Markets nervous over second wave fears and US-EU trade talks showdown

Warnings from the US over coronavirus and its future trading relations with Europe were enough to scare investors and send markets tumbling on Wednesday.

The FTSE 100 closed down 196.43 points, or 3.1%, at 6123.69.

It fell in line with other markets, with traders particularly concerned over a rise in Covid-19 infections in the US. This was also drawn into sharp focus by warnings from US health officials.

The French Cac closed down 2.9% and the German Dax down 3.3%.

David Madden, financial analyst at CMC Markets UK, explained: “Tuesday’s update from Dr Anthony Fauci, a health adviser to the US government, spooked traders as he described the increase in Covid-19 cases in some US states as ‘disturbing’.

“The statement comes as certain US states, such as California, have seen an increase in the infection rate, which is a result of loosening lockdown restrictions.”

But fears were stoked higher by a Bloomberg report suggesting the US is lining up tariffs of 3.1 billion dollars (£2.5 billion) on goods in the UK, Spain, France and Germany, ahead of trade talks with the EU in the summer.

Connor Campbell, financial analyst at Spreadex, said: “Given the two major issues troubling investors, any kind of rebuttal from Washington regarding the US-Europe trade situation could be a lifesaver. Because, let’s be honest, any good news on the second wave front looks pretty impossible at the moment.”

In company news, only four FTSE 100 firms saw out the day up on the opening bell, despite the UK Government setting out more details for its plans to reopen pubs, bars and restaurants in England from July 4.

Hotels in England were told to encourage guests to wear face masks on communal corridors, and trays carrying room service orders should be left outside bedroom doors, rather than brought into the room, according to the new advice.

Shares in Premier Inn owner Whitbread took a hit, down 168p at 2,204p following the news, and Intercontinental Hotels closed down 186p at 3,647p.

But with quarantines for visitors to the UK remaining in place and concerns of localised shutdowns on the horizon, British Airways owner IAG was rooted firmly to the top of the biggest fallers list, down 21.5p at 230.4p.

Elsewhere, house-building giant Persimmon has named National Express boss Dean Finch as its new chief executive.

He replaces David Jenkinson, who announced plans to step down in February after just over a year as chief executive. Shares closed down 103p, or 4.4%, to 2,259p.

Rival housebuilder Crest Nicholson said it would cut 130 jobs as bosses warned full-year profits will fall by an expected 70%. Shares plunged 45.6p to 205.2p.

Mr Kipling and Bisto maker Premier Foods said sales are set to jump by a fifth in the current quarter as Britons continue to cook from scratch more often during the lockdown. Shares closed up 8.9p at 68.5p.

The only four risers on the FTSE 100 were Avast, up 7.5p at 526.5p, Polymetal International, up 8p at 1,583p, J Sainsbury, up 0.7p at 205.3p, and Ocado, up 6p at 1,987p.

The biggest fallers of the day were IAG, down 21.5p at 230.4p, Smith & Nephew, down 120p at 1,490p, Whitbread, down 168p at 2,204p, Kingfisher, down 13.8p at 213.1p, and BAE Systems, down 29.4p at 479.6p.