London open: Stocks fall on Covid worries; retail sales grow again
London stocks fell in early trade on Friday amid concerns about rising coronavirus cases and the impact of further restrictions, as investors digested the latest UK retail sales data.
At 0840 BST, the FTSE 100 was down 0.3% at 6,030.48.
CMC Markets analyst Michael Hewson said: "Talk of new localised and targeted lockdowns, as well as curfews and quarantines appear to be becoming more commonplace, raising concerns about the resilience of the recovery we’ve seen thus far across Europe.
"Today’s European market open appears to reflect these continued concerns with a fairly weak start as we come to the end of a pretty choppy, but directionless week."
On home shores, figures from the Office for National Statistics showed retail sales grew for the fourth month in a row in August as the post-lockdown recovery continues.
Sales rose 0.8% on the month, coming in ahead of expectations for a 0.7% increase. On the year, retail sales were 2.8% higher, versus expectations of 3% growth.
Retail sales are currently 4% higher than they were before the Covid-19 pandemic in February.
The figures showed that spending on home improvements continued to rise in August, with sales at household goods stores up 9.9% compared with February. Online retail sales fell 2.5% in August when from July, but the strong growth seen over the pandemic means sales were still 46.8% higher than pre-crisis levels.
Deputy national statistician for Economic Statistics Jonathan Athow said: "Retail sales continued to grow, further surpassing their pre-pandemic level.
"Sales of household goods thrived as the demand for home improvement continued and, despite a dip this month, online sales remained high. However, clothing stores continued to struggle with sales still well below their February level. Overall, the switch to greater online sales means the high street remains under pressure."
Andrew Wishart, UK economist at Capital Economics, said the strength of retail sales is particularly striking in a month when non-retail spending, particularly on restaurant meals due to the Eat Out to Help Out scheme, also picked up.
"But spending may yet stutter as the furlough scheme is wound down and unemployment rises, weighing on household incomes and job security. And other parts of the economy, such as investment, are taking much longer to recover. That’s why we think it won’t be until around the start of 2022 that GDP recovers to its pre-virus level. And with virus case numbers accelerating, the risk is it takes longer."
In equity markets, precious metals miner Polymetal was under the cosh after its biggest shareholder, IST Group, sold 19 million shares in the company in a placing.
Plastic and fibre products supplier Essentra slumped after raising £100m in a placing and subscription to help fund the acquisition of US packaging business 3C!.
Investment manager Investec fell after saying it would scrap an interim dividend as it guided for a fall of up to 57% in headline earnings per share in volatile market conditions caused by the pandemic.
London Stocks Exchange was trading a little higher as it confirmed that it has entered into exclusive discussions with Euronext over the sale of Borsa Italiana.
Man Group was a touch firmer as it announced a one-year share buyback programme of up to $100m (£77m) to reduce its share capital and pay shares to employees.
FTSE 100 - Risers
Fresnillo (FRES) 1,308.00p 2.19%
BHP Group (BHP) 1,793.60p 1.97%
Smurfit Kappa Group (SKG) 3,086.00p 1.78%
Antofagasta (ANTO) 1,107.00p 1.47%
Anglo American (AAL) 1,997.60p 1.45%
Evraz (EVR) 344.70p 1.44%
Rio Tinto (RIO) 5,061.00p 1.42%
Ocado Group (OCDO) 2,747.00p 1.29%
Avast (AVST) 526.50p 1.06%
Mondi (MNDI) 1,590.50p 0.76%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 181.30p -4.53%
Polymetal International (POLY) 1,801.00p -4.25%
International Consolidated Airlines Group SA (CDI) (IAG) 123.95p -4.25%
Severn Trent (SVT) 2,341.00p -2.78%
InterContinental Hotels Group (IHG) 4,229.00p -2.36%
Whitbread (WTB) 2,200.00p -2.35%
NATWEST GROUP PLC ORD 100P (NWG) 98.00p -2.05%
Land Securities Group (LAND) 549.00p -1.74%
Informa (INF) 388.20p -1.60%
Next (NXT) 6,324.00p -1.59%
FTSE 250 - Risers
Rank Group (RNK) 105.00p 5.00%
4Imprint Group (FOUR) 2,100.00p 4.74%
Sirius Real Estate Ltd. (SRE) 78.00p 4.56%
John Laing Group (JLG) 296.40p 4.07%
Diploma (DPLM) 1,848.00p 2.84%
Vivo Energy (VVO) 76.70p 2.82%
TI Fluid Systems (TIFS) 151.84p 2.55%
Playtech (PTEC) 375.00p 2.32%
Lancashire Holdings Limited (LRE) 780.50p 2.29%
Barr (A.G.) (BAG) 384.50p 1.99%
FTSE 250 - Fallers
Essentra (ESNT) 264.60p -7.16%
Cineworld Group (CINE) 45.69p -5.56%
AO World (AO.) 189.40p -4.44%
Virgin Money UK (VMUK) 85.92p -4.32%
Hammerson (HMSO) 22.00p -4.31%
easyJet (EZJ) 569.00p -4.24%
Carnival (CCL) 989.60p -3.83%
Wetherspoon (J.D.) (JDW) 830.50p -3.60%
Trainline (TRN) 392.60p -3.49%
Go-Ahead Group (GOG) 662.00p -3.22%