FTSE falls as oil and industrials undermine sentiment, 30 Mar 2020 08:52

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FTSE falls as oil and industrials undermine sentiment

30 March 2020, 08:52

After falls in Europe and the US on Friday, Asian markets were mixed at the start of the week as the coronavirus death toll continued to climb.

On currency markets the pound lost 0.5% to $1.239 while in commodities gold lost 0.8% to $1,612/oz.

However, the big news was in the oil market where the price war between Russia and Saudi Arabia pushed Brent crude to an 18-year low of $23/barrel and New York crude dipped below $20/barrel.

The FTSE 100 index fell 1.6% to 5,422 points weighed down by heavy losses in industrial stocks such as Ashtead (AHT), Meggitt (MGGT), Melrose (MRO) and Rolls-Royce (RR.).

On the corporate front, AstraZeneca (AZN) delivered positive news as its cancer drug Imfinzi gained US approval for the treatment of extensive-stage small cell lung cancer and its Farxiga kidney disease drug showed ‘overwhelming efficacy’ in phase III trials. Shares inched up 0.2% to £68.17.

Water and wastewater group Pennon (PNN) said its results for the year to 31 March would be ‘in line with management expectations’ and that the £4.2bn sale of its Viridor unit to funds advised by KKR would complete on schedule this summer. Shares gained 2.3% to £10.98.

Bus and rail group FirstGroup (FGP) announced that it had been awarded an extension to its contract to run Great Western Railways (GWR) to March 2023, with a possible one-year extension, although shares drifted off 0.9% to 47p.

Similarly, shares in rival operator Go-Ahead Group (GOG) lost 3% to 726p after it reported that it had won an extension to its Southeastern contract until October 2021 with an option for the government to extend it to March 2022.

Low-cost airline EasyJet (EZJ) announced that following the ‘unprecedented’ travel restrictions imposed by governments in response to the coronavirus pandemic, it had grounded all its aircraft from today with ‘no certainty of the date’ for restarting flights.

The airline has agreed with the Unite union to put its cabin crew into ‘furlough’ for the next two months meaning they will receive 80% of their average pay under the Job Retention Scheme. EasyJet shares fell 7% to 553p

Property firm Hammerson (HMSO) was another heavy faller, down 6% to 80.5p after it revealed that as of last Friday it had only received 37% of the rent it had billed its UK tenants for the coming quarter. Adjusting for deferrals and customers switching to monthly payments, it had only received 57% of rent due.

Unsurprisingly more companies announced that they were scrapping their dividends, including AIB (AIBG), Bank of Ireland (BIRG), Hammerson (HMSO), Macfarlane (MACF), Morses Club (MCL), Oxford Instruments (OXIG) and Signature Aviation (SIG).