London open: Stocks slide on Fed outlook, second wave fears

London stocks slid in early trade on Thursday following a downbeat outlook from the US Federal Reserve and amid concerns about a second wave of Covid-19.

At 0840 BST, the FTSE 100 was down 2.5% at 6,168.26.

CMC Markets analyst Michael Hewson said: "Last night’s Fed meeting turned out to be every bit as dovish as was expected, with the US central bank painting a fairly subdued outlook for the US economy. While the main focus was on the downgrades to its economic predictions, and the length of the recovery what was particularly notable was his comments on the jobs market, inequality and financial markets."

Hewson also pointed to a rise in new cases of the coronavirus in some US states.

"An increase in cases in Florida, Texas and California have caused some alarm that while economies elsewhere appear to be getting on top of the virus, there are some pockets in the US economy which may take a lot longer.

"A combination of these two factors appears to have infected sentiment in Asia markets with sharp the cosh falls there today, and this also translated into sharp falls today for markets in Europe."

In equity markets, travel stocks were under the cosh again, with cruise operator Carnival, British Airways parent IAG, InterContinental Hotels and travel company TUI all lower.

Ocado was also on the back foot after the online supermarket retailer said it had successfully raised just over £1bn to exploit the rapid change in internet grocery shopping habits sparked by the coronavirus crisis. Investors handed Ocado £657m through a placing and £350m via a debt issue of unsecured bonds due to mature in 2027.

Comparison website Moneysupermarket was weaker after it said forward guidance for 2020 remains suspended as it is still too early to gauge when and how the consumer and provider sides of its marketplace will be back to normal.

On the upside, Polymetal, Fresnillo, Centamin and Hochschild all gained as gold prices rallied after the Fed comments.

Unilever was also up after saying it plans to unify its legal structure as a UK Plc to become a simpler company more able to make acquisitions and disposals in the wake of the Covid-19 crisis.

Market Movers

FTSE 100 (UKX) 6,168.26 -2.54%
FTSE 250 (MCX) 17,150.31 -2.59%
techMARK (TASX) 3,704.46 -2.32%

FTSE 100 - Risers

Polymetal International (POLY) 1,545.50p 2.76%
Fresnillo (FRES) 786.00p 2.42%
Unilever (ULVR) 4,424.00p 1.05%
Reckitt Benckiser Group (RB.) 6,970.00p 0.00%
AstraZeneca (AZN) 8,393.00p -0.13%
Tesco (TSCO) 225.90p -0.48%
Admiral Group (ADM) 2,291.00p -0.78%
GlaxoSmithKline (GSK) 1,636.00p -0.88%
SEGRO (SGRO) 846.20p -0.98%
London Stock Exchange Group (LSE) 7,986.00p -0.99%