable of working out a fudge of sorts."
Wilson pointed to early indications that the ‘frugals’ are prepared to accept the €390bn idea, adding that the biggest hurdles are the size of grants and the conditions attached to the money.
Meanwhile, worries about the coronavirus pandemic continued to dent sentiment.
Oanda analyst Jeffrey Halley said: "Enhanced shutdowns are now a genuine possibility as the US failed to emerge from even the first wave of the pandemic. Elsewhere, the news was equally bad. Things are going from bad to worse in India and Brazil. Worryingly, countries such as Hong Kong, and Victoria and New South Wales States in Australia are facing second waves, with social restrictions ramped up once again.
"That trend is being repeated across the globe and could well undermine any incipient globally recovery in Q3. Markets have not priced in, or are refusing to countenance, this outcome."
In equity markets, travel and leisure stocks were the worst performers, with InterContinental Hotels, Premier Inn owner Whitbread, British Airways parent IAG, tour company TUI and cruise operator Carnival all weaker. Cineworld was also under pressure.
On the upside, Astrazeneca shares rose after the UK government said it had reached an agreement in principle for one million doses of the pharmaceutical company’s treatment containing Covid-19 neutralising antibodies, for those who cannot receive vaccines, such as cancer and immunocompromised patients.
Elsewhere, media group Future was the biggest gainer on the FTSE 250 after saying it was on track for a FY20 performance towards the top end of expectations.
Market Movers
FTSE 100 (UKX) 6,233.54 -0.90%
FTSE 250 (MCX) 17,275.27 -0.42%
techMARK (TASX) 3,821.97 -0.20%
FTSE 100 - Risers
AstraZeneca (AZN) 9,304.00p 1.27%
Antofagasta (ANTO) 1,043.50p 0.82%
Taylor Wimpey (TW.) 142.65p 0.67%
BAE Systems (BA.) 489.10p 0.60%
Smurfit Kappa Group (SKG) 2,520.00p 0.32%
Sage Group (SGE) 681.20p 0.18%
SEGRO (SGRO) 922.80p 0.17%
Polymetal International (POLY) 1,616.50p 0.15%
Spirax-Sarco Engineering (SPX) 10,490.00p 0.14%
Pearson (PSON) 555.00p 0.07%
FTSE 100 - Fallers
InterContinental Hotels Group (IHG) 3,751.00p -3.27%
International Consolidated Airlines Group SA (CDI) (IAG) 212.70p -2.83%
Ocado Group (OCDO) 2,082.00p -2.71%
Whitbread (WTB) 2,253.00p -2.64%
Standard Life Aberdeen (SLA) 259.20p -2.34%
Royal Dutch Shell 'B' (RDSB) 1,211.80p -2.32%
BP (BP.) 302.25p -2.28%
Royal Dutch Shell 'A' (RDSA) 1,273.60p -2.27%
Coca-Cola HBC AG (CDI) (CCH) 2,045.00p -2.25%
Hikma Pharmaceuticals (HIK) 2,210.00p -2.13%
FTSE 250 - Risers
Future (FUTR) 1,300.00p 7.44%
Watches of Switzerland Group (WOSG) 287.00p 3.99%
Weir Group (WEIR) 1,150.50p 3.56%
Hochschild Mining (HOC) 240.00p 2.65%
AO World (AO.) 162.80p 2.13%
Aston Martin Lagonda Global Holdings (AML) 58.55p 1.83%
Airtel Africa (AAF) 62.40p 1.63%
PayPoint (PAY) 564.00p 1.62%
Safestore Holdings (SAFE) 760.00p 1.60%
Spirent Communications (SPT) 269.00p 1.51%
FTSE 250 - Fallers
TUI AG Reg Shs (DI) (TUI) 345.70p -4.82%
Carnival (CCL) 968.00p -4.58%
Vivo Energy (VVO) 74.70p -3.86%
Petrofac Ltd. (PFC) 164.65p -3.54%
Micro Focus International (MCRO) 283.80p -3.47%
Cineworld Group (CINE) 55.40p -3.42%
Hammerson (HMSO) 76.22p -3.27%
Go-Ahead Group (GOG) 703.50p -3.17%
SSP Group (SSPG) 238.40p -3.01%
Sabre Insurance Group (SBRE) 250.50p -2.91%