Stock markets in London snapped a two-day rising streak on Tuesday as data showed that the UK economy shrank by a fifth under lockdown, and health experts warned of a deadly second wave of the Covid-19 pandemic in the UK amid a surge in cases worldwide.

Authorities said a second wave of Covid-19 in the coming winter could kill up to 120,000 Britons over nine months in a worst-case scenario.

The UK's economy shrank by 19.1% in the three months to May, as the full impact of lockdown was felt, the Office for National Statistics reported. The economy actually grew by 1.8% in May, but this was not enough to offset March’s 6.9% decline and the record 20.4% fall in April.

The benchmark FTSE 100 was down 1% to 6,115 at 9am, with only a handful of stocks trading higher. Financials, healthcare and consumer staples shares were among the biggest drags on the index. The mid-cap FTSE 250 was also lower, shedding 1.4% to 17,140.85.

RARE GLOOM FROM SAFETY EXPERT

Health, safety and environmental equipment maker Halma (HLMA) led the blue-chips lower after issuing a downbeat annual forecast. Halma’s shares fell nearly 7% to £21.395 as it said it expected both profit and revenue to fall in its fiscal year 2021 and flagged potential job cuts.

The UK’s tech space was also under pressure after the US Nasdaq sank more than 2% overnight with popular investment trust Scottish Mortgage (SMT), which invests in many technology companies, losing more than 5% to 907.5p.

Computer-based engineering firm Aveva (AVV) and cyber security specialist Avast (AVST) were also weak, off between 3.5% and 4.5%, while technology sector investor Polar Capital Technology Trust (PCT) slipped close to 4% to £21.10 despite posting a positive annual performance that beat its benchmark.

Better news came from online electricals retailer AO World (AO.) after it posted a smaller annual loss on stronger demand as stay-at-home orders to curb the pandemic boosted online shopping.

The shares jumped more than 4% to 170.8p, heading the mid-cap leader board.

FEVERTREE DISAPPOINTS

Drinks maker Fevertree (FEVR:AIM) fell 2.6% to £23.55 after it posted a mixed trading update that showed rising off-trade sales in the US offset by a weaker on-trade performance in Europe. On-trade refers to demand from pubs and clubs.

Defence technology company QinetiQ (QQ.) dropped 2.5% to 291.4p amid news that it had acquired intelligence and law enforcement software company Naimuri for £25 million.

QinetiQ also said that although its order intake in the first quarter of its financial year 'continued to be strong', revenue and profit had been impacted by lockdowns.

Emerging markets asset manager Ashmore (ASHM) shed 2.7% to 416.4p despite a recovery in markets helping to boost its assets under management in June.

Auto dealer Vertu Motors (VTU:AIM) revved 5.7% higher to 24p on announcing that it posted a profit in June that exceeded its expectations, after buyers returned following an easing of UK lockdowns.

Vertu, however, also said that it had reduced it headcount by 6%.

Disease test kit supplier Omega Diagnostics (ODX:AIM) sank 14% to 32.7p, having swung to a full-year loss on the back of a writedown at its discontinued allergy operation.

Industrial cleaning group McBride (MCB) gained 4.4% to 62.64p as it guided for adjusted annual profits above current market consensus, as the pandemic boosts demand for hygiene products.

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Issue Date: 14 Jul 2020