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London open: Stocks fall after three days of gains; ECB in focus

By Michele Maatouk

Date: Thursday 04 Jun 2020

London open: Stocks fall after three days of gains; ECB in focus

(Sharecast News) - London stocks fell in early trade on Thursday following three days of gains, amid growing tensions between the US and China and ahead of the latest policy announcement from the European Central Bank.
At 0830 BST, the FTSE 100 was down 0.4% at 6,355.47.

Sentiment took a hit after the Trump administration said it was barring Chinese airlines from flying to the US from 16 June. The decision, which was made by the US Department of Transportation, is understood to have been a response to Beijing forbidding US air carriers from resuming flights to China amid the Covid crisis.

China's civil aviation regulator subsequently issued a notice allowing US carriers to resume limited services into the country.

Investors were also eyeing the latest policy announcement from the European Central Bank, due at 1245 BST.

Deutsche Bank analyst Jim Reid said: "Investors are hoping that the central bank will add further monetary stimulus, which alongside the switch back into value over growth has perhaps been helping to support the rally over recent days."

Economists expect the €750bn pandemic emergency purchase programme announced in March to be doubled in size and extended to mid-2021, Reid said.

"However our economists also expect large downward revisions to the staff forecast which may give them cover to act further, with President Lagarde having already indicated that their forecast is between the 'middle' and the 'severe' scenarios the ECB had previously discussed, implying GDP growth this year between -8% and -12%.

"The other interesting aspect to watch out for today will be how Lagarde responds to questions on the German constitutional court ruling, which challenged the ECB's previous public sector purchase programme in a court ruling last month."

In UK equity markets, Rolls-Royce was under the cosh after the aerospace and defence giant said it was cutting 1,500 jobs at its base in Derby and 700 at its Renfrewshire plant in Scotland. It had already announced last month that it would be axing 9,000 jobs.

Shares of Aston Martin slid after the luxury car maker said it was axing up to 500 jobs as it cut back production of front-engined sports cars and focus on its DBX sports utility model.

Pennon was in the red after it increased its annual dividend by 6.6% but halved its target for dividend growth as the water company set aside almost £9m for bad debts from Covid-19.

Elsewhere, office space provider IWG was hit by a downgrade to 'sector perform' at RBC Capital Markets, while Electrocomponents was lower after a downgrade to 'neutral' at JPMorgan.

On the upside, online trading platform IG Group rallied after it said full-year trading revenue is expected to be higher than last year as it continues to benefit from increased volatility due to the coronavirus pandemic.

Market Movers

FTSE 100 (UKX) 6,355.47 -0.42%
FTSE 250 (MCX) 17,786.47 -0.62%
techMARK (TASX) 3,833.05 0.16%

FTSE 100 - Risers

AstraZeneca (AZN) 8,792.00p 2.28%
Polymetal International (POLY) 1,522.50p 1.64%
Hikma Pharmaceuticals (HIK) 2,446.00p 1.12%
Experian (EXPN) 2,915.00p 0.97%
Diageo (DGE) 2,922.00p 0.97%
Relx plc (REL) 1,962.50p 0.93%
GlaxoSmithKline (GSK) 1,680.00p 0.93%
London Stock Exchange Group (LSE) 8,316.00p 0.80%
Intertek Group (ITRK) 5,596.00p 0.79%
Tesco (TSCO) 231.50p 0.78%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 311.60p -5.06%
International Consolidated Airlines Group SA (CDI) (IAG) 266.50p -4.55%
Intermediate Capital Group (ICP) 1,330.00p -4.04%
British Land Company (BLND) 433.70p -3.81%
Melrose Industries (MRO) 127.75p -3.58%
Barclays (BARC) 120.98p -3.46%
Meggitt (MGGT) 319.10p -3.33%
Johnson Matthey (JMAT) 2,206.00p -3.20%
Carnival (CCL) 1,139.50p -2.98%
Land Securities Group (LAND) 652.00p -2.89%

FTSE 250 - Risers

Euromoney Institutional Investor (ERM) 810.00p 4.65%
Oxford Instruments (OXIG) 1,298.00p 3.34%
Forterra (FORT) 227.50p 2.71%
IG Group Holdings (IGG) 816.50p 2.58%
Rank Group (RNK) 169.40p 2.42%
Morgan Advanced Materials (MGAM) 238.00p 2.37%
Hilton Food Group (HFG) 1,244.00p 2.13%
Equiniti Group (EQN) 155.60p 2.10%
Softcat (SCT) 1,102.00p 1.94%
IMI (IMI) 965.50p 1.74%

FTSE 250 - Fallers

Hammerson (HMSO) 118.30p -14.12%
Aston Martin Lagonda Global Holdings (AML) 66.00p -4.14%
Senior (SNR) 74.75p -3.55%
Future (FUTR) 1,256.00p -3.53%
Virgin Money UK (VMUK) 98.88p -3.53%
Workspace Group (WKP) 781.00p -3.52%
IWG (IWG) 292.80p -3.49%
Electrocomponents (ECM) 682.50p -3.26%
Frasers Group (FRAS) 305.20p -3.11%
Ninety One (N91) 211.00p -2.76%

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