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London close: Benchmark breaks into green after downbeat data

By Josh White

Date: Tuesday 14 Jul 2020

London close: Benchmark breaks into green after downbeat data

(Sharecast News) - London stocks managed to break into the green in the final moments of trading on Tuesday, having spent most of the session in negative territory amid ongoing concerns about new coronavirus cases in the US and following the release of disappointing UK GDP data.
The FTSE 100 ended the session up 0.06% at 6,179.75, while the FTSE 250 closed 1.21% lower at 17,174.69.

Sterling was weaker against both of its major trading pairs, last falling 0.08% against the dollar to $1.2545, and losing 0.63% on the euro to €1.0998.

Worries about the pandemic continued to dent sentiment after California reimposed restrictions on indoor activities due to a surge in new cases.

"The mood has been downbeat all day as continued health concerns and rising tensions in relation to China have weighed on stocks," said CMC Markets analyst David Madden.

"Dealers are still worried about the rate at which the virus is spreading, and seeing as some restrictions are being reintroduced, that is adding to the bearish move too."

Madden noted that geopolitical tensions were also in the air, after the US government "hit out" against the Beijing administration over its territorial claims in the South China Sea.

"This represents the latest development in the frosty relationship between the two largest economies in the world.

"China isn't on great terms with the UK either, as earlier today it was announced the British government basically banned Huawei from its 5G network."

On home shores, data out earlier from the Office for National Statistics showed the economy grew 1.8% on the month in May.

It was a big improvement on April's 20.3% slump, but well below consensus expectations of 5.5% growth.

"GDP languished 24.5% below January's pre-Covid peak in May, as the maintenance of a strict lockdown to curb Covid-19 prevented the economy from recovering meaningfully," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

There was more bad news as the Office for Budget Responsibility said the UK economy was unlikely to recover to pre-Covid levels until the end of 2022 under its central scenario, while the budget deficit would hit its highest level in peacetime.

In its downside scenario, output would recover even more slowly, returning to its pre-virus peak only in the third quarter of 2024.

The upside scenario would see activity rebound relatively quickly, recovering by the first quarter of next year.

"The coronavirus outbreak and the public health measures taken to contain it have delivered one of the largest ever shocks to the UK economy and public finances," the OBR said.

It said the UK was on track to record the largest decline in annual GDP for 300 years, with output falling by more than 10% this year in all three scenarios and contracting by a quarter between February and April.

"This delivers an unprecedented peacetime rise in borrowing this year to between 13 and 21% of GDP, lifting debt above 100% of GDP in all but the upside scenario.

"As the economy recovers, the budget deficit falls back. But public debt remains elevated, continuing to rise in the central and downside scenarios."

In equity markets, Halma fell 4.54% after it reported record annual profit and revenue underpinned by acquisitions, but warned that adjusted pre-tax profit for the 2021 financial year would fall 5% to 10% on the year.

Online grocer Ocado lost 2.19% even after it reported a rise in half-year revenue as Britons turned to home deliveries during the coronavirus lockdown.

The company said revenue for the six months to 31 May increased 27.2% to £1.02bn.

AO World reversed earlier gains to slide 14.02%, after saying it experienced strong demand during the Covid-19 crisis but was cautious about the outlook as it reported a smaller annual loss.

The online household appliance retailer's operating loss for the year to the end of March narrowed to £3.8m from £13m as total revenue rose to £1.05bn from £902.5m.

Market Movers

FTSE 100 (UKX) 6,179.75 0.06%
FTSE 250 (MCX) 17,174.69 -1.21%
techMARK (TASX) 3,679.54 -0.49%

FTSE 100 - Risers

BT Group (BT.A) 115.80p 4.23%
BP (BP.) 304.50p 2.65%
Imperial Brands (IMB) 1,442.50p 2.52%
Royal Dutch Shell 'B' (RDSB) 1,247.60p 2.45%
Royal Dutch Shell 'A' (RDSA) 1,309.60p 2.38%
Phoenix Group Holdings (PHNX) 658.40p 2.08%
Admiral Group (ADM) 2,333.00p 2.06%
CRH (CRH) 2,950.00p 2.01%
WPP (WPP) 603.80p 1.75%
Vodafone Group (VOD) 126.78p 1.65%

FTSE 100 - Fallers

Scottish Mortgage Inv Trust (SMT) 893.50p -6.83%
Halma (HLMA) 2,187.00p -4.54%
Rolls-Royce Holdings (RR.) 256.40p -4.26%
Persimmon (PSN) 2,543.00p -4.25%
JD Sports Fashion (JD.) 619.20p -4.09%
Hargreaves Lansdown (HL.) 1,542.00p -3.99%
Compass Group (CPG) 1,100.50p -3.89%
Informa (INF) 420.90p -3.68%
Avast (AVST) 558.50p -3.46%
Taylor Wimpey (TW.) 138.75p -3.44%

FTSE 250 - Risers

Just Group (JUST) 51.80p 6.85%
Direct Line Insurance Group (DLG) 293.50p 3.67%
Computacenter (CCC) 1,680.00p 2.38%
Royal Mail (RMG) 175.00p 1.89%
IP Group (IPO) 66.20p 1.85%
Tate & Lyle (TATE) 653.40p 1.81%
Wood Group (John) (WG.) 205.10p 1.79%
National Express Group (NEX) 165.50p 1.72%
TP ICAP (TCAP) 355.00p 1.54%
LXI Reit (LXI) 111.20p 1.46%

FTSE 250 - Fallers

AO World (AO.) 141.00p -14.02%
Oxford Instruments (OXIG) 1,240.00p -7.32%
Meggitt (MGGT) 297.30p -6.69%
Cineworld Group (CINE) 53.10p -6.18%
Frasers Group (FRAS) 289.80p -6.15%
TUI AG Reg Shs (DI) (TUI) 356.30p -5.54%
Polar Capital Technology Trust (PCT) 2,075.00p -5.47%
Avon Rubber (AVON) 3,560.00p -5.44%
PPHE Hotel Group Ltd (PPH) 1,130.00p -5.44%
Hammerson (HMSO) 74.98p -5.30%

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