Worries over extended post-virus economic recovery weigh down FTSE

The Bank of England’s warning that the UK economy’s post-virus recovery is to take longer than previously predicted dealt a fresh blow to the FTSE 100.

It closed in the red after the central bank said UK GDP is only set to reach pre-crisis levels by the end of 2021, as traders baulked at the prospect of a drawn-out recovery.

London’s top flight closed 77.78 points lower at 6,026.794 points at the end of trading on Thursday.

Connor Campbell, financial analyst at Spreadex, said: “Spooked by the Bank of England, sterling’s six-month highs, and a sector-dragging update from Glencore the FTSE had a rough one on Thursday.

“A flat open in the US did little for Europe, with the eurozone indices eventually following the FTSE lower as Thursday went on.”

Europe’s other main markets opened in the black but were dragged lower as they were also weighed down by cautions over US-China trade tensions.

The German Dax decreased by 0.54%, while the French Cac moved 0.98% lower.

Across the Atlantic, the Dow Jones dipped marginally on the opening bell as trade worries and increasing concern over the lack of compromise over the US’s Covid-19 stimulus package hit sentiment.

Meanwhile, sterling returned to growth as the Bank of England forecast that the economy is set to contract by 9.5% this year, while it also reduced its unemployment projections for the year.

The pound rose 0.23% versus the US dollar at 1.314 and was up 0.38% against the euro at 1.109.

In company news, mining giant Glencore dived after it decided not to pay out a proposed 2.6 billion US dollars (£2 billion) dividend.

It plunged by 15.86p to 180.34p after it reported a slump in half-year profits due to weaker commodity prices and the impact of the virus.

Birmingham Bullring owner Hammerson slid in value after it announced plans to raise more than £800 million through selling its 50% stake in European shopping centre owner VIA Outlets.

The company said that the move will help it pay down a massive debt bill, reducing it to around £2.2 billion.

Shares in the business fell by 8.54p to 47.42p at the close of play.

Elsewhere, JD Wetherspoon lifted higher despite announcing plans to cut nearly a third of head office jobs.

The pub chain saw shares rise by 16.5p to 934p after it said 110 to 130 of the 417 roles in its head office could be axed as it reduces costs in the face of the pandemic.

Small business finance provider Duke Royalty bounced 3.75p higher to 24.25p after it said its partners reported an upturn in trading in May, June and July, after the initial revenue drop they experienced at the start of the pandemic.

The price of oil dipped after it rolled back from Wednesday’s four-month high as traders sought to cash in.

The price of a barrel of Brent crude oil decreased by 1.44% to 45.19 US dollars.

The biggest risers on the FTSE 100 were Pearson, up 44p at 605p, Aviva, up 13.2p, ITV, up 2.4p at 63.3p, and Mondi, up 44.5p at 1,469.5p.

The biggest fallers of the day were Glencore, down 15.86p at 180.34p, Land Securities, down 30.2p at 579.8p, Rio Tinto, down 238p at 4,720p, and Taylor Wimpey, down 5.35p at 118.35.

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