A host of poor earnings reports have hit UK stocks hard, pushing the FTSE 100 down 100 points in early trading.
Bad economic and corporate news sends indices into retreat.
FTSE 100 heads back to 6000.
Both UK-focused and international firms under pressure.
A double-digit percentage decline in the German economy and abysmal results from Lloyds have put the cat among the pigeons this morning. Stocks are firmly in the red, with the FTSE 100 taking it on the chin as Lloyds drops 8% and heavy losses in Europe as well as investors fear that more bad news will be on the way. Continuing indications of a rise in virus cases throughout Europe have added to the caution, with markets worrying that Q2 was not the last quarter of significant economic weakness. The FTSE 100, the serial underperformer of the past four months, is now heading back towards 6000, having seen upward momentum stall over the past two months around the 6300 mark. The economic worries have combined with a modest recovery in the dollar to hit commodity prices, putting mining stocks on the back foot as well, leaving London’s main market looking very vulnerable indeed. UK investors will be glad that Shell got its bad news out of the way last month, otherwise today’s numbers would have caused a bigger fall in the stock and put yet more pressure on the beleaguered index.
There was a flurry of UK corporate news this morning, almost all of it bad. Lloyds is paying the price for its dominant position in the UK market, with increasing signs of weakness in the second half, but even international firms like Compass cannot afford to be too optimistic about the rest of the year. Taken together, this is a very gloomy set of updates that should give investors pause before putting more money to work in equities, at least for the time being.
Ahead of the open, we expect the Dow to start at 26,270, down 269 points from Wednesday’s close.
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