18th Mar 2020 08:48
(Alliance News) -Â London stocks quickly gave back the previous session's gains on Wednesday as sentiment turned once again, with the latest round of government stimuli to counter Covid-19 unable to lift the mood.
The FTSE 100 was down 174.67 points, or 3.3%, at 5,120.23 early Wednesday. The blue-chip index had closed 2.8% higher on Tuesday.
The mid-cap FTSE 250 index was down 459.96 points, or 3.3%, at 13,464.92. The AIM All-Share index was down 2.3% at 611.48.
The Cboe UK 100 index was down 2.9% at 8,677.23. The Cboe 250 was down 3.0% at 11,692.53, and the Cboe Small Companies down 0.2% at 8,046.06.
In mainland Europe, the CAC 40 in Paris was down 2.4% while the DAX 30 in Frankfurt was down 3.8% early Wednesday.
"US equity markets rebounded yesterday on hopes of a significant fiscal package to combat the economic impact of the coronavirus. However, despite that stimulus package being announced by the White House, risk appetite reversed in the Asian trading session, with futures markets pointing to European stocks opening lower," said Lloyds Bank.
US President Donald Trump said the White House was discussing a "substantial" spending bill with Congress that would include immediate cash payments to Americans. Officials did not give hard numbers, but the Washington Post reported the amount could reach USD850 billion, with a chunk destined for airlines fearing ruin.
"We're going big," Trump told reporters.
UK Chancellor Rishi Sunak unveiled an "unprecedented package" of government-backed loans worth GBP330 billion for businesses struggling in the sudden economic paralysis caused by mass self-quarantine.
France has pledged a EUR45 billion aid package and German Chancellor Angela Merkel confirmed a 30-day "entry ban" into the EU. The World Health Organization urged the "boldest actions" on the continent, the pandemic's latest epicentre.
Asian hotspots China and South Korea have seen new infections and deaths level out in recent weeks – China reported just one new domestic case for the second consecutive day on Wednesday – but numbers are ballooning across Europe.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 1.7%. In China, the Shanghai Composite closed down 1.8%, while the Hang Seng index in Hong Kong ended down 4.2%. In Sydney, the S&P/ASX200 slumped 6.4%.
In London, grocers were outperforming the wider FTSE 100 in early dealings, with J Sainsbury shares up 8.7%, Wm Morrison Supermarkets up 3.2% and Tesco up 2.7%.
Wm Morrison Supermarkets reported a rise in profit for its recently-ended financial year.
Total revenue for the year to February 2 was down 1.1% to GBP17.5 billion, though pretax profit jumped 44% to GBP435 million. Profit was boosted as Morrisons booked a GBP27 million exceptional gain, versus a loss of GBP93 million the year before.
Profit before tax and exceptional items was up 3.0% to GBP408 million.
Like-for-like sales were down 0.8%, having risen 4.8% the year before.
Sales have been on an "improving trend" since the start of 2020, the supermarket said.
"During the last two weeks, there has been considerable stocking up and sales pull-forward as customers plan for the impact of Covid-19. Overall, for the first six weeks of 2020-21, retail contribution to LFL was 5.0%," said Morrisons.
Elsewhere in the grocery sector, Tesco and J Sainsbury noted the UK government's plan to give all retail businesses a full business rates holiday for the next twelve months.
Both said they are awaiting further details on the policy, though Sainsbury's highlighted that it paid GBP567 million in business rates for the financial year ended March 2019, of which GBP500 million related to stores.
At the other end of the index was Compass, down 6.7%. The caterer was extending Tuesday's losses as it warned on a hit from Covid-19.
Meanwhile, Restaurant Group shares were up 3.1% despite saying it has seen a sharp slowdown in sales, with its Concessions business "getting worse by the day" due to international travel bans.
For the first eight weeks of the financial year, like-for-like sales were up 4.5%. In the last two weeks, however, sales have tumbled 13%. In the Concessions business, which operates outlets in places such as airports, sales have been down 22% and the situation is "getting worse by the day".
The company, which operates casual dining chains such as Frankie & Benny's and Wagamama, is now assuming an overall decline in like-for-like sales of 25% in the current financial year, with a "significant" fall in its Concessions business.
It expects adjusted earnings before interest, tax, depreciation and amortisation between GBP95 million and GBP105 million for the financial year ended December 27.
"Clearly the situation is evolving rapidly and there is no certainty around the severity and duration of the impact on the business. The company is continuing to consider its funding options, both equity and debt, on an ongoing basis," said Restaurant Group.
Shares in the casual dining chain have already fallen 80% over the past month.
Mitchells & Butlers was down 9.1% as it said recent trading has been "severely impacted" by Covid-19.
"Given the rapidly evolving nature of the situation it is impossible to quantify the impact Covid-19 could have on our financial performance. However, we expect a significant reduction in our expected outturn for 2020 and, given this uncertainty, can no longer provide detailed guidance on the expected forward financial performance for the year," the pub operator said.
Sterling was quoted at USD1.2042 early Wednesday, higher than USD1.2057 at the London equities close on Tuesday.
The euro traded at USD1.0985 early Wednesday, down from than USD1.0974 late Tuesday. Against the yen, the dollar was quoted at JPY107.30 versus JPY107.44.
Gold was quoted at USD1,503.51 an ounce early Wednesday, lower than USD1,527.67 on Tuesday. Brent oil was trading at USD28.32 a barrel, down from USD29.72.
In the economic calendar for Wednesday, there is eurozone inflation at 1000 GMT.
By Lucy Heming;Â [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
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