The FTSE 100 slumped in early trade on Thursday as investors mull the threat of a resurgence in coronavirus cases. This comes after several countries, which have recently eased lockdown restrictions, reported a renewed spike in infections.
Germany, China and South Korea have struggled to put a lid on new Covid-19 cases and are bracing themselves for a second wave of outbreaks and re-imposing stiffer measures.
Also weighing on investors’ minds are comments from US Federal Reserve chair Jerome Powell who warned that the coronavirus threatens ‘lasting harm’ to the US economy.
The UK’s benchmark index dropped 1.34% in early trade to 5,824.79.
It mirrors big falls seen in Asian stock markets throughout Thursday, with Japan’s Nikkei 225 down 1.74%, the Hang Seng in Hong Kong falling 1.31% and China’s Shanghai Composite dropping 0.96%.
Commodities had a slightly better time of it with brent crude oil futures up 2.5% to $29.92 per barrel and West Texas Intermediate crude oil futures up 2.61% to $25.95 per barrel. Gold was trading virtually flat at $1,715.87 per ounce.
WH SMITH REVENUES COLLAPSE
In company news, retailer WH Smith (SMWH) was said to be the one to watch this morning for stock market direction.
Its shares were down 0.55% to 911.5p in early trading as it revealed that in April group revenue was down 85% on the same period last year, with travel revenue down 91% and high street revenue down 74%.
Travel, with outlets in places like airports and train stations, is a big part of WH Smith’s growth plans.
The added update on trading in the period since the coronavirus outbreak started masked what were otherwise solid results for the six months to 29 February, with travel revenue up 2% on a like-for-like basis and trading profit in the division up 11% to £49m.
Overall group revenue was up 7% to £747m, though pre-tax profit was down 3% to £63m.
GRAINGER SHARES RISE AS IT UPS DIVI
On the property front, developer Grainger (GRI) gave a good insight into the residential sector as increased its interim dividend, with its shares rising 0.73% to 247p.
For the six months to 31 March, pre-tax profit fell to £49.6m from £54.3m on-year as revenue slipped to £86.9m from £107m, but net rental income rose 27% to £37m.
‘We have achieved high rent collection, strong rental growth and maintained occupancy levels over 97%,’ the company said.
The interim dividend was raised by 6% to 1.83p a share.
Fellow property company Sirius Real Estate (SRE) rose 2.3% to 66.7p after it maintained its normal dividend policy, with the business park company’s rent collection holding up at 98.8% of normal levels in April.
INVESTMENT FIRM 3I KEEPS DIVI
Shares in investment company 3i (III) moved 1.6% higher to 761.8p as it stuck to plans to pay a 2020 dividend despite being hit badly by March’s market selloff.
In full year results to 31 March 3i, which is focused on mid-market private equity and infrastructure, said gross investment return was £352m or 6%, compared to £1.15bn or 20% in its last financial year to March 2019.
Net asset value declined to 804p per share versus 815p a year earlier. However, it declared a total dividend of 35p per share for its 2020 financial year, with a dividend of 17.5p per share to be paid out in July.
‘For 3i and many other businesses, the next 12 to 24 months will be among the most challenging periods historically in which to operate a business and generate a return,’ the company said.
MARSTON’S SCRAPS DIVIDEND
One company not keeping its dividend is pub owner Marston’s (MARS), with its shares correspondingly dropping 2.4% to 29.28p.
Citing the continued uncertainty surrounding the re-opening of the pub sector, Marston’s said it was cancelling its shareholder payout for 2020 and revealed it has agreed £70m of additional liquidity through an increase in its bank facility.
It confirmed that it will review future dividends when normalised trading resumes.
OTHER COMPANY NEWS
Swiss watch retailer Watches of Switzerland (WOSG) gained 2.9% to 226.9p as it said in a full year trading update that demand for luxury watches has ‘remained strong’ with the firm’s online sales ahead of its expectations. Full year revenue to 26 April increased 5.9% to £819.3m, with EBITDA expected to be between £75m-78m.
Infection prevention and control tech company Byotrol (BYOT:AIM) soared 17.8% to 5.55p after it said it expected to report record first-quarter sales after confirming it had secured two new license agreements.
Housebuilder Persimmon (PSN) fell 3.6% to £20.73 after it announced it will reopen its sales offices and show homes in England on the 15 May, and reported securing 1,351 gross private sales reservations in the eight weeks to 10 May.
