London close: Benchmark finishes weaker amid surge in unemployment

London’s benchmark index remained below the waterline by the close on Tuesday as data revealed a surge in unemployment claims.

The FTSE 100 ended the session down 0.77% at 6,002.23, while the FTSE 250 managed gains of 0.55% to close at 16,320.08 - both boards having surged a day earlier on news of a potential vaccine by US biotechnology company Moderna.

Sterling was stronger against both of its major trading pairs, last rising 0.52% against the dollar to $1.2258 and advancing 0.31% on the euro to €1.1208.

Data released earlier by the Office for National Statistics showed UK unemployment surged to a 24-year high of 2.1 million 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.

At the same time, the share of the labour market claiming out-of-work benefits rose to 5.8% from 3.5%.

The figures showed 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.

“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,” said Andrew Wishart, UK economist at Capital Economics.

“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 closed down 6.5% 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 by 3.42% 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 2.1% 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 2.27% 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 8.16% higher, while insurer Beazley advanced 7/79% 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) 6,002.23 -0.77%
FTSE 250 (MCX) 16,320.08 0.55%
techMARK (TASX) 3,684.77 -0.03%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 203.50p 8.16%
Standard Life Aberdeen (SLA) 233.30p 5.28%
ITV (ITV) 76.50p 3.41%
M&G (MNG) 121.45p 3.14%
JD Sports Fashion (JD.) 562.00p 3.04%
InterContinental Hotels Group (IHG) 3,662.00p 2.58%
Ocado Group (OCDO) 1,950.50p 2.47%
DCC (DCC) 6,120.00p 2.27%
British Land Company (BLND) 355.30p 2.22%
Auto Trader Group (AUTO) 511.00p 2.20%

FTSE 100 - Fallers

Imperial Brands (IMB) 1,545.50p -6.50%
Centrica (CNA) 37.22p -5.44%
SSE (SSE) 1,223.50p -4.79%
Compass Group (CPG) 1,114.00p -3.42%
Next (NXT) 4,478.00p -2.63%
Unilever (ULVR) 4,119.00p -2.62%
Sainsbury (J) (SBRY) 183.60p -2.24%
Reckitt Benckiser Group (RB.) 7,032.00p -2.20%
Antofagasta (ANTO) 837.40p -2.10%
National Grid (NG.) 913.80p -2.10%

FTSE 250 - Risers

Hyve Group (HYVE) 14.54p 11.16%
Hochschild Mining (HOC) 198.90p 9.89%
Hammerson (HMSO) 64.74p 9.80%
Network International Holdings (NETW) 419.00p 9.40%
UDG Healthcare Public Limited Company (UDG) 677.50p 8.66%
Beazley (BEZ) 357.20p 7.79%
BMO Commercial Property Trust Limited (BCPT) 62.10p 7.25%
Micro Focus International (MCRO) 454.80p 7.01%
Crest Nicholson Holdings (CRST) 252.40p 6.50%
Elementis (ELM) 63.10p 6.23%

FTSE 250 - Fallers

Greencore Group (GNC) 140.30p -7.15%
PureTech Health (PRTC) 234.00p -5.41%
The Renewables Infrastructure Group Limited (TRIG) 121.20p -4.87%
Fisher (James) & Sons (FSJ) 1,188.00p -4.60%
Greencoat UK Wind (UKW) 134.80p -4.24%
RHI Magnesita N.V. (DI) (RHIM) 2,236.00p -3.62%
Apax Global Alpha Limited (APAX) 127.40p -3.02%
JPMorgan Indian Investment Trust (JII) 479.50p -3.02%
Kingfisher (KGF) 166.70p -2.94%
Dixons Carphone (DC.) 70.00p -2.78%