14th Jul 2020 08:54
(Alliance News) - Stock prices in London opened lower on Tuesday amid a toxic mix of coronavirus concerns, heightened US-China tensions, and disappointing UK economic data.
In the US, California Governor Gavin Newsom on Monday ordered all indoor restaurants, bars and movie theatres to close again as coronavirus cases soar across the state. Churches as well as businesses including gyms, shopping malls, hair salons and non-essential offices must also close indoor operations in 30 of the state's worst-hit counties including Los Angeles, he said.
Meanwhile, Hong Kong on Monday announced sweeping new measures as the city suffers a relapse. In Australia, Melbourne is already under a new lockdown, and there are signs of new outbreaks in Sydney.
The US on Monday confirmed 59,222 new coronavirus cases in the previous 24 hours, Johns Hopkins University reported in its real-time tally. The country has seen a resurgence of cases in the so-called Sun Belt, stretching across the south from Florida to California.
In addition, US-China tensions were back on the table after US Secretary of State Mike Pompeo called China's pursuit of resources in the South China Sea "unlawful", ramping up support for Southeast Asian nations and triggering an angry response from Beijing.
The comments added to a laundry list of issues that have the two economic superpowers at odds, including China's role in the virus pandemic, trade, Hong Kong and Huawei.
The FTSE 100 index was down 48.88 points, or 0.8%, at 6,127.31. The mid-cap FTSE 250 index was 161.42 points lower, or 0.8%, at 17,223.67. The AIM All-Share index was 0.7% lower at 874.89.
The Cboe UK 100 index was down 1.0% at 609.54. The Cboe 250 was 0.4% lower at 14,628.54, and the Cboe Small Companies index was flat at 9,197.06.
In mainland Europe, the CAC 40 in Paris was down 1.5% while the DAX 30 in Frankfurt was 1.3% lower.
"Risk aversion returns with stocks opening on the back foot after UK GDP dramatically misses forecasts, amid elevated US-China tensions over offshore resources in the South China Sea and intensifying coronavirus fears," said City Index analyst Fiona Cincotta.
In the FTSE 100, Halma was the worst performer, down 5.3% after the hazard detection firm warned of a fall in financial 2021 profit due to the coronavirus pandemic.
For the financial year that ended March 31, Halma's revenue was up 11% to GBP1.34 billion from GBP1.21 billion in financial 2019.
Pretax profit rose 8% to GBP224.1 million from GBP206.7 million the year prior. The figure was just shy of the GBP227 million consensus forecast. Adjusted pretax profit rose by 9% to GBP267.0 million from GBP245.7 million, in line with consensus.
Halma raised its total annual dividend 5% to 16.50 pence from 15.71p, which it said was the 41st consecutive year of dividend per share growth.
Looking ahead, Halma expects financial 2021 adjusted pretax profit to be 5% to 10% below 2020.
Ocado Group was down 3.5% despite the online grocer saying it delivered a strong performance considering the challenging times created by the Covid-19 pandemic.
For the half-year ended May 31, Ocado's pretax loss narrowed to GBP40.6 million from GBP147.4 million a year before, as revenue increased to GBP1.09 billion from GBP882.3 million. Ocado said the coronavirus crisis has significantly accelerated the ongoing shift by consumers to online grocery.
Looking ahead, Ocado said there is a positive outlook for online grocery, but it has suspended its Retail revenue growth forecast given uncertainties over the scale and duration of social distancing restrictions in the UK.
"On first glance, a GBP40 million loss is not particularly impressive - and may be downright concerning - but it must be remembered that Ocado is very much still in the growth phase, which requires a lot of investment and is therefore reflected in the bottom line. What lockdown has done is speed up the inevitable shift to online grocery shopping, which has done wonders for Ocado since it is at the very forefront of that revolution. However, now it has been given such a gift, it must ensure it capitalises on it," eToro analyst Adam Vettese said.
The Japanese Nikkei 225 index ended down 0.9%. In China, the Shanghai Composite closed down 1.3%, while the Hang Seng index in Hong Kong is down 1.5%.
The pound was quoted at USD1.2535 early Tuesday, down from USD1.2615 at the London equities close Monday, after data showed UK economy rebounded by less than expected in May.
The Office for National Statistics said that, on a monthly basis, UK gross domestic product in May rose 1.8% after a 20% drop in April and a 6.9% contraction in March.
"These are undoubtedly worrying figures. For the economy to only grow by 1.8% in May, the month where lockdown started to ease, points to choppy waters ahead. The government will be hoping that we've already reached economic 'rock bottom' and that these latest figures are the start of a consistent, upward rebound," commented Robert Alster, head of investment services at Close Brothers.
The euro was quoted at USD1.1343, lower from USD1.1359. Against the yen, the dollar was quoted at JPY107.23, flat from JPY107.28 late Monday in London.
In economic news from the continent, German inflation hardened slightly in June, according to figures from Destatis.
Consumer prices rose 0.9% on an annual basis in June, ticking up from 0.6% in May. Stripping out energy products, June's inflation rate would have been 1.6%, Destatis noted. The harmonised index of consumer prices - calculated for EU-wide comparison - rose 0.8% year-on-year in June after 0.5% growth in May.
Brent quoted at USD42.12 a barrel early Tuesday, down from USD42.92 late Monday. Gold was quoted at USD1,797.30 an ounce, down from USD1,806.50.
Oil was lower as the Joint Ministerial Monitoring Committee of the Organization of the Petroleum Exporting Countries prepares to meet on Tuesday and Wednesday to recommend levels for future supply cuts.
In the economics event calendar, there are eurozone industrial production at 1000 BST and the US consumer price index at 1330 BST.
By Arvind Bhunjun; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
HalmaOcado