Recovery fears send market into a slump

Global markets were sent into a tailspin on Thursday, as worries over rising Covid cases and a slowdown in the global recovery reared their heads.

Although it did not suffer as badly as the German and French indexes, the FTSE 100 still dipped 1.7%.

The index closed at 7,031 points, a 120 point reduction. Although it recovered somewhat from day-lows of 6,982.

“Ouch! Not even the glorious prospect of the first major final in 55 years for England’s male footballers can cushion the blow being felt by investors today,” said AJ Bell financial analyst Danni Hewson.

“The FTSE 100 even dipped below that psychological milestone of 7,000 for a time this afternoon. Why? Fear is the simple answer.

“Global markets have chosen today to price in the dawning realisation that Covid isn’t nearly done damaging lives and economies.

“Case numbers are rising and it doesn’t matter how loudly politicians shout about “recovery” and relaxation of restrictions, there is a very real possibility that living with this disease will require a few more U-turns.”

The yields on US Treasury bonds, one of the safest investments on the planet, have fallen to their lowest levels since mid-February.

“This is a rather different narrative to the one that was predicting that the reflation trade of rising yields might put downward pressure on some of the more expensive areas of the stock market. This almost appears old news now, as investors find something else to fret about,” said CMC Markets analyst Michael Hewson.

Meanwhile, the S&P 500 was trading down 0.8% and the Dow Jones was down 0.7% as markets closed in Europe.

In Germany, the Dax closed down 1.7% and the Cac in Paris dropped 2%.

Sterling was up by around 0.1% against two major international currencies. By the end of the day, one pound could buy 1.3768 dollars or 1.1623 euros.

Deliveroo shares dipped 2.3% even as it said that sales over the last three months are stronger than expected.

WH Smith was also deeply in the red, down 1.6% after it bought airport sites, including 17 Dixons Travel stores.

Both of these were hit by the wider sell-off in the market, but B&M’s 5% drop came after it revealed a 4.4% drop in like-for-like sales in the 13 weeks to the end of June.

BT’s shares were down 2.4%. The telecoms giant has reached an agreement with the Communication Workers Union on pay and voluntary redundancies.

Persimmon said that it completed 7,406 house sales in the first six months of 2021. But it warned that cost pressures could soon cool the housing market. Shares dipped 4.8%.

Lloyds Bank saw its shares fall 2.5% after being fined nearly £91 million by the Financial Conduct Authority for misleading customers over their home insurance renewal quotes.

Ladbrokes-owner Entain managed to break out of the malaise of most London-listed companies, posting a 0.7% rise in its share price. Net gaming revenue rose 11% in the first half of 2021 it revealed and upped its earnings forecast.

It was joined in the green by Watches of Switzerland, which reported a rise in annual profits from £1.5 million to nearly £64 million. Shares rose 1.2%.

The boss of Fuller’s, the pub giant, said that plans to lift restrictions on July 19 will remove “the final obstacle” to its business. Shares rose 4.6%.

The biggest risers on the FTSE 100 were BAE Systems, up 4p to 533p, Entain, up 13p to 1,820.5p, Croda, up 50p to 7,646p, Shell ‘A’, up 8.8p to 1,460p, and Shell ‘B’, up 4.4p to 1,424.8p.

The biggest fallers on the FTSE 100 were Intermediate Capital Group, down 110p to 2,070p, United Utilities, down 29p to 548.6p, Persimmon, down 147p to 2,923p, JD Sports, down 42p to 937.6p, and Burberry, down 82p to 1,987p.