The FTSE 100 got off to a slow start on Wednesday after a warning from the International Monetary Fund (IMF) that the global economy could suffer its worst fall since the 1930s.
In its half-yearly forecasts, the IMF said gross domestic product (GDP) is expected to fall globally by 4.2% in 2020, by 6.5% in advanced countries, and by 7% in the UK.
The UK’s benchmark index fell 0.63% to 5,754.73 shortly after trading began.
The drop mirrors Asian stock markets which have also been trading in the red. Japan’s Nikkei 225 fell 0.45%, while the Hang Seng in Hong Kong dropped 1.04% and the Shanghai Composite in China decreased by 0.57%.
While in commodities, the oil rally following a truce between Russia and Saudi Arabia proved short-lived as traders fear what the IMF’s forecasts will mean for demand. Oil is now back below $30 with brent crude futures trading around 2% down at $28.99 a barrel.
Gold also fell, dropping 2.45% to $1,713.59 per ounce, but is still up around 15% over the past month as it starts to live up to its safe-haven status.
SMURFIT AND FERGUSON SCRAP DIVIDENDS
In FTSE 100 company news, plumbing services provider Ferguson (FERG) rose 0.4% to £52.10, despite withdrawing its interim dividend and suspending its $500m share buyback to conserve cash.
Ferguson also said it would seek shareholder approval for an additional US listing when markets calmed, rather than a primary listing there.
Packaging company Smurfit Kappa (SKG) reversed 0.5% to £22.48, having scrapped its final dividend.
The firm grew volumes in Europe and the Americas in the first quarter by 3% and 3.5% respectively, but cited coronavirus uncertainty for withdrawing the payout.
SPIRENT KEEPS DIVI
While in the FTSE 250, communications technology supplier Spirent Communications (SPT) gained 3.7% to 237p, as it became one of the rare companies to keep its 2019 final dividend intact, having boosted its revenue in the first quarter.
The company said strong cash flow has resulted in it having a cash balance of $208m at the end of March, helping to confirm the 3.45 cents per share final payout.
Revenue in the three months through march rose 12% with order intake showing ‘good growth’, Spirent Communications said.
‘We benefited from our strong opening orderbook and we have continued to build momentum into the second quarter,’ the company added.
OTHER COMPANY NEWS
Fund manager Jupiter (JUP) sank 7.7% to 199p as it reported a fall in assets under management, driven by outflows from its funds and choppy markets.
Online gambling company 888 (888) slipped 6.3% to 133p, having slashed its dividend after its annual profit more than halved.
Healthcare services provider UDG Healthcare (UDG) slumped 4.9% to 595p after warning the coronavirus crisis would weigh on its second half performance, while suspending its interim dividend.
Hotel and resort owner PPHE Hotel (PPH) shed 1% to £12.28 as its revenue slumped 18% in the first quarter after coronavirus lockdowns and travel restrictions lowered occupancy levels.
Property portal OnTheMarket (OTMP:AIM) dropped 6.2% to 30.5p as it suspended its financial guidance for 2020 while warning of a short-term hit from the Covid-19 crisis.
Computing and power component manufacturer Solid State (SOLI:AIM) added 2.2% to 460p on guiding for a full-year profit ahead of market expectations, and a mixed impact from the coronavirus crisis.
Fashion retailer Quiz (QUIZ:AIM) rallied 14% to 6.21p as it reopened its online operations, though with ‘standard’ delivery services on offer only.
