FTSE falls 1.3% as Sunak unveils winter jobs scheme

Update (16:45): UK stocks have closed firmly in the red despite the government’s latest intervention to prop up the jobs market amid the coronavirus pandemic.

The FTSE 100 closed 76 points, or 1.3%, lower at 5,823, while UK ‘mid-cap’ stocks on the FTSE 250 were down 1.1%.

That was despite the government’s unveiling of the successor to the furlough scheme, under which it will cover up to 22% of the wages of workers in ‘viable’ jobs working reduced hours.

In the US, the S&P 500 inched higher after a fall at the open, up 0.3%, after data showed new applications for US jobless aid rose to 870,000 last week, up from 866,000 the week before and confounding expectations of a fall to 840,000. 

Neil Wilson, analyst at Markets.com, said the figures showed ‘ongoing weakness in the labour market as the country struggles out of recession’.

‘With economic indicators failing to deliver lift-off and stimulus apparently off the table before the election, there needs to be a positive catalyst to get the bulls back in the game.’

(10:33) Cineworld slumps

UK stocks have fallen as Covid-19 cases jumped a quarter in just a day, prompting fears that stricter curbs are to come, with the mid-cap market pulled lower by Cineworld (CINE) which slumped to a £1.3bn loss.

The FTSE 100 had breathed a sigh of relief that prime minister Boris Johnson’s new restrictions, which include a 10pm curfew on bars and restaurants from tonight, were not more draconian but after new infections rose 25% in the space of 24 hours, the relief was short-lived. 

READ  The online CD shop that grew into a global retail tech brand

The UK blue-chip index fell 35 points, or 0.6%, to 5,865. Spreadex analyst Connor Campbell said investors feared ‘tougher measures are almost an inevitability at this point’. 

Markets will be banking on chancellor Rishi Sunak’s ‘winter economy plan’ to see the country through another potential lockdown and specifically, what happens when the £39bn furlough scheme ends at the end of October.

Fiona Cincotta, analyst at City Index, said Sunak’s plan – which will be set out today – is expected to include ‘a wage support scheme similar to that in Germany’ to subsidise the wages of those in part-time work.

‘This should mean that the four million or so people that are neither in employment nor out of employment on furlough won’t necessarily face a cliff edge,’ she said. ‘This should at least soften the blow to the economy.’ 

The main index was hampered by a poor trading update from Smiths Group (SMIN), which fell 6.2%, or 89p, to £13.43 after the engineering group set out plans for job cuts after profits fell 26% over the year. 

Fears of tighter Covid-19 restrictions knocked British Airways owner International Consolidated Airlines (IAG), which fell 5.3% to 95p, and aerospace engineer Rolls-Royce (RR), down 3.1% at 157p.

The FTSE 250 was down 0.7%, with Cineworld (CINE) sliding to the bottom of the mid-cap index, down 12.4%, or 6p, at 42p.

Doubts were raised about the cinema chain’s ability to survive a second lockdown after it fell to a £1.3bn loss in the first half of the year and said it would likely need to raise additional liquidity.

READ  CPSE ETF: Fifth tranche subscription to open on March 19; government eyes Rs 3,500 crore

Russ Mould, analyst at AJ Bell, said another fundraise would put the company in a ‘dangerous situation given it is already up to its eyeballs in debt’.

‘Management says current trading is encouraging but that’s off a base where expectations are rock bottom,’ he said. ‘Cineworld is walking a very long tightrope with the winds picking up that could knock it and the cinema industry down.’

Pets at Home (PETS) jumped to the top of the FTSE 250, surging 16.3%, or 49p, to 355p after reporting full-year profit was expected to come in ahead of expectations.



Please enter your comment!
Please enter your name here