FTSE slips as reports of slow lockdown exit disappoint

The FTSE 100 and pound fall on reports that a slow, phased reopening of the UK economy will be announced by Boris Johnson tonight.

(Update) The FTSE 100 narrowed its losses, closing nearly 12 points or 0.2% lower at 6,612. The ‘mid-cap’ FTSE 250 also clawed back most of its earlier retreat, ending the day nearly 55 points or 0.26% down at 20,981. 

Morning report

10:19am: London stocks slid on reports of a slow exit from the current lockdown that will see restaurants and retail outlets closed until mid-April.

The FTSE 100 slid 1%, or 70 points, to 6,553 as it failed to be buoyed by a 0.4% dip in sterling to trade at $1.4008 against the dollar ahead of prime minister Boris Johnson’s lockdown announcement later today.

Johnson will unveil his road map for the easing of lockdown restrictions at 7pm tonight, with a phased return to normal life expected to start with a reopening of schools on 8 March and meetings in public spaces allowed between two people.

From the end of March, outdoor gatherings of up to six people or two households are expected to be allowed and outdoor sports facilities will reopen.

However, the reopening of non-essential shops and pubs and restaurants is not expected until mid-April, which has caused disappointment in markets.

‘The delay to the retail reopening helps explain why the FTSE and pound have both opened the week in the red,’ said Spreadex analyst Connor Campbell.

‘For while investors are no doubt happy the country is loosening the restrictions once again, the reality is they don’t hold positions in schools and picnics.’

Smith & Nephew (SN), the provider of hip and knee replacements which tumbled last week after reporting an almost halving of profits in 2020, led the blue chips lower. The shares shed 4.3%, or 64p, to £14.09 after analysts cut their share price targets.

Ocado (OCDO) fell 3.5%, or 91p, to £24.68 on a Which? report that said the online supermarket delivery platform had a lack of delivery slots and had struggled to meet a surge in demand caused by the pandemic, while Sainsbury’s (SBRY) ranked highest for grocery delivery according to the consumer rights organisation.

The mid-cap FTSE 250 matched the FTSE’s 1% decline, retreating 225 points to 20,810.

G4S (GFS) weighed on the index as it dropped nearly 10% to 242p after GardaWorld pulled out of a £4bn auction for the security group, leaving a clear path for US rival AlliedUniversal.

Mitchells & Butlers (MAB) provided some upside momentum as the pub group leaped 10%, or 29p, to 320p after launched a £351m ‘critical’ cash raise from investors.

The All Bar One and Harvester owner said the share issue would allow it to reduce its unsecured debt and allow it to invest in its business.

Investment trusts

Fidelity China Special Situations (FCSS ) and Templeton Emerging Markets (TEM ) were among the main fallers, respectively down 3.1% to 467p and 2% at £10.30.

Private equity giant 3i Group (III ) gave up 11p or 1% in line with the FTSE 100 to stand at £11.25 after announcing the £89m acquisition of head hunter Wilson Human Capital Group, whose business it hopes to expand internationally.

Jupiter Emerging & Frontier Income (JEFI ) slipped 1.4p or 1.4% to 103p after declaring a 1p per share quarterly dividend.

NextEnergy Solar Fund (NESF ), the lowest rated of London-listed renewable energy funds, firmed 0.7p or 0.7% to 101.1p after reporting a 1.1% fourth quarter increase in net asset value, or 2.9% with the dividend included.

The main cause of the net asset value uplift was a 0.25% reduction in the discount rate to value assets, confirming a trend of other renewables funds which have reported strong competition for the projects they seek to buy.

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