London close: Stocks finish lower as sterling falls off cliff
London stocks maintained their negative distance with the previous session’s close through Wednesday afternoon, with a string of dividend suspensions on the back of the coronavirus giving investors little to smile about.
The FTSE 100 ended the session down 4.05% at 5,080.58, and the FTSE 250 was 6.58% weaker at 13,008.19.
Sterling continued its slide against its major trading pairs, and was last down 4.18% against the dollar at $1.1551 to reach its worst level in decades, while losing 2.36% against the euro at €1.0702.
The Covid-19 coronavirus pandemic was believed to be prompting a "synchronised rush" to buy up dollars.
Neil Wilson, chief market analyst at Markets.com, said it was one of the worst sustained periods of sterling selling that he could recall, pointing to a “severe dollar liquidity crunch” that central banks had yet to get a grip on.
“There is a synchronised rush for dollars that has caught most companies, governments and traders on the hop.
“Dollar funding issues have been far more serious than estimated prior to this crisis.”
IG’s senior market analyst Joshua Mahony said earlier that the recent fiscal and financial boost was already starting to wane.
“While the announcement of supportive measures has sidetracked traders for a short period of time, such boosts will only provide a brief reprieve from the overwhelming sense of fear over exactly how this virus will impact the economic landscape.”
Mahony said the Chancellor’s promise of £330bn worth of funding helped alleviate some of the fears of an economic collapse while economies went into lockdown.
“However, while these measures can help mitigate the likeliness that businesses will fold, it also raises the prospect of a post-virus world where firms are lumbered with huge debt burdens.”
Amid the doom and gloom, supermarkets remained a bright spot, with Sainsbury’s rising 12.66% and Morrisons adding 10.51% after the Chancellor said the government would be giving all retail, hospitality and leisure businesses in England a 100% business rates holiday for the next year.
Morrisons also reported a rise in full-year pre-tax profit and a jump in recent like-for-like sales, thanks to stockpiling, while Sainsbury’s announced a series of measures to help deal with panic buying.
“The supermarket sector has swiftly switched from being one of price competition and declining margins, to the haven sector which appears bulletproof as the UK restricts movement,” added Joshua Mahony.
“While a France-style shutdown would likely hit UK markets given the economic implications, traders will no doubt be looking for the benefactors given that pharmacies and supermarkets will remain open and in high demand.”
On the FTSE 250, Cineworld rocketed 151.64% and Marston’s added 43.51%, while Wetherspoon reversed earlier gains to close down 9.82%.
Cineworld announced the closure of its cinemas on Tuesday, while Marstons said earlier that it was unlikely to pay a dividend this year as it tried to save cash and protect its balance sheet from the impact of the pandemic and government advice for people to avoid pubs and restaurants.
On the downside, rental equipment firm Ashtead slumped 23.3%.
Engineering firm Meggitt was off 24.51% and aerospace and defence group Rolls-Royce lost 10.84%.
In a note on the aerospace and defence sector, Credit Suisse said aftermarket activities are likely to be temporarily halted as airlines try to conserve cash by any means possible.
"This will compound any production rate decision by the airframers," it said, adding that stocks in its coverage exposed to aftermarket are Rolls-Royce and Meggitt.
Passenger transport operator National Express Group pared back a fraction of its earlier losses during the afternoon, but still ended the day down 31.1%.
Market Movers
FTSE 100 (UKX) 5,080.58 -4.05%
FTSE 250 (MCX) 13,008.19 -6.58%
techMARK (TASX) 2,922.37 -3.66%
FTSE 100 - Risers
Sainsbury (J) (SBRY) 216.30p 12.66%
Morrison (Wm) Supermarkets (MRW) 199.30p 10.51%
Ocado Group (OCDO) 1,479.50p 8.71%
Schroders (SDR) 2,515.00p 7.39%
DCC (DCC) 4,385.00p 6.02%
Hargreaves Lansdown (HL.) 1,535.00p 5.90%
United Utilities Group (UU.) 936.00p 5.00%
BT Group (BT.A) 127.00p 4.79%
Reckitt Benckiser Group (RB.) 5,950.00p 3.86%
SEGRO (SGRO) 715.20p 2.94%
FTSE 100 - Fallers
Carnival (CCL) 620.00p -34.22%
Meggitt (MGGT) 238.40p -24.51%
Ashtead Group (AHT) 1,300.00p -23.30%
easyJet (EZJ) 503.80p -15.44%
CRH (CRH) 1,574.00p -14.78%
JD Sports Fashion (JD.) 293.20p -14.34%
Barratt Developments (BDEV) 394.60p -12.31%
Anglo American (AAL) 1,146.00p -11.82%
SSE (SSE) 1,172.00p -11.81%
Standard Life Aberdeen (SLA) 184.35p -11.63%
FTSE 250 - Risers
Cineworld Group (CINE) 53.80p 151.64%
Marston's (MARS) 31.86p 43.51%
Capita (CPI) 43.56p 31.17%
Marks & Spencer Group (MKS) 114.25p 23.75%
Man Group (EMG) 110.00p 10.40%
Vesuvius (VSVS) 402.80p 9.34%
Aston Martin Lagonda Global Holdings (AML) 184.10p 8.29%
Royal Mail (RMG) 160.80p 8.25%
Victrex plc (VCT) 2,262.00p 7.92%
Inchcape (INCH) 469.80p 7.75%
FTSE 250 - Fallers
McCarthy & Stone (MCS) 41.42p -53.46%
Intermediate Capital Group (ICP) 559.50p -32.55%
National Express Group (NEX) 90.40p -31.10%
SSP Group (SSPG) 150.80p -28.53%
Elementis (ELM) 18.31p -26.76%
TR Property Inv Trust (TRY) 217.50p -25.77%
Virgin Money UK (VMUK) 69.14p -25.24%
FDM Group (Holdings) (FDM) 490.00p -22.83%
IWG (IWG) 114.00p -22.82%
Micro Focus International (MCRO) 311.65p -22.61%