London midday: Stocks pare gains after eurozone GDP; IAG slumps

Fri 31 Jul 2020

LONDON (SHARECAST) - (Sharecast News) - London stocks had flattened out by midday on Friday as weak eurozone growth figures offset stellar earnings from the US technology sector.
The FTSE 100 was steady at 5,988.64, paring earlier gains as investors weighed up solid earnings from the likes of Apple, Amazon and Facebook against data showing that eurozone GDP shrank at its fastest rate on record in the second quarter, down 12.1%.

IG analyst Joshua Mahony said: "Unfortunately the current outlook is gradually weakening as evident from yesterday's initial and continuing jobless claims out of the US. It is evident that while some elements of the economy can operate in the absence of a vaccine, economic activity will be limited until the pharma sector produces a treatment or vaccine that allows people to move and spend freely once again."

Worries about a resurgence of Covid-19 cases across Europe and in the UK also weighed, with new restrictions implemented across Northern England after a spike in cases.

Elsewhere, the latest survey from Nationwide showed house prices bounced back in July, boosted by pent-up demand after the coronavirus lockdown ended. Annual house price growth recovered to 1.5% from a 1.6% decline June. On the year, prices were up 1.5% compared to a 0.1% dip the month before.

Nationwide's chief economist, Robert Gardner, said the pick-up in prices "reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions".

"Pent-up demand is coming through, where decisions taken to move before lockdown are progressing. Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.

"Our own research, conducted in May, indicated that around 15% of people surveyed were considering moving as a result of life in lockdown."

He said there trends look set to continue in the near term, with the recently-announced stamp duty holiday serving to bring some activity forward. However, he also warned that this could be "something of a false dawn".

"Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead."

In equity markets, precious metals miners Fresnillo, Polymetal and Hochschild all shone as gold prices continued to rally.

NatWest was trading up despite saying that first-half profits evaporated as the bank was forced to set aside an extra 2bn for bad loans in the second quarter due to the Covid-19 pandemic. The impairment loss is up from 802m in the first quarter. NatWest, formerly RBS, reported a 770m pre-tax loss compared with a 2.7bn profit a year ago.

Russ Mould, investment director at AJ Bell, said the rise in the share price must be seen in the context of a big sell-off earlier this week following gloomy updates from other listed banks.

Pets At Home surged to the top of the FTSE 250 after it posted a smaller-than-expected drop in first-quarter revenue.

On the downside, British Airways and Iberia parent IAG was sharply lower after it posted a second-quarter operating loss before exceptional items of €1.36bn as the Covid-19 pandemic led to a 95.3% drop in passenger capacity. It also said it will tap financial markets for €2.75bn in fresh equity. EasyJet and Wizz Air also retreated.

BT was in the red as it reported a 13% drop in first-quarter pre-tax profit, with revenue down 7% due to the impact of Covid-19, which weighed on BT Sport revenue.

Market Movers

FTSE 100 (UKX) 5,988.64 -0.02%
FTSE 250 (MCX) 17,131.37 0.67%
techMARK (TASX) 3,753.89 0.26%

FTSE 100 - Risers

Barclays (BARC) 103.42p 2.62%
Fresnillo (FRES) 1,240.00p 2.61%
RSA Insurance Group (RSA) 430.90p 2.60%
British Land Company (BLND) 366.20p 2.43%
Hargreaves Lansdown (HL.) 1,757.50p 2.39%
Avast (AVST) 571.50p 2.33%
JD Sports Fashion (JD.) 624.60p 2.29%
St James's Place (STJ) 956.20p 2.20%
3i Group (III) 887.40p 2.19%
Homeserve (HSV) 1,355.00p 2.11%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 166.00p -8.31%
ITV (ITV) 56.70p -3.93%
BT Group (BT.A) 104.25p -3.34%
Rentokil Initial (RTO) 540.80p -3.01%
Intertek Group (ITRK) 5,456.00p -2.95%
BAE Systems (BA.) 492.70p -2.44%
Whitbread (WTB) 2,238.00p -2.10%
Rolls-Royce Holdings (RR.) 240.50p -1.96%
Imperial Brands (IMB) 1,315.50p -1.90%
GVC Holdings (GVC) 671.00p -1.76%

FTSE 250 - Risers

Pets at Home Group (PETS) 298.00p 16.22%
Spirent Communications (SPT) 278.00p 7.75%
BMO Commercial Property Trust Limited (BCPT) 57.80p 6.45%
Equiniti Group (EQN) 124.00p 6.16%
Bank of Georgia Group (BGEO) 769.00p 4.63%
Sabre Insurance Group (SBRE) 288.00p 4.35%
Drax Group (DRX) 283.80p 4.26%
Hochschild Mining (HOC) 270.60p 4.24%
Network International Holdings (NETW) 416.60p 4.15%
TBC Bank Group (TBCG) 777.00p 4.02%

FTSE 250 - Fallers

Petropavlovsk (POG) 35.65p -6.06%
Vesuvius (VSVS) 408.80p -5.19%
Wizz Air Holdings (WIZZ) 3,180.00p -3.64%
Frasers Group (FRAS) 256.80p -2.73%
Shaftesbury (SHB) 500.00p -2.72%
Go-Ahead Group (GOG) 625.00p -2.65%
easyJet (EZJ) 510.20p -2.37%
Cineworld Group (CINE) 38.78p -2.12%
Syncona Limited NPV (SYNC) 238.00p -2.06%
TUI AG Reg Shs (DI) (TUI) 300.20p -2.06%
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