London open: Stocks edge lower amid Covid fears; sterling loses ground
London stocks were a little weaker in early trade on Wednesday amid ongoing concern about a rise in new coronavirus cases in the US, as enthusiasm over the EU’s rescue package faded.
At 0850 BST, the FTSE 100 was down 0.2% at 6,255.37, while the pound was off 0.4% against the dollar at 1.2679 following a report suggesting the UK is close to abandoning hope of reaching a Brexit trade deal with the EU amid deadlock on key issues.
According to The Telegraph, the government’s central working assumption is that Britain will trade with Europe on World Trade Organisation terms when the transition period ends on 31 December.
Spreadex analyst Connor Campbell said it was "perhaps surprising" that the FTSE hasn’t risen simply as a counterpoint to the pound’s heavy losses.
"It’s a sign of the dumpster fire that is 2020 that a no-deal Brexit, something that has often been THE trading story over the past couple of years, is relegated to third or fourth billing due to grander geopolitical issues," he said.
Campbell said investors were scared by US President Donald Trump’s claim that things are going to get worse before they get better.
"It appears that Trump’s pivot towards the presidential in an attempt to boost his plummeting approval ratings - urging Americans to wear face masks during a relatively sombre first daily covid-19 press conference since April - has worried investors. After all, if Trump has now dropped his long-held stance that everything is OK, then it is probably time to really be concerned."
In equity markets, Melrose Industries slumped. The engineering company warned of potential job losses as it looked to cut costs after second quarter sales slumped during the Covid-19 lockdowns. Melrose said revenue fell 27% after a "steep decline" in the second quarter as lockdowns shuttered its factories.
However, there was a rebound in June as measures were eased and adjusted operating profits were breakeven and Melrose said it expected to post a small first-half operating profit.
St Modwen Properties was also in the red following the release of its first-half results.
On the upside, precious metals miners Fresnillo, Polymetal and Hochschild were all firmly higher after gold prices hit $1,865 per ounce for the first time since September 2011.
DIY group Kingfisher rallied after saying it expects interim pre-tax profits to be higher than the previous year as strong demand continued across its markets after the lifting of lockdowns, but withheld guidance due to continued uncertainty.
Computacenter surged as it said adjusted first-half pre-tax profit turned out to be "substantially ahead" of the same period last year.
Market Movers
FTSE 100 (UKX) 6,255.37 -0.23%
FTSE 250 (MCX) 17,533.76 0.18%
techMARK (TASX) 3,850.26 0.11%
FTSE 100 - Risers
Kingfisher (KGF) 247.20p 9.82%
Fresnillo (FRES) 1,138.50p 6.50%
Polymetal International (POLY) 1,718.50p 3.09%
British Land Company (BLND) 379.50p 2.32%
Smurfit Kappa Group (SKG) 2,498.00p 1.63%
Avast (AVST) 585.00p 1.39%
Antofagasta (ANTO) 1,051.00p 1.35%
Bunzl (BNZL) 2,284.00p 1.06%
Rightmove (RMV) 594.20p 1.02%
Auto Trader Group (AUTO) 545.00p 0.85%
FTSE 100 - Fallers
Melrose Industries (MRO) 104.00p -13.66%
Whitbread (WTB) 2,321.00p -1.86%
International Consolidated Airlines Group SA (CDI) (IAG) 213.40p -1.75%
Associated British Foods (ABF) 1,892.50p -1.51%
Burberry Group (BRBY) 1,408.00p -1.44%
Hargreaves Lansdown (HL.) 1,726.50p -1.34%
Evraz (EVR) 303.60p -1.30%
WPP (WPP) 606.80p -1.20%
Smiths Group (SMIN) 1,460.50p -1.18%
BAE Systems (BA.) 489.90p -1.11%
FTSE 250 - Risers
Computacenter (CCC) 1,885.00p 8.58%
Mediclinic International (MDC) 272.60p 7.32%
Go-Ahead Group (GOG) 714.00p 5.00%
Hochschild Mining (HOC) 267.40p 4.78%
BlackRock Smaller Companies Trust (BRSC) 1,320.00p 4.43%
PayPoint (PAY) 588.00p 4.26%
AO World (AO.) 172.40p 2.86%
Watches of Switzerland Group (WOSG) 288.50p 2.67%
Coats Group (COA) 53.70p 2.29%
IP Group (IPO) 69.00p 2.22%
FTSE 250 - Fallers
TI Fluid Systems (TIFS) 187.00p -3.11%
Cineworld Group (CINE) 54.80p -2.80%
Calisen (CLSN) 180.05p -2.68%
St. Modwen Properties (SMP) 346.50p -2.26%
TUI AG Reg Shs (DI) (TUI) 363.20p -2.21%
Just Group (JUST) 44.96p -2.13%
SSP Group (SSPG) 249.00p -1.97%
Carnival (CCL) 976.20p -1.89%
Victrex plc (VCT) 1,910.00p -1.80%
Greggs (GRG) 1,513.00p -1.75%