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FTSE falls, pound rises on record surge in UK jobless

19 May 2020

The pound gained but the FTSE 100 shed some of yesterday's rally after a record rise in UK claims for unemployment benefits.

Update (16:40):  The FTSE 100 gave away a bit more of yesterday’s relief rally as investors acknowledged a surge in UK unemployment and mixed retail sales results in the US caused by the lockdown against the coronavirus pandemic.

By the close of trading the blue-chip index traded 51 points or 0.9% lower at 5,997, though the pound had a good day, up 0.4% to $1.2241 against the dollar.

On Wall Street the S&P 500 was flat at 2,954 after DIY chain Home Depot missed quarterly profit forecasts and department store group Kohl’s made a bigger-than-expected loss due Covid-19 related costs.

Figures from the Commerce Department showed the number of new home built plunged a record 30.2% in April to a seasonally-adjusted 891,000 units as the country prepared for a severe economic shock.

Eurobox rallies

In London, real estate investment trusts were again prominent among the risers and fallers. BMO Commercial Property (BCPT ) continued to rally from recent lows adding 5.2p or 9% to 63.1p, as did Custodian (CREI ), up 5.3p or 6.75% to 83.8p.

Tritax EuroBox (EBOX ) rose 5.4p or 6.8% to 84.6p after announcing at its half-year results that Covid-19 was accelerating the shift to online shopping and boosting demand for the logistics properties it owns. It said it would defer 3.9% of its rent beyond its financial year, but

Shopping centre operator Town Centre Securities (TOWN) dropped 14.5p or 12.3% to 103p.

Elsewhere, Renewables Infrastructure Group (TRIG ) slipped 6.4p or 5% to 121p after the popular alternative income fund tapped out a new issue of shares, with Greencoat UK Wind (UKW ) shedding 6.4p or 4.5% to 135p in sympathy.

Other closed-end funds on retreat included JPMorgan Indian (JII ) down 16p or 3.2% to 481.5p and Scottish (SCIN ) off 24p or 3.1% to 749p.

(8:47) Pound rises despite jobless surge

The pound has risen despite a record surge in UK claims for unemployment benefits as the coronavirus pandemic takes its toll on the job market.

The pound rose 0.4% against the dollar to $1.224 despite the rise in UK jobless claims of 856,000 in April, taking the total to 2.1m, the highest level since 1996, according to the Office for National Statistics. The unemployment rate for the first quarter, which covers only one week of the lockdown imposed to contain the spread of the coronavirus pandemic, fell to 3.9%, down from 4% in the three months to the end of February.

The FTSE 100 dipped 15 points, or 0.3%, to 6,033, though holding onto the bulk of the  gains from yesterday’s 248-point surge. Global stock markets soared yesterday after US biotechnology company Moderna (MRNA.O) reported positive results from an early trial of its vaccine against the coronavirus.

‘The April claimant count is likely to be the sign of things to come,’ said Helal Miah, investment research analyst at The Share Centre.

‘Markets and investors are bracing for the near certainty that the next set of jobs data will be horrible, along with other economic indicators to show that we are facing the worst economic conditions in living memory.

‘Many expect we will see the unemployment rate reach 10% next month and I fear it may stick at elevated levels for longer than we had believed at the start of the crisis, given how many companies and small businesses are likely to fail along the way.’

British Airways owner International Consolidated Airlines (IAG) jumped to the top of the FTSE 100, up 8.5% at 204.1p while budget airline group EasyJet (EZJ) was up 5.2% at 580.4p. On the FTSE 250, travel group TUI (TUI) was up 5.9% at 314p.

Imperial Brands (IMB) fell 6.8% to £15.40 as the tobacco group became the latest FTSE 100 giant to cut its dividend, saying it planned to reduce its payout by a third.

Investment company news brought to you by Citywire Financial Publishers Limited.

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