London close: Stocks close lower after dire retail sales data
London stocks finished in the red on Friday, sliding back towards its earlier lows in afternoon trading, after a potential treatment for Covid-19 failed in its first trial and as investors digested dire UK retail sales data.
The FTSE 100 ended the day down 1.28% at 5,752.23, and the FTSE 250 was 0.68% weaker at 15,687.43.
Sterling was weaker against both of its major trading pairs, last losing 0.09% against the dollar to $1.2333, and sliding 0.3% on the euro to €1.1420.
Sentiment took a hit following reports late on Thursday that Gilead Sciences’ antiviral drug remdesivir failed in its first randomised clinical trial, dashing hopes that it could potentially be used as a treatment for coronavirus patients.
“A preliminary announcement from Gilead had boosted sentiment last week, yet that has now been undermined after Chinese trials were abandoned due to underwhelming outcomes,” said Joshua Mahony, senior market analyst at IG.
“With many speculating that a vaccine is unlikely to come this year, the economic pain that comes with continued social distancing measures is likely to continue for a long time yet.
“Donald Trump’s speculation that distancing measures could need to run into early summer are a reminder that this economic crunch isn’t going away anytime soon.”
There wasn’t much to be cheery about on the macroeconomic front either, as the latest figures from the Office for National Statistics showed retail sales suffered their worst decline ever in March due to the coronavirus pandemic.
Retail sales slumped 5.1% in March from February, versus expectations for a 4% fall, while year-on-year, retail sales were down 5.8% against expectations of a 4.7% drop.
Clothing sales were hit particularly badly, sliding 34.8% on the month, while food stores saw the strongest rate of growth on record last month, up 10.4% as people stockpiled ahead of the lockdown.
The government lockdown forcing non-essential stores to close was implemented from 23 March.
“Retail sales saw their biggest monthly fall since records began over 30 years ago with large declines in clothing and fuel, only partially offset by strong food sales,” said Rhian Murphy, head of retail sales at the ONS.
“Online-only retailers saw strong growth though, with many high street stores also unsurprisingly seeing a boost to web sales.”
Thomas Pugh, UK economist at Capital Economics, said the 5.1% month-on-month fall suggests that consumption declined by at least 4% quarter-on-quarter in the first quarter.
"As the lockdown was only introduced in the middle of March, however, a further big decline is almost guaranteed in April," he said.
In equity markets, Meggitt lost 4.24% after a downgrade to ‘sell’ at Societe Generale.
Luxury fashion brand Burberry was in the red by 3.62%, as it said that its senior leaders and directors will take a voluntary pay cut to preserve cash during the coronavirus pandemic and that it will maintain base pay for all employees unable to fulfil their roles because of closures.
It also said it will not rely on government support for jobs in the UK, where more than a third of its employees are based.
Persimmon dipped into negative territory just before the close, falling 0.08%, after saying it would start a phased reopening of its construction sites from 27 April as the industry started to emerge from the coronavirus lockdown.
Beazley slipped into the red in the afternoon as well, closing 0.91% lower, even after an upgrade to ‘buy’ at Jefferies.
On the upside, a strong performance from the housebuilding sector helped to keep some of Persimmon’s peers above water, with Barratt Developments managing gains of 0.39% and Taylor Wimpey 2.54% firmer.
Market Movers
FTSE 100 (UKX) 5,752.23 -1.28%
FTSE 250 (MCX) 15,687.43 -0.68%
techMARK (TASX) 3,476.11 -1.02%
FTSE 100 - Risers
Taylor Wimpey (TW.) 153.00p 3.52%
RSA Insurance Group (RSA) 348.20p 2.47%
Centrica (CNA) 32.28p 1.70%
Intermediate Capital Group (ICP) 1,028.00p 1.68%
Flutter Entertainment (FLTR) 9,044.00p 1.62%
Reckitt Benckiser Group (RB.) 6,506.00p 1.59%
Bunzl (BNZL) 1,713.00p 1.39%
Sainsbury (J) (SBRY) 201.50p 1.33%
Ocado Group (OCDO) 1,609.50p 1.19%
Vodafone Group (VOD) 109.00p 1.19%
FTSE 100 - Fallers
Intertek Group (ITRK) 4,726.00p -6.45%
Compass Group (CPG) 1,272.00p -5.57%
Whitbread (WTB) 2,649.00p -5.19%
Meggitt (MGGT) 252.90p -4.35%
Aveva Group (AVV) 3,241.00p -4.17%
Pearson (PSON) 432.90p -4.10%
Standard Chartered (STAN) 376.80p -3.85%
BT Group (BT.A) 115.55p -3.75%
InterContinental Hotels Group (IHG) 3,362.00p -3.70%
Royal Dutch Shell 'B' (RDSB) 1,348.40p -3.69%
FTSE 250 - Risers
Aston Martin Lagonda Global Holdings (AML) 58.95p 9.67%
Travis Perkins (TPK) 1,045.00p 8.76%
Grafton Group Units (GFTU) 640.50p 6.75%
Airtel Africa (AAF) 37.75p 5.30%
TI Fluid Systems (TIFS) 146.40p 4.57%
AJ Bell (AJB) 360.00p 4.35%
John Laing Group (JLG) 335.60p 3.77%
Countryside Properties (CSP) 402.00p 3.66%
Chemring Group (CHG) 202.00p 3.59%
Hill & Smith Holdings (HILS) 1,124.00p 3.50%
FTSE 250 - Fallers
Euromoney Institutional Investor (ERM) 748.00p -9.66%
Cineworld Group (CINE) 53.20p -9.22%
Marston's (MARS) 29.98p -8.04%
TUI AG Reg Shs (DI) (TUI) 275.00p -7.87%
Hyve Group (HYVE) 20.35p -7.71%
Dixons Carphone (DC.) 62.45p -6.79%
UK Commercial Property Reit Limited (UKCM) 60.40p -6.79%
SSP Group (SSPG) 261.60p -5.83%
Renishaw (RSW) 3,162.00p -5.50%
Rotork (ROR) 227.60p -5.40%