London close: Stocks finish weaker as Covid concerns weigh

London stocks finished in the red on Thursday, as optimism over a potential Covid-19 vaccine was replaced by worries about rising cases, tightening restrictions and their impact on the economy.

The FTSE 100 ended the session down 0.8% at 6,334.35, and the FTSE 250 was 0.98% lower at 19,507.45.

Sterling was weaker as well, last falling 0.38% against the dollar to $1.3223, and sliding 0.28% on the euro to €1.1166.

“Stock markets are set to finish the day in the red as lockdown worries have replaced the recent optimism generated on the back of the vaccine hopes,” said CMC Markets analyst David Madden.

“Concerns about the health crisis and the lockdowns is the main theme of the session.”

Madden said traders had not forgotten about the hopeful news from Moderna and Pfizer-BioNTech over Covid-19 vaccines, although concerns about damage being done to the economy was in focus today.

“In London, it is the usual suspects that are feeling the most pain because of the health concerns, as airlines, transport and hospitality stocks are under pressure.

“Oil, mining and banking stocks are suffering too.

“Broadly speaking, the supermarket sector is up on the session.”

Investors were earlier digesting the latest survey from the Confederation of British Industry, which showed that UK factory orders fell at a faster pace in November as the second wave of Covid-19 hit demand.

The CBI's monthly manufacturing order book balance dropped to -40 from October's seven-month high of -34, though output volumes showed their strongest reading for more than a year.

The orders were slightly worse than a reading of -40 forecast in a Reuters poll of economists.

Total and export order books both weakened and were well below their long-run averages.

The survey showed demand for manufactured goods falling as businesses responded to a new series of Covid-19 restrictions in the UK and other countries while factory activity continued to feel the benefit of orders placed since the first lockdowns ended.

“Output volumes have declined at their slowest pace in over a year in our November survey,” said the CBI's deputy chief economist Anna Leach.

“But order books have softened again as global demand has been hit by intensified lockdowns, and manufacturers have trimmed their expectations.”

On the corporate front, B&Q owner Kingfisher fell 2.84%, even after it reported a strong rise in third quarter sales as consumers spent the coronavirus lockdown improving their homes.

Richard Hunter, head of markets at Interactive Investor, noted that over the last year, the outperformance of the share price had been significant, with a rise of 43% compared to a decline of 13% for the wider FTSE 100.

"Quite apart from the challenges which may be yet to come, the strong performance has led to the question of whether the shares are now up with events, as evidenced by some initial profit taking in early trade, such that the market consensus of the shares remains at a hold," he said.

Speciality chemicals company Johnson Matthey moved 5.57% lower after it reported a slump in first-half pre-tax profit as the coronavirus pandemic dented demand but said it expected a "materially stronger" second half.

Cineworld shares tanked 8.68% following a report the cinema chain was considering a company voluntary arrangement to help it stay afloat until the spring.

On the upside, Morrisons rallied 2.9% after an upgrade to ‘buy’ at Goldman Sachs.

Discount retailer B&M European Value Retail reversed earlier losses which came as its stock went ex-dividend, to close up 1.65%.

Halma was in the black by 2.66%, after the safety equipment maker revised its full-year profit forecasts and lifted its interim dividend as order intake in the second half increased year-on-year.

Outsourcer Serco was also a high riser, adding 2.62% after an article in the Times suggested it had attracted interest from at least two private equity firms that are quietly running the numbers with advice from investment banks.

Royal Mail gained 6.48%, despite saying it swung to a loss in the first half as redundancy and Covid-19 costs more than offset higher revenue from booming parcel deliveries.

The FTSE 250 group swung to a £20m operating loss in the six months to the end of September from a £61m profit a year earlier as revenue rose 9.8% to £5.7bn.

Market Movers

FTSE 100 (UKX)6,334.35-0.80%
FTSE 250 (MCX)19,507.45-0.98%
techMARK (TASX)3,963.15-0.52%

FTSE 100 - Risers

Croda International (CRDA)6,248.00p3.62%
Scottish Mortgage Inv Trust (SMT)1,044.00p3.37%
Halma (HLMA)2,423.00p3.11%
Morrison (Wm) Supermarkets (MRW)186.20p2.90%
Relx plc (REL)1,776.50p2.51%
Pearson (PSON)639.00p2.40%
Hikma Pharmaceuticals (HIK)2,596.00p1.96%
BAE Systems (BA.)507.80p1.74%
Ocado Group (OCDO)2,330.00p1.66%
Sainsbury (J) (SBRY)222.00p1.60%