FTSE sells off despite government spending splurge

Wed, 8th Jul 2020

UK stocks traded lower on Wednesday as investors dismissed the latest measures from chancellor Rishi Sunak to stimulate the economy and avoid an unemployment crisis due to the coronavirus pandemic. At the close the benchmark FTSE 100 index was down 34 points or 0.6% at 6,156, weighed down by Asia-focused banks HSBC and Standard Chartered after a threat from the US to 'destabilise' the currency peg with the dollar. Despite the waiving of stamp duty on houses up to £500,000 in the chancellor's summer statement, homebuilders were little moved and property portal Rightmove ended the day down 2.2% at 550p. Bus and rail company FirstGroup crashed 23% to 37.8p after it booked a £300m pre-tax loss, blaming writedowns at its Greyhound coach division, restructuring costs and a slump in passenger volumes due to the pandemic. FirstGroup warned of 'material uncertainties' about the pace of recovery in demand, which had slumped around 90% since the March lockdown. Shares in AIM-listed online fashion group Boohoo fell a further 14% to 224p, taking losses since Monday's open to more than 40% after a weekend press report that one of its UK suppliers was paying its workers just £3.50 per hour, well below the minimum wage. Despite a rebuttal by the company, other retailers such as Amazon, ASOS and Next announced that they would drop Boohoo's brands from their websites. Plastics manufacturer Victrex dropped 7.8% to £18.30 as its third-quarter revenue slumped 18% and margins were squeezed, partly owing to a delay in elective procedures during the pandemic hurting its medical division. Safety-related company investor Marlowe dipped 0.6% to 524p as it posted a fall in annual profit owing to acquisition expenses and losses on its sale of its air-quality activities. Marlowe's adjusted profit, however, jumped 54% to £13.6m, as revenue climbed 44%. Pharma giant AstraZeneca edged up 0.5% to £85.79 as its pancreatic cancer treatment jointly developed with Merck received regulatory approval from the European Union. Property investor Segro eased 0.7% to 909p on announcing that it had offered breathing space to tenants for rent worth £9m that was due for the third quarter. Student accommodation group Unite gained 0.1% to 929p, having forecast its rental income for the upcoming academic year to fall by 10-20%. Scottish house builder Springfield Properties added 2.7% to 96p, despite announcing that it expected its annual profit to fall by as much as 44% due to Covid-19 lockdowns disrupting construction activity. Springfield also said it had seen a resurgence in demand since it recommenced operations on site from 15 June, and therefore expected 'significantly higher' first-quarter sales in the current financial year. Packaging company MPAC jumped 10% to 269p on announcing that its order book going into the second half of 2020 remained strong, with no orders cancelled due to the Covid-19 pandemic. Story provided by StockMarketWire.com

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