London close: Stocks close lower after Shell slashes dividend

London stocks were lower by midday on Thursday, with oil giant Shell pacing the decline as it cut its dividend for the first time in 80 years, while the US employment market booked another week of deterioration.

The FTSE 100 ended the session down 3.5% at 5,901.21, and the FTSE 250 was 2.26% weaker at 16,454.46.

Sterling was stronger against both of its major trading pairs, rising 0.92% against the dollar to last trade at $1.2584, and rising 0.38% on the euro to €1.1513.

Stocks had rallied on Wednesday, as investors cheered news that Gilead Sciences’ antiviral ‘remdesivir’ drug had helped improve outcomes for patients with Covid-19.

CMC Markets analyst David Madden said traders were booking some profits following Wednesday’s strong gains during early trading.

"It seems as if the bulls are just taking a breather for now as people are still optimistic that governments will move towards easing lockdown restrictions," he said.

During the afternoon, investors digested further deterioration in the US jobs market, as the Department of Labor reported that initial jobless claims for the week ending 25 April rose by around 3.839 million.

That was down from the 4.427 million surge seen last week, and slightly below some economists' forecasts, with Barclays anticipating a print of four million.

On the continent, meanwhile, rate-setters in the euro area unexpectedly eased their policy settings further at Thursday's meeting, but they did not expressly reiterate that its pandemic emergency bond purchase programme, or PEPP, could be further increased in size.

Almost all economists were anticipating an increase in PEPP to support debt issuance by euro area governments, although not until the European Central Bank's June policy meeting at the earliest.

The ECB kept all its main interest rates unchanged, as expected by analysts, but lowered the interest rate that it would charge on its third round of so-called Targeted Long Term Refinance Operations between June 2020 to June 2021 to 50 basis points below the average level on its main policy rate, now at 0.0%.

"Dealers will be looking to see if the central bank is wholeheartedly committed to assisting the eurozone in this time of huge uncertainty," Madden said earlier.

"Last night, the Fed made it clear they are willing to do what it takes to overcome the crisis, so the standard has been set for the ECB."

In equity markets, Royal Dutch Shell plunged 11.37% after it slashed its first-quarter dividend by 66%, saying it was "imprudent" to maintain payouts at pre-coronavirus levels with an uncertain demand outlook and oil prices at rock bottom.

Net income attributable to shareholders on a current cost of supplies (CCS) basis excluding identified items, plunged 46% year on year to $2.8bn as prices and demand slumped due to the Covid-19 pandemic.

Hargreaves Lansdown was 12.64% weaker after around 6.05m shares in the investment platform were placed at 1,550p.

According to traders, PHL Limited - which is controlled by co-founder Stephen Lansdown - sold around £100m worth of shares in the company overnight.

The placing price represented a 6% discount to the closing share price on Wednesday.

Lloyds Bank was off 7.25% as it said first-quarter pre-tax profits slumped 95% to £74m as the company took a "significantly" increased impairment charge of £1.4bn and pulled guidance due to the coronavirus pandemic.

Sainsbury's shares fell 4.48% after it put its dividend on hold as the supermarket group warned conditions were too uncertain to make a decision at this stage in the Covid-19 crisis.

Underlying pre-tax profit for the year to 7 March fell 2% to £586m as group sales rose 0.1% to £32.4bn, while reported pre-tax profit rose 26% to £255m.

On the upside, Flutter Entertainment rose 3.24% as it said completion of its acquisition of The Stars Group was due to take place next week.

Hikma Pharmaceuticals added 1.67% after saying it was confident in its outlook for the year as the company sold more products during the Covid-19 crisis.

Consumer goods giant Reckitt Benckiser advanced 3.56% after it lifted its full-year outlook and reported a jump in first-quarter sales as demand for its products was boosted by the coronavirus pandemic.

Market Movers

FTSE 100 (UKX) 5,901.21 -3.50%
FTSE 250 (MCX) 16,454.46 -2.26%
techMARK (TASX) 3,577.16 -1.62%

FTSE 100 - Risers

Reckitt Benckiser Group (RB.) 6,630.00p 3.56%
Flutter Entertainment (FLTR) 9,750.00p 3.24%
Sage Group (SGE) 640.00p 2.14%
Hikma Pharmaceuticals (HIK) 2,370.00p 1.67%
AstraZeneca (AZN) 8,322.00p 1.40%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,088.00p 0.80%
Admiral Group (ADM) 2,330.00p 0.00%
Unilever (ULVR) 4,102.00p -0.05%
Severn Trent (SVT) 2,386.00p -0.08%
SSE (SSE) 1,256.50p -0.40%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 1,440.50p -12.64%
Royal Dutch Shell 'B' (RDSB) 1,286.40p -11.37%
Royal Dutch Shell 'A' (RDSA) 1,325.00p -10.82%
InterContinental Hotels Group (IHG) 3,608.00p -9.05%
Informa (INF) 439.20p -8.84%
Royal Bank of Scotland Group (RBS) 110.55p -8.22%
Standard Life Aberdeen (SLA) 221.10p -7.76%
Rolls-Royce Holdings (RR.) 330.00p -7.72%
Lloyds Banking Group (LLOY) 32.24p -7.25%
Aviva (AV.) 241.80p -6.89%

FTSE 250 - Risers

Marston's (MARS) 37.76p 8.38%
Equiniti Group (EQN) 176.60p 8.07%
TI Fluid Systems (TIFS) 159.60p 7.84%
Premier Oil (PMO) 32.63p 7.05%
BMO Commercial Property Trust Limited (BCPT) 79.00p 5.97%
Convatec Group (CTEC) 212.40p 5.25%
G4S (GFS) 109.20p 5.05%
Petrofac Ltd. (PFC) 196.90p 4.43%
Petropavlovsk (POG) 26.25p 4.00%
ICG Enterprise Trust (ICGT) 736.00p 3.95%

FTSE 250 - Fallers

Virgin Money UK (VMUK) 76.12p -15.21%
Crest Nicholson Holdings (CRST) 256.80p -10.08%
SSP Group (SSPG) 280.40p -8.13%
TUI AG Reg Shs (DI) (TUI) 316.50p -8.10%
Investec (INVP) 160.70p -7.97%
Network International Holdings (NETW) 415.00p -7.90%
Jupiter Fund Management (JUP) 218.60p -7.06%
Marks & Spencer Group (MKS) 92.10p -6.89%
Provident Financial (PFG) 193.50p -6.88%
Stagecoach Group (SGC) 74.80p -6.50%