Concerns around a second wave of coronavirus infections led global stock markets sharply lower on Monday morning.

The FTSE 100 index plunged 2.2% in early trade, dropping back below the 6,000 mark to hit 5,969 points.

In Asia, Japan’s Nikkei 225 fell a whopping 3.5%, with the Hang Seng in Hong Kong dropping 2.32%. US equity futures are pointing to a 2% fall in indices there later today.

BPS POTENTIAL $17.5BN HIT

As well as fears over what prolonged economic damage and the hit to company earnings a second wave would bring, also weighing on the index was news from oil and gas giant BP (BP.).

Its shares fell 5.4% to 306p after it revised its price assumptions for oil and gas, lowering them and extending the period to 2050, in a move which could see BP write off up to $17.5bn in post tax earnings in the second quarter.

BP is now assuming an average Brent crude price of around $55 per barrel and $2.90 per mmBtu for Henry Hub gas from 2021 to 2050.

In addition, BP said with the coronavirus pandemic having continued during the second quarter of 2020, it now sees the prospect of the pandemic having an ‘enduring impact’ on the global economy, with the potential for weaker demand for energy for a sustained period.

ASTRAZENECA VACCINE DEAL

Pharmaceutical giant AstraZeneca (AZN) dipped 0.7% to £81.46 after it inked a deal to supply 400m coronavirus vaccines to European countries – at no profit.

The company reached an agreement with Europe’s Inclusive Vaccines Alliance to supply 400m doses of the potential vaccine, being developed by Oxford University, before the end of 2020.

AstraZeneca also said the announcement is not anticipated to have any significant impact on the company's financial guidance for 2020; costs to manufacture the vaccine are anticipated to be offset by funding by governments.

BUNZL JUMPS 

Outsourcing firm Bunzl (BNZL) rallied 5.8% to £19.93 after better than expected trading due to higher demand in the cleaning and hygiene and grocery sectors amid the coronavirus pandemic.

In a trading statement for the six months to 30 June, Bunzl said revenue is expected to increase by 5% adjusted for the number of trading days.

The company said recent substantial declines in profitability in the lower margin foodservice and retail sectors were expected to be ‘more than offset’ by strong performances in the grocery and generally higher margin safety, cleaning & hygiene and healthcare sectors., primarily driven by ‘significant sales’ volumes of coronavirus related products.

CINEWORLD TERMINATES $2.3BN DEAL

Cinema company Cineworld (CINE) dropped 2% to 75p after walking away from plans to acquire Canada’s Cineplex for $2.3bn, claiming the latter had breached terms of the deal.

‘Cineworld has complied with all of its obligations under the arrangement agreement and it is entitled to terminate the arrangement,’ the company said. ‘It will therefore vigorously defend any allegation to the contrary.’ Cineworld said it also reserved the right to seek damages.

For its part, Cineplex denied that it breached the agreement and claimed that Cineworld had failed to comply with deal obligations.

METRO IN TALKS WITH P2P LENDER

Challenger bank Metro Bank (MTRO) gained 2.5% to 107.6p as it confirmed press reports that it was in talks to acquire UK focused peer-to-peer lender Retail Money Market, which trades as RateSetter.

Metro Bank said RateSetter’s distribution platform could ‘accelerate its stated strategy to grow its unsecured consumer lending book.’

‘The company regularly assesses various opportunities in the market and accordingly confirms that it has entered in to a period of exclusivity with RateSetter, but discussions regarding the potential acquisition are at an early stage,’ it said.

OTHER COMPANY NEWS

Specialist recruitment business SThree (STEM) reversed 2.9% to 262.2p after announcing that its net fee revenue slumped 7% in the first half of its financial year.

Investment company Scottish Investment Trust (SCIN) fell 1.3% to 700.8p even as it declared a quarterly dividend of 5.7p per share, despite having posted a negative first-half performance.

Midlands-focused property investor Real Estate Investors (RLE) dropped 6.8% to 30.3p as it declared a lower first-quarter dividend, citing uncertainty created by the coronavirus crisis.

Iron ore producer Ferrexpo (FXPO) slipped 1.8% to 189p, even as it declared an interim 2020 dividend of 6.6 US cents per share as sales rose in the first five months of the year.

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Issue Date: 15 Jun 2020