The FTSE 100 has fallen back below the 6,000 mark, dragged lower by supermarkets after Morrisons reported a 25% hit to profits as a jump in costs related to the coronavirus pandemic took its toll.
The UK blue-chip index fell 49 points, or 0.8%, to 5,964, ahead of emergency Brexit talks to discuss prime minister Johnson’s plans to override parts of the withdrawal agreement. Cabinet office minister Michael Gove will meet EU officials while the UK’s chief negotiator continues trade talks with his EU counterpart Michel Barnier. The pound inched higher against the dollar to $1.302.
Morrisons (MRW) fell 4.4% to 186.4p as half-year profits fell by a quarter to £148m, driven by a surge in Covid-19-related costs, which hit £155m as the supermarket took on more staff to deal with demand.
‘The first half of the year has carried the weight of coronavirus disruption,’ said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown. ‘£155m of extra costs associated with an army of extra workers and coronavirus preparedness could only be partially offset by the government’s business rate relief scheme.’
The ‘mid-cap’ FTSE 250 index fared better, trading flat. Games Workshop (GAW) soared 11.4%, or 995p, to £97.20 after declaring a 50p dividend as trading in the three months to end of August came in ahead of expectations. Growth in online sales drove a jump in operating profits to £45m, from £28m last year
Jefferies analyst Andrew Wade is expecting ‘material consensus upgrades’ and he remains positive due to the ‘quality of the business, top line momentum, and ongoing potential for forecast upgrades’.
London markets will be looking ahead to a European Central Bank (ECB) monetary policy announcement later today.
Fiona Cincotta, analyst at City Index, said the ECB was not expected to adjust policy ‘so the focus will be firmly on the new economic projections and comments from [ECB president] Christine Lagarde’.