The FTSE 100 continued its decline throughout Thursday morning, falling below the 6,000 mark as investor hopes of a V-shaped economic recovery were dampened by the Bank of England.
The central bank said the British economy would not recover its end-2019 size until the end of next year, later than its earlier estimate of a recovery by the second half of 2021.
In its policy decision, the central bank kept interest rates on hold at 0.1% and also made no changes to its bond-buying programme.
The central bank’s slower-than-expected rebound forecast dragged on markets, along with Glencore’s (GLEN) dividend cut and several heavy hitters going ex-dividend.
The benchmark FTSE 100 dropped 1.8% to 5,995 around halfway through the day’s trading on Thursday.
ANOTHER DIVIDEND SCRAPPED
Mining group Glencore tumbled on Thursday after scrapping its dividend to pay down debt. Shares in the firm fell 6.1% to 184p as it also booked a $3.2 billion (£2.44 billion) impairment charge, driving the stock lower.
It was not alone in the sector, Evraz (EVR) dropped 1.7% to 316.3p as it cut its interim dividend and reported operating profit fell 2.4% to $891 million as revenue was down 18.8% to $5 billion in the six months to 30 June 2020.
While ITV (ITV), Britain’s biggest free-to-air commercial broadcaster, also saw a big earnings hit.
Having initially slumped 5% in early trading, its shares were last seen 0.7% lower to 60.5p after it posted a 50% drop in first-half adjusted earnings, as it paid a heavy price for weakened advertising during the pandemic.
On a brighter note, Aviva (AV.) gained 2.3% to 290.9p as new CEO Amanda Blanc said the British life, motor and home insurer would reduce its focus on Asia and Europe, a strategy change welcomed by analysts.
Aviva’s strategy update came as it posted a 12% drop in first-half operating profit.
British outsourcer Serco (SRP) was the biggest mid-cap loser on Thursday, plunging 13.2% to 147.1p as investors pulled out following a strong coronavirus recovery rally.
The sharp pullback came despite Serco reporting a 53% jump in first-half profit on 24% revenue growth. Its results were boosted by contract wins in 2019 and the acquisition of the Naval Systems Business Unit of Alion last August.
RESPONSE FALLS ON DEAF EARS
Also firmly in reverse was British engineer Meggitt (MGGT), despite its repost to press speculation about its funding and liquidity. The company said its financial position and liquidity remain strong in a statement, yet investors were clearly spooked, sending the share price down 7.5% to 273p.
British shopping centre operator Hammerson (HMSO) tumbled 12.55% to 48.9p after telling the market that it planned to raise £825 million through a rights issue and sell its 50% stake in joint venture VIA Outlets to its partner APG.
Packaging company Mondi (MNDI) moved 1.5% higher to £14.47 as it announced that ‘softer pricing’ prompted a decline in revenue for the first half of 2020 and lower underlying earnings. But the company said that its strong financial position had allowed it to resuming paying dividends.
Cigarette maker Imperial Brands (IMB) said chief financial officer Oliver Tant has decided to retire, sending the stock 2% lower to £12.63.
Shares in insurer Phoenix (PHNX) remained virtually flat at 689.8p despite it posting an 11% rise in half-year earnings and raising its 2020 cash generation target.
GlaxoSmithKline (GSK) fell 1.8% to £15.45 as the pharmaceutical giant said the US Food and Drug Administration had approved its a drug used to treat blood cancer patients.
Estate agency Savills (SVS) dipped 1% to 762.5p after it reported a 69% drop in first-half pre-tax profit.