15th Oct 2020 17:08
(Alliance News) - London share prices finished firmly in the red on Thursday on news the capital city and other areas of the UK will face tighter restrictions in a bid to curb the spread of Covid-19.
The FTSE 100 index closed 1.7%, or 102.54 points, lower at 5,832.52. The FTSE 250 ended down 0.6%, or 111.96 points, at 17,838.45, and the AIM All-Share closed down 1.0%, or 9.85 points, at 971.49.
The Cboe UK 100 ended down 1.9% at 579.02, the Cboe 250 closed down 1.0% at 15,034.88, and the Cboe Small Companies ended 0.7% lower at 9,373.76.
Millions more people in London and across England will face tougher coronavirus restrictions from Saturday.
The capital, along with Essex, Elmbridge, Barrow-in-Furness, York, North East Derbyshire, Erewash and Chesterfield will move into the second tier of measures – including a ban on households mixing indoors, including pubs and restaurants.
But a bitter political row has so far prevented Greater Manchester being moved into Tier 3, with Health Secretary Matt Hancock telling MPs he wanted to see "rapid progress" on the issue.
Hancock's announcement means that more than half of England's population will be under Tier 2 "high" alert or Tier 3 "very high" restrictions.
A call between Greater Manchester leaders and Downing Street officials failed to reach an agreement on new restrictions and there will be further meetings later today.
Greater Manchester Mayor Andy Burnham has been resisting following the Liverpool City region moving into Tier 3 restrictions, which include the closure of pubs and bars unless they can operate as restaurants.
London Mayor Sadiq Khan told City Hall the move to Tier 2 is based on "expert public health and scientific advice about what is necessary to save lives in the capital" but stressed that he was pushing for extra support from the government.
"Nobody wants to see more restrictions – but this is deemed to be necessary in order to protect Londoners' lives by myself, London council leaders and by ministers," he said.
The ban on households mixing indoors could be devastating for the capital's 3,640 pubs and 7,556 restaurants, which will see business suffer but will not be eligible for government support available to premises which have been ordered to close.
A further 26.7 million people will now be covered by the Tier 2 restrictions.
Northern Ireland is braced for the toughest controls in the UK so far with pubs and restaurants set to close for four weeks from Friday and schools facing a two-week shutdown.
Joshua Mahony, senior market analyst at IG, said: "Market sentiment continues to sour as a London lockdown poured fuel to the fire for Coronavirus concerns. The recent European underperformance established through a sharp surge in daily Covid deaths remains in play, with FTSE 10 declines double that seen in the Dow.
"While the US does still have a comparatively elevated number of coronavirus deaths per million, the fact is that the likes of the UK is on a much steeper trajectory as things stand. The decision to push London onto a phase 2 stage does little to help boost confidence in the outlook of the UK economic hub, with the tier 2 restrictions bringing plenty of downside without the benefit of economic support associated with a tier 3 lockdown. From an FX perspective, the pound looks likely to suffer, as the economic lockdown repercussions are compounded by the continued lack of progress in Brexit negotiations."
The pound was quoted at USD1.2926 at the London equities close, down from USD1.3029 at the same time on Wednesday.
Stocks in New York were also in the red at the London equities close. The DJIA was down 0.5%, the S&P 500 index was 0.7% lower and the Nasdaq Composite had lost 1.0%.
In Paris the CAC 40 ended 2.1% lower, while the DAX 30 in Frankfurt ended down 2.5%.
France on Wednesday toughened its anti-coronavirus measures, imposing a strict curfew in Paris and eight other cities from Saturday.
In addition, new cases of coronavirus infections in Germany have soared to 6,638 in the past 24 hours, official data showed, reaching a daily level not seen since the start of the pandemic. The alarming jump in numbers came just hours after Chancellor Angela Merkel met with the leaders of Germany's 16 federal states to agree tougher restrictions designed to slow the spread of the contagion.
Germany will introduce tougher measures on gatherings and mask-wearing to fight a surge in coronavirus infections. Limits will be imposed on the numbers of people at private events if an area records more than 35 new infections per 100,000 people over seven days, and even more stringent caps if that number exceeds 50.
