UK shares tumbled Wednesday amid concerns around Covid-19 and Brexit. Here are the big movers.
The FTSE 100 index slid to its lowest point since April today as the threat of tighter lockdown restrictions sent stocks including British Land (LSE:BLND), Taylor Wimpey (LSE:TW.) and HSBC (LSE:HSBA) sharply down.
The top-flight joined European markets in falling more than 2% amid speculation that France and Germany are planning more severe curbs to stem the surge in Covid-19 cases.
Boris Johnson is also under pressure to introduce a new national lockdown, raising fears about the potential devastating impact on companies in the leisure, banking and building sectors.
The pandemic is just one of a number of headwinds hurting markets at the moment, with the perfect storm also including uncertainty over next week's US presidential election and the outcome of Brexit trade talks.
A Brent crude price below 40 US dollars a barrel reflected fears of a looming demand shock, as shares in City heavyweights BP (LSE:BP.) and Royal Dutch Shell (LSE:RDSB) returned to 25-year lows with falls of 3%.
Banking stocks, which rose earlier this week on hopes for a resumption in dividend payments in 2021, were back under pressure. Ahead of tomorrow's Q3 results, Lloyds Banking Group (LSE:LLOY) was 2% lower at 27.7p as the threat of negative interest rates continues to hang over the company.
The Bank of England's latest monetary policy meeting takes place next Thursday, when analysts at UBS think committee members will sanction an additional £100 billion of asset purchases under its quantitative easing programme.
“With risks to the outlook remaining skewed to the downside, we expect the committee to confirm that it stands ready to provide further easing, including cutting the bank rate into negative territory, if warranted by the outlook.”
The Bank will also update its economic forecasts, with UBS braced for a downgrade to growth estimates but with inflation holding up better than expected.
Rolls-Royce (LSE:RR.) produced the biggest fall in the top-flight after the admission of nil-paid rights in its heavily discounted 10-for-3 issue of new shares. The stock was trading at 96.7p, a fall of 122p on last night, but above the theoretical ex-rights price of 55p when the fundraising was disclosed at the start of this month.
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There were pockets of cheer for blue-chip investors, not least from fashion retailer Next (LSE:NXT) after its latest upgrade to profits guidance sent its shares up 4% to 6,336p. Ocado was also doing well after a rise of 79p to 2,391p.
In the FTSE 250 index, KAZ Minerals (LSE:KAZ) rose 54.6p to 625.4p after the copper miner's independent directors backed a £3 billion takeover from a consortium led by chairman Oleg Novachuk.
The offer of 640p a share, which is a 12% premium to last night's closing price, highlights continued appetite for M&A despite the rising economic uncertainty.
Deal-making activity also helped beleaguered Aston Martin Lagonda (LSE:AML) to engineer a share price rally of 3.85p to 58.35p after executive chairman Lawrence Stroll announced a far-reaching plan to boost the finances of the luxury car maker.
As well the owner of Mercedes-Benz lifting its stake by up to 20% by 2023, a number of investors have taken part in a heavily-discounted placing of shares at 50p in order to raise £125 million. Aston Martin, which listed on the stock market two years ago at a price of 1,900p, is also issuing more than £1 billion of bonds to help restructure existing borrowings.
The refinancing will underpin Stroll's new business plan targeting sales of about 10,000 vehicles, £2 billion in revenues and £500 million in adjusted earnings by 2024/25.
“This is truly game changing. We now have the right team, partner, plan and funding in place to transform the company to be one of the greatest luxury car brands in the world."
Spare a thought, meanwhile, for investors of retailer Shoe Zone after management said they did not expect to reinstate dividends until the 2024/25 financial year.
Store trading since reopening its 400-plus estate in June is broadly down by a fifth on a year earlier, with a big surge in digital trading unable to make up the shortfall as Shoe Zone (LSE:SHOE) heads for a full-year loss of between £10 million and £12 million.
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CEO Anthony Smith said the company had a robust plan and sufficient funding in place to ensure the survival of the business.
Shoe Zone finished the financial year with cash of £6.3 million but is now focused on debt repayments and aware that additional funds may be needed for one of the company's legacy pension schemes. Shares fell 16% to 38.1p, compared with 187p in February.
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