24th Apr 2020 08:53
(Alliance News) - Stocks in London were thrown into the red on Friday morning as UK retail sales hit historic lows.
Compounding the bad news, Gilead Sciences' possible Covid-19 treatment remdesivir failed its first clinical trial.
The FTSE 100 index was down 70.37 points, or 1.2%, at 5,756.24 early Friday. The mid-cap FTSE 250 index was down 160.01 points, or 1.0%, at 15,634.04. The AIM All-Share index was down 0.2% at 774.04.
The Cboe UK 100 index was down 1.1% at 9,738.51. The Cboe 250 was down 1.0% at 13,504.83, but the Cboe Small Companies was up 0.1% at 8,808.28.
Markets received a boost last Friday after leaked footage of a video discussion among faculty members of the University of Chicago discussing remdesivir, saying it was producing rapid recoveries in Covid-19 patients.
Then late Thursday, inadvertently released trial results showed the experimental coronavirus treatment failed in its first randomized clinical trial.
A draft summary went online briefly on the website of the World Health Organization and was first reported by the Financial Times and Stat, which posted a screenshot.
But Gilead Sciences disputed how the now-deleted post had characterised the findings, saying the data showed a "potential benefit".
Remdesivir, which is administered intravenously, was among the first drugs suggested as a treatment for the disease caused by the novel coronavirus and as such had great hopes riding on it.
In Asia on Thursday, the Japanese Nikkei 225 index closed down 0.9%. In China, the Shanghai Composite ended down 1.1%, while the Hang Seng index in Hong Kong is down 0.5% in late trade.
Also weighing on sentiment, UK March retail sales including fuel fell 5.1% month on month.
Grocery sales were up strongly by about 10%, but more than offset by a 19% fall in non-food sales - including a 35% drop in clothing.
Rhian Murphy, head of retail sales at the ONS, said: "Retail sales saw their biggest monthly fall since records began over 30 years ago with large declines in clothing and fuel, only partially offset by strong food sales.
"Online-only retailers saw strong growth though, with many high street stores also unsurprisingly seeing a boost to web sales."
Sterling was quoted at USD1.2343 early Friday, softer than USD1.2391 at the London equities close on Thursday.
UK consumer confidence was steady in April - the GfK index sitting just above a historic low recorded in 2008 - after falling sharply to minus 34 points the month before. The overall index score for data analysis business GfK's UK consumer confidence index in April remained at minus 34 – just five points above a low of minus 39 in July 2008.
The index, which surveyed more than 2,000 people between April 1 and 14, asks people how they feel about their personal financial situation, the wider economy and their attitude towards making major purchases.
In mainland Europe, the CAC 40 in Paris was down 1.3% and the DAX 30 in Frankfurt was 1.6% lower early Friday.
Back in London, Pearson was atop the FTSE 100 - and one of only a few in the green - as first quarter trading was in line with revised expectations, with revenue falling 5% year on year in the period.
Pearson blamed Covid-19 for the declined, and noted if social distancing is prolonged significantly, its North American and International Courseware businesses will see a "more pronounced effect" as campuses and schools remain closed for longer.
In the recent quarter, Global Assessment revenue declined 3%, International revenue by 10%, and North American Courseware revenue by 10%. The lone bright spot was Global Online Learning, where revenue grew 6%.
Pearson had previously proposed a final dividend for 2019 of 13.5p, which shareholders will vote on at Friday's annual general meeting.
Burberry was down 2.2%. The luxury fashion designer said its trench coat factory in Castleford, West Yorkshire is now manufacturing non-surgical gowns and supplying them to the UK National Health Service.
The company also is sourcing surgical masks through its supply chain and supplying them to the NHS and charities such as Marie Curie, Burberry said.
To date, Burberry has donated more than 100,000 pieces of personal protection equipment.
Housebuilder Persimmon fell 1.5% in early trade. It has vowed to begin a phased re-opening of its construction sites, starting Monday. The move follows similar announcements on Thursday by peers Taylor Wimpey and Vistry.
The housebuilder also said it has achieved about 820 gross private sales in the five weeks to April 19, as its sales staff continues to work from home.
Cancellation rates remain at historically low levels, Persimmon added.
On Thursday, Persimmon had added 8.4% in a positive read-across from the Taylor Wimpey and Vistry announcements.
In the midcaps, IG Group was up 1.7%. The online trading platform provider said its revenue in the first 36 trading days - out of 61 - in its fourth quarter saw revenue of GBP173 million, which is higher than GBP139.8 million in the third quarter and compares to GBP249.9 million in the first half.
"The high levels of volatility have persisted through March and into April, and the group has continued to see high levels of client trading activity and further increases in the number of active clients," IG said.
Travel firm FirstGroup gained 4.0% as it announced it has requested a GBP300 million issuance of commercial paper through the UK Government's CCFF scheme. Before this, FirstGroup had undrawn committed headroom and free cash of about GBP500 million.
In the UK, First Bus is operating at 40% of normal capacity. Passenger volumes are approximately 90% lower, the company said, but it is providing services for key workers.
FirstGroup also noted it expects its Greyhound business in the to receive part of the USD326 million allocated by the US government for continued intercity bus transport support.
"Given the unique nature of its scale as the only provider of a national network of coach services across 44 US states, Greyhound is expected to be a major recipient of this funding," the company said.
Greyhound's revenues have fallen by about 80% since the start of the coronavirus outbreak, and the business is operating just over a third of its pre-outbreak timetabled mileage at present.
The US House of Representatives passed a new USD483 billion economic stimulus bill Thursday as US job losses due to the coronavirus soared and businesses clamoured for more support.
It comes on top of USD2.2 trillion package enacted in late March. The House voted hours after data that another 4.4 million US workers had filed claims for jobless benefits, bringing the total to 26.4 million since the pandemic intensified.
The world's largest economy has been hit by about 50,000 deaths, more than any other country, and saw one of its deadliest days with 3,176 new fatalities in 24 hours.
In Europe, lawmakers were unable to pass an immediate package.
Instead, they tasked the European Commission with developing a proposal for a recovery fund to deal with a looming recession.
The EU executive's president, Ursula von der Leyen, said the fund will be rooted in the next EU long-term budget, and be paid out to member states in a "sound balance between grants and loans".
The bulk of the funds will be spent on member state reforms and cohesion, while a smaller amount will be spent on beefing up EU crisis tools, von der Leyen said.
The proposal should be ready by mid-May, she added.
The euro was trading at USD1.0741, down from USD1.0835 late Thursday.
Against the yen, the dollar was quoted at JPY107.67, versus JPY107.60.
Brent oil was trading at USD21.54 a barrel early Friday, down from USD22.78 late Thursday - but up after having dipped as low as USD15.97 this week, its worst level since 1999.
Gold was quoted at USD1,728.20 an ounce early Friday, lower than USD1,737.15 on Thursday.
By Paul McGowan; [email protected]
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