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London stocks sink on grim global growth forecast, fears of second virus wave

06/24/2020 | 10:34am

London stocks marked their worst session in two weeks on Wednesday as a spike in novel coronavirus cases across the globe compounded fears of a second wave of the pandemic, while builder Crest Nicholson tumbled after issuing a grim forecast.

The homebuilder slumped 18.2% for its biggest one-day drop in three months after forecasting a 60% to 70% slide in its annual adjusted pretax profit due to coronavirus-led disruptions.

As Wall Street tumbled, broad-based losses saw the blue-chip FTSE 100 close down 3.1% and the domestically focused FTSE 250 drop 2.8% with financial, energy, consumer stocks among the biggest drags.

The International Monetary Fund slashed its 2020 global output forecasts further on Wednesday saying the coronavirus pandemic is causing wider and deeper damage to economic activity than first thought.

In Britain, a day after lockdown restrictions were further relaxed, top medics warned that a second wave of COVID-19 was a real risk.

AJ Bell investment director Russ Mould said that while the economic impact of potential measures to contain local flare-ups would be less than shutting down an entire economy, "a recovery of this nature is a messier story for investors to digest and this could act as a drag on equities".

Optimism around a rebound in economic activity and a raft of global stimulus helped the FTSE 100 rally about 25% since crashing to an eight-year low in March, but the pace of gains has slowed recently.

Oilfield services provider Petrofac Ltd slid after taking its first-half trading was hit by the pandemic.

But Naked Wines and Mr Kipling cakes maker Premier Foods Plc shot up as they posted upbeat results due to a boost in demand during the lockdown.

Graphic: Global equities since Brexit vote -

(Reporting by Susan Mathew, Shashank Nayar and Sagarika Jaisinghani in Bengaluru; editing by Uttaresh.V, Kirsten Donovan)

© Reuters 2020
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