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London midday: Stocks fall amid Covid worries; GDP in focus

(Sharecast News) – London stocks had fallen further by midday on Friday as investors digested the latest UK GDP data, with US President-elect Joe Biden’s Covid relief package failing to lift markets amid growing worries about the pandemic and tightening restrictions.
The FTSE 100 was down 0.9% at 6,741.58.

IG market analyst Joshua Mahony said: “European markets are ending the week on a somewhat sour note, with fears over increased lockdown measures in Germany, France, and China denting sentiment.

“A slump in UK GDP for November highlights the detrimental impact lockdown measures are taking on economic growth, and the highly infectious forms of the virus now evident in the UK, South Africa, Brazil, and Japan do raise the risk of further nationwide lockdowns as the virus spreads.

“Vaccination efforts will help lift sentiment over time, yet the long-term nature of those efforts mean traders are instead focusing on the economic havoc this virus will wreak in the meanwhile.”

Data released earlier by the Office for National Statistics showed the economy shrank 2.6% in November but beat expectations as the government imposed a second Covid-19 lockdown on England.

The drop in output ended six consecutive months of growth as all four nations in the UK put restrictions in place in an effort to stem a resurgence of coronavirus infections. Britain entered a stricter shutdown in early January that could last for months.

Output in November dropped back to 8.5% less than in February compared with a 61% shortfall in October. The economy was 8.9% smaller than a year earlier compared with an annual decline of 6.8% the month before.

The result showed the economy holding up better than the 4.6% average drop forecast by analysts as businesses adapted to restrictions.

The services sector was most affected, dropping 3.4%, with hairdressers and pubs the hardest hit. Production edged down 0.1% with factories open and often busy ahead of the Brexit trade deadline. Construction expanded 1.9%.

As far as Biden’s $1.9trn Covid relief package is concerned, Mahony said it appears to be a case of buy-the-rumour-sell-the-fact, as investors largely shrugged off the package, which has been months in the making.

“While bulls have been crying out for a fresh cash injection to stave off further economic suffering, the minimal market reaction highlights the fact that markets have largely factored in such a package given the recent Democratic success,” he said.

In equity markets, DS Smith was in the red after Merpas sold shares in the packaging company in a placing.

Oilfield services provider Petrofac slid after the Serious Fraud Office said a former employee of one of its subsidiaries had admitted additional charges under the UK Bribery Act. No charges were brought against any group company or any other officers or employees, Petrofac said.

Defence company Babcock lost ground after it said profits had fallen by more than a third in the nine months to date as the coronavirus pandemic hit its civil aviation business.

Shares of food packing company Hilton Food tumbled after an undisclosed institutional seller placed a 9.9% stake.

Wood Group was knocked lower by a downgrade to ‘equalweight’ at Barclays, while Vesuvius and Bodycote were weaker after downgrades to ‘sector perform’ at RBC Capital Markets.

On the upside, Aveva rallied as it said it was confident in its outlook for the current year after a “strong” third quarter improved revenue growth to about 1.5% in the nine months to the end of December.

Defence and aerospace engineer Meggitt rise after it said it expects full-year results to be in line with expectations but cautioned that the expected recovery in air travel from the pandemic would take longer than expected.

Opioid addiction treatment maker Indivior surged after it upped its full-year revenue guidance and said adjusted pre-tax income is set to beat its previous expectations, thanks in part to better-than-expected revenues from its Sublocade treatment.

Market Movers

FTSE 100 (UKX) 6,741.58 -0.89%
FTSE 250 (MCX) 20,557.10 -1.05%
techMARK (TASX) 4,128.33 -0.33%

FTSE 100 – Risers

Aveva Group (AVV) 3,756.00p 5.59%
Unilever (ULVR) 4,388.00p 0.78%
International Consolidated Airlines Group SA (CDI) (IAG) 163.15p 0.59%
Entain (ENT) 1,413.50p 0.57%
Whitbread (WTB) 3,206.00p 0.44%
WPP (WPP) 818.20p 0.37%
GlaxoSmithKline (GSK) 1,397.80p 0.32%
Next (NXT) 7,978.00p 0.23%
Pershing Square Holdings Ltd NPV (PSH) 2,700.00p 0.19%
Aviva (AV.) 351.00p 0.14%

FTSE 100 – Fallers

Just Eat Takeaway.Com N.V. (CDI) (JET) 7,908.00p -4.49%
Smith (DS) (SMDS) 389.60p -3.92%
Anglo American (AAL) 2,711.50p -3.61%
B&M European Value Retail S.A. (DI) (BME) 501.20p -3.36%
Auto Trader Group (AUTO) 560.60p -2.98%
Kingfisher (KGF) 271.30p -2.97%
Ocado Group (OCDO) 2,513.00p -2.75%
Smiths Group (SMIN) 1,485.50p -2.72%
BAE Systems (BA.) 488.00p -2.71%
JD Sports Fashion (JD.) 828.40p -2.70%

FTSE 250 – Risers

Indivior (INDV) 114.30p 8.86%
Royal Mail (RMG) 390.40p 3.20%
TUI AG Reg Shs (DI) (TUI) 395.50p 3.13%
888 Holdings (888) 306.50p 2.51%
Hiscox Limited (DI) (HSX) 987.20p 2.13%
Savills (SVS) 1,033.00p 1.77%
SSP Group (SSPG) 336.00p 1.63%
Gamesys Group (GYS) 1,318.00p 1.38%
easyJet (EZJ) 836.00p 1.38%
Meggitt (MGGT) 433.60p 1.38%

FTSE 250 – Fallers

Petrofac Ltd. (PFC) 129.95p -22.00%
Babcock International Group (BAB) 220.50p -16.32%
Hilton Food Group (HFG) 1,028.00p -11.68%
Just Group (JUST) 77.45p -5.84%
Hammerson (HMSO) 21.96p -5.71%
IWG (IWG) 337.00p -4.53%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,908.00p -4.49%
Synthomer (SYNT) 426.00p -4.44%
Marshalls (MSLH) 660.00p -4.21%
Energean (ENOG) 843.20p -4.18%

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