London close: Stocks finish weaker amid jobs, vaccine disappointment

The FTSE 100 ended the session down 0.53% at 5,969.71, and the FTSE 250 was off 1.52% at 17,891.01.

Sterling was trading weaker as well, last falling 0.79% against the dollar to $1.2961, and losing 0.12% on the euro to €1.1046.

“Sentiment has gone from bad to worse today as traders are worried about the health crisis,” said CMC Markets analyst David Madden.

“The number of new coronavirus cases has stoked fears about stricter restrictions, and that has impacted market confidence as economic activity could take a hit.

“Earlier today, the IMF revised upward its growth outlook for the world economy for this year but that hasn’t stopped the decline in European equities.”

Madden noted that the body now believed the global economy would shrink by 4.4% in 2020, compared to its June prediction for an economic contraction of 4.9%.

For 2021, the IMF was now anticipating growth of 5.2%, down from 5.4% in a prior update.

“The lack of progress with respect to a US coronavirus relief package hasn’t helped sentiment in the markets either.”

US-based pharmaceutical and personal care giant Johnson & Johnson temporarily paused further dosing in all of its Covid-19 vaccine candidate clinical trials due to an "unexplained illness" in a study participant.

The pause included its phase 3 ‘Ensemble’ trial, with the company saying the participant’s illness was being reviewed and evaluated by the study’s independent data safety monitoring board and its internal clinical and safety physicians.

“The news that Johnson & Johnson has paused its vaccine trial has not gone entirely unnoticed, but the market has learned to live with the ups and downs of product development over the past few months, with the reaction to this kind of news much more muted than during the summer,” said IG analyst Chris Beauchamp.

Meanwhile, figures from the Office for National Statistics showed the unemployment rate rose more than expected August, hitting its highest level in three years as the coronavirus pandemic continues to take its toll.

The unemployment rate increased to 4.5% from 4.1% in July, coming in above consensus expectations of 4.3%.

According to ONS estimates for June to August, around 1.52m people were unemployed, up 209,000 on a year earlier and 138,000 higher than the previous quarter.

Redundancies increased in June to August by 113,000 on the year, and a record 114,000 on the quarter, to 227,000.

The annual increase was the largest since April to June 2009, with the number of redundancies at its highest level since May to July 2009.

“Since the start of the pandemic there has been a sharp increase in those out of work and job hunting but more people telling us they are not actively looking for work,” said ONS deputy national statistician for economic statistics Jonathan Athow.

“There has also been a stark rise in the number of people who have recently been made redundant.”

Laith Khalaf, financial analyst at AJ Bell, noted that things looked set to get worse before they would get better for the UK economy, as furlough expired and greater social restrictions were enforced, although not on a nationwide basis.

“The huge cost of the Covid crisis response also needs to be reckoned with.

“The IFS estimates borrowing will hit £350 billion this year, a level never seen in peacetime Britain.

“The government will probably wait until it can at least see the edge of the woods before it lays out its plans to balance the books, but tax rises look set to be on Rishi’s menu.”

Chinese trade data was more upbeat, with exports up 9.9% on the year in September and imports 13.2% higher.

In equity markets, stocks with exposure to the pandemic and related restrictions were under the cosh.

Engine maker Rolls-Royce was off 6.03% following strong gains in the previous session, while British Airways and Iberia parent IAG also lost ground, closing down 4.06%.

Aerospace and defence engineer Meggitt was 7.65% weaker, Upper Crust owner SSP lost 5.16%, pub chain Mitchells & Butlers was down 2.7%, cruise operator Carnival slid 6.04%, and travel company TUI fell 2.67%.

Cineworld was down 4.56% after Disney decided not to go for a full theatrical release of Pixar animation Soul, opting instead to premiere it on streaming service Disney+.

On the upside, SSE added 1.66% after agreeing to sell its 50% share in its Multifuel energy-from-waste ventures to Australian fund manager First Sentier Investors for £995m in cash as part of its £2bn disposal programme.

Credit checking firm Experian was also in the black by 1.91%, after Credit Suisse upped its price target on the stock.

Market Movers

FTSE 100 (UKX) 5,969.71 -0.53%
FTSE 250 (MCX) 17,891.01 -1.52%
techMARK (TASX) 3,857.60 -1.10%

FTSE 100 - Risers

Scottish Mortgage Inv Trust (SMT) 1,075.00p 1.80%
SSE (SSE) 1,348.00p 1.66%
Experian (EXPN) 3,067.00p 1.63%
Tesco (TSCO) 222.00p 1.51%
Bunzl (BNZL) 2,553.00p 1.39%
Morrison (Wm) Supermarkets (MRW) 174.60p 1.28%
Sainsbury (J) (SBRY) 202.50p 1.15%
B&M European Value Retail S.A. (DI) (BME) 503.00p 0.98%
Polymetal International (POLY) 1,725.50p 0.91%
Kingfisher (KGF) 307.70p 0.89%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 183.10p -6.03%
British Land Company (BLND) 355.40p -4.64%
Lloyds Banking Group (LLOY) 26.87p -4.28%
Hargreaves Lansdown (HL.) 1,477.50p -4.18%
International Consolidated Airlines Group SA (CDI) (IAG) 97.62p -4.06%
Land Securities Group (LAND) 536.10p -4.01%
NATWEST GROUP PLC ORD 100P (NWG) 108.90p -3.59%
Legal & General Group (LGEN) 192.15p -3.56%
Barclays (BARC) 102.10p -3.53%
Taylor Wimpey (TW.) 117.45p -3.41%

FTSE 250 - Risers

IP Group (IPO) 84.50p 6.25%
PureTech Health (PRTC) 250.00p 2.25%
Vectura Group (VEC) 107.40p 1.90%
Allianz Technology Trust (ATT) 2,770.00p 1.28%
FirstGroup (FGP) 53.00p 1.05%
Marshalls (MSLH) 720.00p 0.91%
4Imprint Group (FOUR) 1,980.00p 0.81%
Synthomer (SYNT) 333.00p 0.73%
AJ Bell (AJB) 420.00p 0.72%
Polar Capital Technology Trust (PCT) 2,215.00p 0.68%

FTSE 250 - Fallers

National Express Group (NEX) 153.90p -7.95%
Meggitt (MGGT) 286.00p -7.65%
Carnival (CCL) 930.40p -6.04%
Mediclinic International (MDC) 290.00p -5.66%
Babcock International Group (BAB) 259.90p -5.49%
Vistry Group (VTY) 586.00p -5.41%
Provident Financial (PFG) 206.00p -5.33%
SSP Group (SSPG) 187.30p -5.16%
Sanne Group (SNN) 644.00p -5.01%
Countryside Properties (CSP) 347.80p -4.97%