FTSE drops below 6,000 level on retail data and trade tensions

Fri, 22nd May 2020

UK stocks steadied somewhat in late morning trading after sliding at the open as retail sales tanked in April and China proposed a new security law in Hong Kong that inflamed trade tensions with the US. At midday the benchmark FTSE 100 index was down 57 points or 0.95% to 5,958, following a 5% drop on the Hang Seng index in Asia. UK retail sales plunged a record 18.1% by volume in April, according to the Office for National Statistics, even worse than expectations. Textile, clothing and footwear sales fell over 50% as all 'non-essential' stores were shut. Insurance firm Prudential, which has large exposure to Asia, fell 6.9% to £10.38 while banking giant HSBC which generates more than half its earnings in Hong Kong fell 3.8% to 383p. Water utility United Utilities slipped 4.8% to 877p as it booked a 71% fall in annual profit, weighed down by charges related to the Covid-19 crisis. The company lifted its dividend 3% for the year to 42.6p per share, including a final payout of 28.4p, but said its dividend for the current financial year was under review. The negative sentiment spilled over to rival utility Severn Trent which dropped 4.6%, despite having confirmed its dividend policy earlier this week. Bucking the gloom, high-fashion retailer Burberry was one of the top FTSE gainers up 3.4% to £14.22, even as it cut its dividend as annual profits plunged. Burberry said it thought the impact from store closures related to lockdowns would near a peak this quarter. Also firmer was pharmaceutical company Hikma Pharmaceuticals, up 1.8% to £25.59, having received approval from US health authorities for a generic version of Amarin's drug used to treat cardiovascular disease. Telecom group Vodafone ticked up 0.2% to 129p on announcing that it had appointed outgoing Heineken chief executive Jean-Francois Van Boxmeer as its new chairman in waiting. MID- AND SMALL-CAP MOVERS Bus and train operator Go-Ahead Group dropped 11% to £10.96 after it cut its earnings forecast due to impact of the lockdown on passenger numbers. Measurement instrument group Spectris shed 4.7% to £25.62 as sales slumped 20% in the first four months of the year, partly owing to the Covid-19 crisis. Financial services company Close Brothers fell 2.8% to £10.50 having flagged a jump in bad loan provisions across its businesses due to the impact of Covid-19. Food court and publishing group Time Out slid 3.4% to 39.6p as it launched a discounted share issue to raise up to £49m to help it weather the Covid-19 storm. Media platform Future jumped 7.5% to £11.74 after it reported a surge in profit as the Covid-19 lockdowns triggered an acceleration in online user growth. Surveillance systems group Synectics jumped 12% to 120p on announcing that it had won two multi-year contracts with existing customers, including bus firm Stagecoach and a casino company. Story provided by StockMarketWire.com

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