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FTSE steadies after sell-off amid US virus resurgence

25 June 2020

FTSE 100 reverses course after sell-off at the open as concerns over resurgence in coronavirus cases in the US linger.

The FTSE 100 has steadied, reversing course after a sell-off at the open, as concerns over a resurgence of coronavirus cases in the US lingers.

After tumbling 3.1% yesterday, the UK blue-chip index lurched lower at the open before clawing back losses to trade at 6,118 points, down six points on the day but up from an earlier low of 6,031.

Investors grappled with a record 38.672 new Covid-19 cases in the US on Wednesday, while warnings from the World Health Organization (WHO) and the International Monetary Fund (IMF) continued to weigh.

The WHO reported global cases of the Covid-19 virus were growing at the rate of 1m a week, with surges in the US and Latin America, while the IMF yesterday forecasted a 4.9% slump in the global economy this year, a sharp downgrade from the 3% 

‘The safe haven trade is in full swing,’ said Fiona Cincotta, analyst at City Index.

‘The overriding fear for traders is that the surge in cases could derail the economic recovery,’ she said. 

‘The IMF highlighted the unprecedented hit to consumer spending and more economic scarring, with firms going out of business and people remaining unemployed for longer. The outlook made for grim reading and the reality check has hit confidence.’

Property search engine Rightmove (RMV) was among the FTSE 100 fallers, down 3.1% at 536p, while United Utilities (UU) dropped 4% to 916.6p. 

The FTSE 250 ‘mid-cap’ index slid 1.6%, or 286 points, to 16,864 pulled lower by pub and restaurant group Mitchells & Butler (MAB), which fell 5%, or 10p, to 193.8p despite being given the green light to reopen on 4 July. 

Easyjet (EZJ) fell 5.6% to 698.4p after the budget airline sought to raise up to £450m through a share placing as Covid-19 widened its first-half losses to £353m.

The biggest casualty this morning was Non-Standard Finance (NSF), which crashed 28.6% to 8.2p after the UK lender warned over its ability to operate as a going concern due to the impact of Covid-19, which has halted lending and is expected to result in a spike in defaults.

John van Kuffeler, chief executive of the lender, said the past 18 months had been ‘difficult and disappointing’.

Struggling shopping centre operator Intu Properties (INTU) rallied 7.7% or 0.3p to 4.2p after declines earlier this week.

Secure Income Reit (SIR ) added 2.5p or 0.9% to 271p after updating investors on rent collection.

Sequoia Economic Infrastructure Income (SEQI ) edged slightly higher to 104.5p after the debt fund used its annual results to reaffirm a 6.25p per share dividend target for this financial year, but said it was slowing the pace of new lending and had put four loans in ‘run off’ due to their low ESG scores.

Rival SQN Asset Finance Income (SQN ) was in favour, up 7.5% or 2.5p to 35.9p.

But a raft of UK equity, property and global trusts retreated with Manchester and London (MNL ), Aurora (ARR ), Majedie (MAJE ) and Ediston Property (EPIC ) down between 4.3% and 6.8%.

 

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