UK midcaps drop on fears of prolonged lockdown, oil drags FTSE 100
Reuters
Published Apr 15, 2020 08:32
Updated Apr 15, 2020 10:35
By Devik Jain and Sruthi Shankar
(Reuters) - Signs of a longer lockdown in Britain knocked 4% off UK's midcap shares on Wednesday, while plunging oil prices hit the commodity-heavy FTSE 100 index.
The FTSE Mid 250 index (FTMC), comprising companies more exposed to the British economy, posted sharper losses for a second straight session, compared with the internationally-focussed FTSE 100 (FTSE), which was also down 2%.
Shares in Royal Dutch Shell (L:RDSa) and BP (L:BP) fell about 5% each as oil prices dived on reports that highlighted persistent oversupply and collapsing demand concerns due to global coronavirus-related lockdowns.
"A lot of the domestic weakness is around concerns over the UK economy being locked down for longer," said Roger Jones, head of equities at London & Capital.
"The UK previously looked like one of the first countries to come out of the lockdown situation in Europe, and they now look to be potentially one of the last countries."
With the death toll rising past 12,000 as of Tuesday and tight lockdown measures in place, economists predict that Britain's economy could shrink by 13% this year, its deepest recession in three centuries.
Adding to woes, data from the Office for National Statistics said the UK's true death toll far exceeds estimates previously published by the government.
Meanwhile, aggressive monetary and fiscal stimulus measures have helped the midcap shares recover about 26% from their March lows, but they are still nearly 30% below all-time highs.
Shares in insurer Hiscox (L:HSX) slumped 16.3% to the bottom of the midcap index after brokerage Peel Hunt reduced price target to 800 pence from 1,030 pence.
Pub operators Mitchells & Butlers (L:MAB) and J D Weatherspoon (L:JDW), who have forecast a severe hit to earnings as pubs and restaurants in the UK remain shut, slid more than 10%.
Asset managers declined after Jupiter Fund Management (L:JUP) reported a drop of 18.3% in assets under management in the first quarter as fears over the pandemic rattled financial markets. Smaller rival Merian Global Investors was the worse hit.
Jupiter's shares tumbled (L:JUP) 7%, while Ashmore Group (L:ASHM), Schroders (L:SDR) and Standard Life Aberdeen (L:SLA) dropped between 3.6% and 5.5%.
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Shares in Kromek (L:KMK), a global supplier of medical devices, jumped 10.2% after announcing plans to start manufacturing of medical ventilators in Britain and globally under a licence from Japan's Metran.
Investors await first-quarter corporate results from companies in the United States. U.S. President Donald Trump is expected to hold a meeting with G7 leaders on Thursday to coordinate national responses to the coronavirus outbreak.
Written By: Reuters
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