(Update) The FTSE 100 pulled back from earlier gains this afternoon, capping a disappointing July, as yesterday’s news of record drops in economic output in the US and Germany and resurgent coronavirus outbreaks in France and Spain tday took their toll.
The blue-chip index closed down 92 points, or 1.5%, at 5,897, a level last seen in mid-May.
UK ‘mid caps’ were slightly more resilient, with the FTSE 250 shedding 84 points, 0.5%, to close at 16,933.
‘The market’s attempt at a rebound was all but gone by Friday afternoon, the western indices wilting in the face of a 2-day GDP reality check,’ said Spreadex analyst Connor Campbell.
‘Though it has been erring lower for the past couple of weeks, it is the losses encountered on Thursday and Friday that really did the damage. And this is even before the UK is served its own Q2 GDP damnation.’
In the US, the S&P 500 was flat, despite yesterday’s bumper earnings for several tech behemoths, while the Dow Jones dropped 112 points, 0.4%, to 26,201, as oil company Exxon Mobil reported back-to-back quarterly losses.
(10:21) US tech results boost FTSE
Strong results overnight from US tech giants Amazon, Apple and Facebook buoyed the UK stock market after yesterday’s dire US and German economic figures.
The FTSE 100 gained 25 points, or 0.43%, to 6,015, recouping some of yesterday’s 2.3% fall, with tech-heavy Scottish Mortgage Trust among the leaders on the blue-chip index.
Gold made solid gains to $1,976 an ounce as the US dollar slipped to a two-year low, on course for its largest monthly decline in a decade. This came after data confirmed the American economy’s record quarterly contraction; meanwhile, the US’s daily coronavirus case count shows no sign of abating.
JD Sports (JD) was another big riser on the FTSE 100, up 3.1% to 629p, while Aveva gained 2.7% to £42.06, as the software provider was caught in the groundswell of buoyant earnings for US tech companies in the face of the pandemic.
Scottish Mortgage (SMT), the £12.8bn global investment trust, rose 2.1% to £8.83 after large holding Amazon (AMZN.O) reported record quarterly profits, double the same period last year.
IAG (IAG) fell 6.7% to 169p, as the British Airways parent announced a €2.75bn rights issue, while unveiling losses in the first half of the year of more than €4bn.
ITV (ITV) was the next weakest performer, down 3.1% to 57.2p.
The UK’s FTSE 250 mid-cap index gained 83 points, 0.5%, to 17,100. Pets at Home (PETS) surged 13% to 291p, as it posted a better-than-expected sales drop in the first quarter, while precious metals miner Hochschild Mining (HOC) also gained on gold’s rise, jumping 6.3% to 276p.
Among the small caps, Ted Baker (TED) plummeted 7% to 72.1p, after an RBC analyst took an axe to their target price, cutting it from 140p to 70p.
‘July has been a second bad month in a row for investors in UK stocks with the FTSE 100 index now trading at lows last seen in late-May. The market has most certainly lost momentum and is slowly drifting down as many companies continue to struggle from the pandemic,’ said Russ Mould, investment director at AJ Bell, who observed out the index was now down 2.4% on the month and 7.1% below its 5 June high following the March crash.
‘As ever during this pandemic, the reasons behind Friday’s gains feel quite arbitrary, almost counterintuitive,’ said Spreadex analyst Connor Campbell, who put the positive tone of trading down to Amazon et al’s blockbuster earnings.
‘Clearly investors aren’t feeling completely comfortable, however, as evidenced by gold’s latest shunt higher. The safe haven commodity is now achingly close to hitting $2,000 per ounce for the first time, reflecting the market’s underlying anxiety despite Friday’s surface level green hue,’ he added.