London midday: Stocks turn lower as virus fears take hold again
By Michele Maatouk
Date: Tuesday 28 Jul 2020
(Sharecast News) - London stocks had reversed earlier gains by midday on Tuesday as worries about a rise in new coronavirus infections outweighed hopes of a US stimulus package and a strong showing in the housebuilding sector.
Equity markets had kicked the session off a little higher on optimism surrounding a $1 trillion stimulus package in the US.
CMC Markets analyst David Madden said: "US lawmakers will be in focus this week as there are hopes that a political settlement between Republicans and Democrats will be reached, and that should pave the way for the stimulus package to be approved.
"The political negotiations will continue, but dealers would be surprised if a compromise wasn't reached."
Gains had evaporated by midday, however, with the FTSE 100 down 0.3% at 6,085.92 as worries about the Covid-19 pandemic took hold again. Madden pointed to the growing number of cases in China, India and Spain and the fact that Prime Minister Boris Johnson has cautioned businesses in the UK should prepare for a second wave. As a result, "the bulls don't want to get ahead of themselves", he said.
Market participants were also digesting the latest survey from the Confederation of British Industry, which showed that retail sales rose a little in July after non-essential shops were allowed to reopen following the lockdown but sales are expected to dip next month.
The balance of retailers reporting year-on-year growth in sales rose to +4 from -37 in June, coming in ahead of expectations for a balance of -25. Although this was only slight growth on the year, it marked the best level since April 2019.
The improvement was driven mainly by stronger grocery sales, while sales of hardware & DIY products and other normal goods such as cards, flowers and stationary, returned to growth.
CBI chief economist Rain Newton-Smith said: "It's great to see retail sales stabilise this month, but this doesn't tell the whole story. This crisis has created winners and losers within the retail sector and for some businesses the picture remains bleak.
"The re-opening of non-essential retail was a vital step towards recovery but isn't a cure-all. The Government has provided critical support for firms and jobs throughout the crisis. But ongoing financial pressures are a major challenge for some retailers, and additional direct support to shore up cash flow, such as extension of business rates relief, should be considered."
In equity markets, precious metals miners Fresnillo and Polymetal were the worst performers, having surged a day earlier as gold prices hit a new record high. Fresnillo was also in focus after it said higher commodity prices and lower costs had resulted in a "significant" rise in profitability during the first half.
Bakery chain Greggs was also in the red as it swung to a loss in the first half as sales fell after its shops were forced to close for three months due to the pandemic.
Consumer goods giant Reckitt Benckiser was a touch weaker despite reporting a 10.8% jump in first-half net revenue as its hygiene business was boosted by solid demand for cleaning products amid the pandemic.
On the upside, housebuilders put in the best performance, with Barratt, Berkeley, Persimmon and Taylor Wimpey all higher on the back of a Financial Times report suggesting the Help to Buy scheme will be extended beyond its December deadline.
Education publisher Pearson gained, having fallen sharply in the previous session on downbeat broker notes.
Miniature wargames manufacturer Games Workshop surged to the top of the FTSE 250 as it posted a rise in annual pre-tax profit and revenue and hailed an "amazing" set of results.
Greencore advanced after the Irish convenience food group reported a drop in third-quarter sales as its food to go categories were hit by the Covid-19 pandemic, but said trends were improving and announced the sale of its molasses businesses.
Market Movers
FTSE 100 (UKX) 6,085.92 -0.31%
FTSE 250 (MCX) 17,214.62 0.33%
techMARK (TASX) 3,744.87 -0.05%
FTSE 100 - Risers
Pearson (PSON) 538.60p 5.15%
Barratt Developments (BDEV) 538.60p 4.22%
Berkeley Group Holdings (The) (BKG) 4,629.00p 3.53%
Persimmon (PSN) 2,529.00p 2.72%
Whitbread (WTB) 2,285.00p 2.60%
Smurfit Kappa Group (SKG) 2,556.00p 2.49%
Taylor Wimpey (TW.) 133.20p 2.46%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,442.00p 1.59%
Land Securities Group (LAND) 540.20p 1.50%
Smith & Nephew (SN.) 1,617.50p 1.35%
FTSE 100 - Fallers
Fresnillo (FRES) 1,228.00p -3.80%
Polymetal International (POLY) 1,869.00p -3.29%
Rolls-Royce Holdings (RR.) 252.10p -3.04%
St James's Place (STJ) 938.00p -2.98%
GVC Holdings (GVC) 713.60p -2.43%
Rio Tinto (RIO) 4,729.00p -2.27%
Antofagasta (ANTO) 1,042.50p -2.25%
International Consolidated Airlines Group SA (CDI) (IAG) 182.95p -2.14%
BHP Group (BHP) 1,716.80p -1.80%
Glencore (GLEN) 181.74p -1.76%
FTSE 250 - Risers
Games Workshop Group (GAW) 9,060.00p 7.16%
Sabre Insurance Group (SBRE) 276.50p 6.14%
Bellway (BWY) 2,759.00p 4.63%
Greencore Group (GNC) 116.40p 4.30%
Provident Financial (PFG) 172.10p 4.18%
Henderson Smaller Companies Inv Trust (HSL) 772.00p 4.04%
Frasers Group (FRAS) 279.20p 3.87%
Kainos Group (KNOS) 1,076.00p 3.86%
Vistry Group (VTY) 673.50p 3.70%
Redrow (RDW) 455.20p 3.55%
FTSE 250 - Fallers
Greggs (GRG) 1,404.00p -3.77%
Plus500 Ltd (DI) (PLUS) 1,179.50p -3.60%
Hochschild Mining (HOC) 271.60p -3.48%
easyJet (EZJ) 527.20p -2.77%
Airtel Africa (AAF) 55.60p -2.46%
Rotork (ROR) 281.00p -2.29%
Aggreko (AGK) 421.00p -2.05%
Telecom Plus (TEP) 1,332.00p -1.91%
Centamin (DI) (CEY) 206.00p -1.90%
Babcock International Group (BAB) 280.80p -1.82%
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