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(Alliance News) - Shares in London were trading lower on Wednesday morning on fears that rising coronavirus numbers could slow the economic recovery.
The FTSE 100 index was down 14.78 points, or 0.2%, at 6,175.12 early Wednesday. The mid-cap FTSE 250 index was down 94.34 points, or 0.5%, 17,255.70. The AIM All-Share index was down 0.5% at 879.12.
The Cboe UK 100 index was down 0.3% at 615.15. The Cboe 250 also was down 0.7% at 14,676.88, and the Cboe Small Companies flat at 12,297.56.
In mainland Europe, the CAC 40 in Paris was down 0.6%, while the DAX 30 in Frankfurt was 0.4% lower.
"The mood in the market remains depressed on Wednesday as coronavirus concerns coupled with geopolitical tensions drag on risk sentiment. Equities across the board are out of favour whilst safe haven gold is consolidating," said City Index analyst Fiona Cincotta.
Gold was priced at USD1,795.01 an ounce early Wednesday, higher than USD1,793.61 on Tuesday.
Elsewhere in commodities, Brent oil was trading at USD42.98 a barrel, lower than USD43.26.
"Covid-19 concerns were further fuelled by warnings from several Federal Reserve officials that rising coronavirus numbers in the US could jeopardize the economic recovery. The timing here of the rising numbers in the sunbelt is extremely important given that some stimulus programmes are due to expire soon," added Cincotta.
US President Donald Trump has formally started the withdrawal of the US from the World Health Organization, making good on threats over the UN body's response to the coronavirus, officials said Tuesday.
The US is the largest financial contributor to the WHO – which leads the fight on global maladies from polio to measles to mental health – but it has increasingly been in Trump's crosshairs as the coronavirus takes a heavy toll.
The withdrawal is effective in one year – July 6, 2021 – and Joe Biden, Trump's presumptive Democratic opponent, is virtually certain to stop it and stay in the WHO if he defeats Trump in the November election.
The US, the country hardest hit by the coronavirus, on Tuesday posted 60,209 new cases, a record for a 24-hour period, according to a tally from Johns Hopkins University.
The economic events calendar on Wednesday has summer economic update from UK Chancellor Rishi Sunak at 1230 BST and US consumer credit at 2000 BST.
Sunak will announce a GBP2 billion scheme aimed at alleviating youth unemployment by subsidising work placements when he sets out his coronavirus recovery package.
A three-point plan to boost the ailing economy by helping job creation will include a plan to help pay for six-month placements for some under-25s facing long-term unemployment.
Meanwhile, Labour will push Sunak to "avoid additional floods of redundancy notices" by developing a "flexible" furlough scheme in areas where local lockdowns are put in place.
Sunak will also offer an immediate stamp duty "holiday" to temporarily exempt the tax on the first GBP500,000 of homes purchased in England and Northern Ireland, according to unconfirmed reports.
"Should Rishi Sunak underwhelm, stocks, particularly on the FTSE 250 could come under pressure among with the pound," warned Cincotta.
Sterling was quoted at USD1.2559 early Wednesday, softer than USD1.2586 at the London equities close on Tuesday. The euro traded at USD1.1291 early Wednesday, soft from USD1.1297 late Tuesday.
On the LSE, HSBC started the day down 3.5% after Investec cut the bank to Hold from Buy.
WPP was down 3.1% after Credit Suisse reinitiated the coverage of the advertising giant at Underperform.
Among the mid-caps, FirstGroup was the worst performer in the index, down 8.7%. The Aberdeen, Scotland-based transport company reported widened a pretax loss of GBP299.6 million for the year to the end of March compared with GBP97.9 million loss a year ago.
FirstGroup explained that the loss reflects charges relate to the North American self-insurance provision, Greyhound impairment charges, restructuring and reorganisation costs and coronavirus-related charges.
Trading trends prior to the pandemic were broadly similar throughout the year, the company noted, with industry cost pressures offset by revenue growth in First Student, First Transit and First Bus and management actions.
Annual revenue, meanwhile, grew to GBP7.75 billion from GBP7.13 billion year-on-year.
FirstGroup is not proposing to pay a dividend for financial 2020, but said it will continue to review the appropriate timing for restarting dividend payments.
Victrex was down 5.4%, the second worst performer in the FTSE 250 index, after saying that it had a solid start but weaker end to its third quarter as Covid-19 headwinds hurt performance.
The polymer solutions provider reported a 12% drop in sales volume for the three months to the end of June to 805 tonnes, with revenue down 18% to GBP58.8 million, reflecting mix as a key driver.
On a year-to-date basis, Victrex sales volume of 2,797 tonnes was broadly in line with the prior year's 2,811 tonnes. Year-to-date revenue stands at GBP210.3 million, down 3% compared to GBP217.8 million a year prior.
Looking ahead, Victrex said lower production levels and a weak product mix will hurt margins in the second half and in financial 2021.
Elsewhere, boohoo was down 7.4% after saying that it is launching an immediate independent review of its UK supply chain, led by Alison Levitt QC. The fashion retailer said it is also accelerating its independent third party supply chain review with ethical audit and compliance specialists Verisio and Bureau Veritas.
In addition, boohoo said it will be making an initial commitment to invest an incremental GBP10 million to eradicate supply chain malpractice.
The move comes after Next and ASOS dropped boohoo clothing from their websites after claims that the fast-fashion retailer sold clothes made in factories where staff were paid less than the minimum wage and worked in poor conditions.
boohoo has had more than GBP1 billion wiped from its share value in the past two days after an article in the Sunday Times newspaper alleged that workers in a Leicester factory making clothes destined for boohoo were being paid as little as GBP3.50 an hour.
"We wonder what the negative impact will be from the supplier issues. We do not know the quantum but we do know that sales will be impacted by not being on the ASOS, Next and Zalando websites in the short term and we find it hard to believe that sales for the group’s brands won't be impacted given the current media storm," said Shore Capital analyst Greg Lawless.
Shore Capital cut boohoo to Sell from Hold.
In Asia on Wednesday, Nikkei 225 index in Tokyo closed down 0.8%. In China, the Shanghai Composite closed up 1.7%, while the Hang Seng index in Hong Kong is up 0.4%.
Japan's current account surplus was sharply higher in May from the previous month, data from the country's Ministry of Finance showed.
Japan's current account surplus rose to JPY11.768 trillion, about USD109 billion, from JPY2.627 trillion in April.
The dramatic rise was boosted by a sharp contraction in the country's Goods & Services deficit to JPY6.493 trillion from JPY15.967 trillion the previous month.
May's surplus was ahead of consensus estimates, according to FXStreet, of a JPY1.088 trillion surplus.
Against the yen, the dollar was quoted at JPY107.44, soft from JPY107.52 at the close on Tuesday.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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