London open: Stocks retreat as insurers slump after pulling dividends
London stocks fell in early trade on Wednesday as worries about the spread of the coronavirus returned and after a meeting of EU finance ministers failed to yield an agreement on how to tackle the crisis.
At 0830 BST, the FTSE 100 was down 1.2% at 5,636.70, while sterling was 0.3% lower against the dollar at 1.2300 as Prime Minister Boris Johnson spent a second night in intensive care.
London Capital Group analyst Jasper Lawler said: "Optimism is fizzling out as doubts grow about how and when exactly quarantine and lockdown restrictions will end. The failure of eurozone finance ministers to agree joint action underscores the limited capacity of governments to cushion the coming economic fallout.
"In the latest developments in the virus, there have been 75,000 global deaths associated with Covid-19, 10,000 of which have been in France. There was the single largest increase in daily cases in New York State yesterday but the Chinese City of Wuhan in which the virus originated has seen its travel restrictions lifted.
"It looks like pandemic curves will not flatten in time to reach April deadlines set by many governments to review lockdown measures. A few exceptions including Czechoslovakia have eased restrictions but most of those deadlines come in about a week’s time. That would mean a reset for likely another three weeks. An extension of lockdowns and associated deeper economic hardship is probably priced in but raises the chance of a re-test of the March lows in stock markets."
Investors were also looking ahead to the release of the minutes from the Federal Reserve’s emergency meeting on 15 March.
In UK corporate news, Tesco was in the red after it posted an 18.7% decline in full-year pre-tax profit but increased its final dividend as it estimated that the cost to recruit thousands of extra staff to cope with demand and employees taking time off due to the coronavirus would be between £650m and £925m.
Insurers were under the cosh, with Direct Line, RSA and Aviva all sharply lower after they suspended their dividends due to the pandemic and following pressure from the Bank of England. Legal & General, which confirmed last week that it will pay a 2019 dividend, was also in the red.
On the upside, exhibitions and conference company Hyve was trading up after saying it was pulling its dividend due to the Covid-19 outbreak as more than a quarter of its workforce has been put on furlough and the leadership team takes a pay cut.
FTSE 100 - Risers
Sage Group (SGE) 592.80p 1.96%
Pennon Group (PNN) 1,035.50p 1.92%
Aveva Group (AVV) 3,501.00p 1.83%
Persimmon (PSN) 1,984.00p 1.43%
Intertek Group (ITRK) 4,683.00p 1.36%
Smith & Nephew (SN.) 1,492.50p 1.32%
United Utilities Group (UU.) 843.60p 1.22%
Land Securities Group (LAND) 605.40p 1.20%
Intermediate Capital Group (ICP) 1,035.00p 1.17%
Relx plc (REL) 1,736.00p 1.05%
FTSE 100 - Fallers
Aviva (AV.) 242.00p -9.26%
Rolls-Royce Holdings (RR.) 311.10p -7.33%
Legal & General Group (LGEN) 188.90p -7.27%
RSA Insurance Group (RSA) 381.80p -5.33%
Glencore (GLEN) 134.78p -4.74%
Sainsbury (J) (SBRY) 196.80p -4.47%
Royal Bank of Scotland Group (RBS) 110.65p -4.24%
M&G (MNG) 124.65p -4.15%
WPP (WPP) 540.40p -4.05%
Barclays (BARC) 90.99p -4.01%
FTSE 250 - Risers
Hyve Group (HYVE) 20.65p 18.68%
Avast (AVST) 385.00p 4.73%
TUI AG Reg Shs (DI) (TUI) 383.10p 4.16%
Fisher (James) & Sons (FSJ) 1,422.00p 4.10%
Go-Ahead Group (GOG) 1,065.00p 3.70%
RHI Magnesita N.V. (DI) (RHIM) 2,206.00p 3.57%
Crest Nicholson Holdings (CRST) 226.40p 3.47%
PureTech Health (PRTC) 230.50p 3.13%
Assura (AGR) 76.90p 2.53%
TBC Bank Group (TBCG) 735.00p 2.37%
FTSE 250 - Fallers
Virgin Money UK (VMUK) 67.82p -10.65%
OneSavings Bank (OSB) 209.40p -8.16%
Hammerson (HMSO) 70.94p -7.87%
Apax Global Alpha Limited (APAX) 128.20p -6.70%
Travis Perkins (TPK) 851.40p -6.44%
Direct Line Insurance Group (DLG) 273.40p -6.18%
Investec (INVP) 150.75p -5.84%
PPHE Hotel Group Ltd (PPH) 1,135.00p -5.42%
Marks & Spencer Group (MKS) 105.50p -5.17%
Ninety One (N91) 175.70p -4.92%