London midday: Stocks maintain losses amid Covid worries; EU talks in focus

London stocks were still in the red by midday on Monday amid ongoing concerns about a rise in new coronavirus cases in the US and elsewhere, and as EU talks over a rescue fund dragged on.

The FTSE 100 was down 0.7% at 6,248.65, with EU leaders due to resume talks about a €750mln rescue package later in the day amid divisions over the split between loans and grants.

Neil Wilson, chief market analyst at Markets.com, said: “The frugal four are holding out and have a new ally in Finland, so make that the Frugal Five Get the EU into Trouble, if there is ever a book written about it. Hungary and Poland are also unhappy about tying aid to the rule of law. Hungarian Prime Minister Viktor Orban pointedly blamed the ‘Dutch guy’, meaning Dutch PM Rutte, and threatened to veto rule of law of conditionality.

“EU Council President Charles Michel is touting a new deal with €390bn in grants, after the Frugal Five proposed a €700bn fund split equally between loans and grants which fell well short of what most other countries are hoping for. This is already down from the €500bn first imagined by Macron and Merkel.

“Clearly cohesion is weak, but the EU is usually capable of working out a fudge of sorts.”

Wilson pointed to early indications that the ‘frugals’ are prepared to accept the €390bn idea, adding that the biggest hurdles are the size of grants and the conditions attached to the money.

Meanwhile, worries about the coronavirus pandemic continued to dent sentiment.

Oanda analyst Jeffrey Halley said: “Enhanced shutdowns are now a genuine possibility as the US failed to emerge from even the first wave of the pandemic. Elsewhere, the news was equally bad. Things are going from bad to worse in India and Brazil. Worryingly, countries such as Hong Kong, and Victoria and New South Wales States in Australia are facing second waves, with social restrictions ramped up once again.

“That trend is being repeated across the globe and could well undermine any incipient globally recovery in Q3. Markets have not priced in, or are refusing to countenance, this outcome.”

On home shores, figures released earlier showed that pressure on household finances eased a little in July as the lifting of coronavirus restrictions lent some support, but worries about job security grew.

IHS Markit’s monthly household finance index - which measures households’ overall perceptions of financial wellbeing - rose to 41.5 from 40.7 in June and came in comfortably above the eight-and-a-half year low of 34.9 seen in April.

Nevertheless, it remained below the 50.0 mark and far weaker than the levels seen before the pandemic hit in March.

Markit said the phased reopening across parts of the UK economy appears to have been a factor supporting household finances, leading to a slightly improved situation for income from employment and workplace activity in comparison those recorded during the lockdown period.

However, households' financial outlook for the next 12 months deteriorated compared to June, with the index down to 42.5 in July from 45.9 last month as people become increasingly pessimistic about job security.

In equity markets, travel and leisure stocks were under pressure, with British Airways parent IAG, Cineworld, Carnival, Wizz Air and TUI all weaker.

British American Tobacco was knocked lower by a downgrade to ‘hold’ from ‘buy’ at Jefferies.

On the upside, housebuilders advanced after a Rightmove survey showed the average asking price of property coming to market in Britain hit a record this month, up 2.4% compared to March - before the lockdown was implemented - and 3.7% higher on an annual basis. This marked the highest annual increase since December 2016.

Rightmove director and housing market analyst Miles Shipside said: "The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown."

Berkeley Group, Taylor Wimpey, Barratt Developments, Crest Nicholson and Bellway all rallied.

AstraZeneca was the top performer amid expectations it will report positive results form its early stage human vaccine trials later in the day.

Media group Future also racked up healthy gains after saying it was on track for a FY20 performance towards the top end of expectations.

Market Movers

FTSE 100 (UKX) 6,248.65 -0.66%
FTSE 250 (MCX) 17,320.06 -0.16%
techMARK (TASX) 3,844.08 0.38%

FTSE 100 - Risers

AstraZeneca (AZN) 9,419.00p 2.53%
Sage Group (SGE) 686.20p 0.91%
Berkeley Group Holdings (The) (BKG) 4,457.00p 0.72%
SEGRO (SGRO) 927.00p 0.63%
Barratt Developments (BDEV) 545.00p 0.63%
Antofagasta (ANTO) 1,040.50p 0.53%
Reckitt Benckiser Group (RB.) 7,792.00p 0.49%
Polymetal International (POLY) 1,620.50p 0.40%
BAE Systems (BA.) 488.10p 0.39%
National Grid (NG.) 894.40p 0.31%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 211.30p -3.47%
Ocado Group (OCDO) 2,074.00p -3.08%
Evraz (EVR) 298.90p -2.77%
Standard Life Aberdeen (SLA) 258.20p -2.71%
British American Tobacco (BATS) 2,711.00p -2.66%
ITV (ITV) 65.10p -2.57%
Sainsbury (J) (SBRY) 189.80p -2.29%
Fresnillo (FRES) 1,066.50p -2.29%
Prudential (PRU) 1,224.00p -2.28%
Coca-Cola HBC AG (CDI) (CCH) 2,048.00p -2.10%

FTSE 250 - Risers

Future (FUTR) 1,300.00p 7.44%
Hochschild Mining (HOC) 248.20p 6.16%
Oxford Biomedica (OXB) 891.00p 3.36%
QinetiQ Group (QQ.) 315.40p 2.34%
Meggitt (MGGT) 310.20p 2.17%
Ninety One (N91) 228.80p 2.14%
Brewin Dolphin Holdings (BRW) 272.00p 2.06%
Weir Group (WEIR) 1,133.50p 2.03%
BlackRock Smaller Companies Trust (BRSC) 1,278.00p 1.91%
Crest Nicholson Holdings (CRST) 214.00p 1.90%

FTSE 250 - Fallers

Cineworld Group (CINE) 54.40p -5.16%
Micro Focus International (MCRO) 280.30p -4.66%
SSP Group (SSPG) 236.00p -3.99%
Wizz Air Holdings (WIZZ) 3,210.00p -3.89%
FirstGroup (FGP) 33.92p -3.80%
William Hill (WMH) 116.60p -3.60%
Carnival (CCL) 978.60p -3.54%
Go-Ahead Group (GOG) 701.00p -3.51%
Beazley (BEZ) 419.40p -3.50%
TUI AG Reg Shs (DI) (TUI) 350.60p -3.47%