In London, budget airline Ryanair Holdings ended 4.3% lower on news it has reduced its winter schedule further due to increased flight restrictions imposed by European governments, leading to further staff cuts.
Winter capacity between November and March has been cut to 40% of the year prior's levels, reduced from the previously planned 60%.
The company expects the full-year traffic to be down by approximately 38 million passengers. This guidance could be further revised downwards if European governments continue to "mismanage air travel" and impose more lockdowns this winter, Ryanair said.
Tighter restrictions have been imposed through much of central Europe, including Ireland, Austria, Belgium, Portugal and the UK.
These have led to slightly weaker bookings in October and substantially fewer bookings in November and December.
Ryanair's financial year ends March 31. It expects to maintain up to 65% of its winter route network, but with reduced frequencies.
Aerospace firm Rolls-Royce Holdings ended 8.4% higher. It has priced GBP2 billion in a senior notes offering as part of its proposed debt and equity recapitalisation package.
The bond offering comprises of USD1.00 billion 5.750% notes due 2027, EUR750 million 4.625% notes due 2026 and GBP545 million 5.750% notes due 2027.
The proposed GBP5 billion recapitalisation package aims to increase resilience, strengthen the balance sheet and support long-term strategy, according to Rolls-Royce, which has been badly damaged by Covid-19's impact on air travel.
Initially, the intention was to raise approximately GBP1 billion through the offering, but the jet engine maker said that, given the strong demand from investors for the notes, it decided to increase the size of the offering.
Mondi said it has delivered a resilient performance with underlying earnings before interest, tax, depreciation and amortisation for the third quarter of EUR306 million.
The Vienna-based packaging and paper company reported underlying earnings before interest, tax, depreciation and amortization of EUR306 million for the third quarter of 2020, 20% lower when compared with the prior year. Compared to the second quarter of 2020, underlying Ebitda was down 13% from EUR353 million.
The business saw good volume growth in its uncoated fine paper and fibre-based packaging products, which together with ongoing strong cost control were more than offset by the impact of planned maintenance shuts, negative currency effects and lower average selling prices.
Mondi finished the day 4.6% lower.
BT Group "A" shares ended down 3.5% on Thursday. This after a British regulator said it would open up a probe into BT to assess whether the telecommunications firm is meeting its responsibilities as a universal broadband service provider.
Back in 2018, the UK government introduced a "universal service obligation" law, allowing homes and businesses the right to request a "decent broadband connection".
Regulator Office of Communications selected BT as the universal service provider. Under the law, customers with can request a broadband service with speeds of at least 10 megabits per second and upload speeds of at least one megabit per second.
"Upon receiving such a request, BT must assess the costs of providing that connection and, where this is less than GBP3,400, BT must provide the connection. Where the assessed costs exceed that amount, BT must also provide the connection if the customer is willing to pay the excess costs," Ofcom explained.
"While the cost of some connections will be high due to the remoteness of many of these premises, we are concerned that BT may not be complying with the regulatory conditions correctly where it assesses excess costs for a given connection. This could result in some customers' quote for a connection being higher than necessary."
Ofcom said it will now "gather evidence" and will set out the next steps of its probe before the end of 2020.
The euro stood at USD1.1705 at the European equities close, down from USD1.1741 a day before.
Against the yen, the dollar was trading at JPY105.30, up from JPY105.07 late Wednesday.
Brent oil was quoted at USD42.58 a barrel at the Thursday equities close, down from USD43.18 at the same time the previous day.
Gold was trading lower at the Thursday close. An ounce of the precious metal was quoted at USD1,904.50 an ounce at the London equities close against USD1,909.80 on Wednesday.
The economic calendar for Friday has EU foreign trade and harmonised CPI at 1000 BST. Frisday is also the final day of the EU summit. The Italian CPI reading is at 0900 BST, followed by Italian EU foreign trade at 1000. UK Finance monthly card spending statistics are at 0930 BST. Then in the US, it's advance monthly sales for retail & food services at 1330 BST, industrial production & capacity utilization at 1415 BST, and Manufacturing & trade: inventories & sales at 1500 BST.
The UK corporate calendar for Friday has annual results from pub chain JD Wetherspoon and cancer and infectious disease treatment developer Scancell Holdings.
By Anna Farley; [email protected]
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