Tuesday 30 June 2020 5:08 pm

FTSE 100 falters, taking shine off best quarter since 2010

The FTSE 100 retreated today as fears over a second coronavirus lockdown dampened the end of the strongest quarter for UK stocks since 2010. 

The blue-chip index ended the session XX per cent down after news of the UK’s first local lockdown and poor GDP figures helped dampen investor enthusiasm. 

Nevertheless, the FTSE 100 recorded its best quarter since 2010 for the three months to 30 June. 

The index rose 8.8 per cent in the second quarter as it recovered from its worst quarter since 1987 as the coronavirus pandemic sent shockwaves through markets at the start of 2020. 

US stocks also put in a mixed performance on Tuesday as Covid-related worries and mounting tensions between the US and China weighed on sentiment.

Read more: UK GDP suffers largest fall since 1979 in first quarter of 2020

Coronavirus worries drag US stocks lower

The three major Wall Street indices opened narrowly in the green on Tuesday, but the Dow soon edged into the red before flipping positive again by 5pm UK time. 

The Nasdaq added 1.17 while the S&P 500 climbed 0.77 per cent on the last trading day of what is expected to be the benchmark index’s best quarter since 1998.

The S&P has rebounded about 18 per cent since April on a raft of fiscal and monetary stimulus and the easing of restrictions, but is still down about five per cent on the year as a resurgence in coronavirus cases raises fears of another round of lockdowns.

With California and Texas marking a record spike in cases on Monday, investors are counting on more stimulus to shore up the domestic economy.

 WHO: Pandemic “not even close to being over” 

The FTSE 100 was shaken today following warnings from the World Health Organisation (WHO) last night that the coronavirus pandemic is “not even close to being over”.

WHO chief Dr Tedros Adhanom Ghebreyesus said yesterday that the outbreak is “speeding up”, adding that there was “no excuse” for countries that were failing to implement contact tracing. 

Data from the Office for National Statistics this morning showed that the UK economy slumped 2.2 per cent in the first quarter in its largest fall since 1979. 

The government also announced that Leicester would be placed under a local lockdown following an outbreak of coronavirus cases in the city, which accounted for 10 per cent of all new Covid-19 cases in the UK last week. 

Oil majors drag FTSE 100 lower

Among FTSE 100 constituents, Shell tumbled 3.05 per cent after the oil major warned of a $22bn hit to the value of its assets as the coronavirus pandemic hits demand for energy.  

Shell’s announcement helped drag fellow energy giant BP lower. Shares in the company ended the session 2.11 per cent down.

“In a world of falling oil demand and a bigger push towards renewables, these energy titans increasingly look like creatures from another era, something which should give investors pause for thought,” said IG chief market analyst Chris Becuchamp.

“While neither Shell nor BP will be going anywhere soon, their importance as dividend payers will likely diminish relative to other sectors, and yield-hungry investors need to be prepared for this eventuality,” he said. 

FTSE 100 engineering firm Smiths led the index’s risers after it unveiled restructuring plans designed to cut £70m costs per year from 2022. 

Shares in the company rose 8.36 per cent after it announced the plan, which it said would involve “some job losses”.

Investment giant Standard Life Aberdeen rose 1.88 per cent following the announcement that chief executive Keith Skeoch will step down after five years at the helm and be replaced by former Citi executive Stephen Bird.

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Global stocks largely in the green

The FTSE’s European peers put in a mixed performance on Tuesday, but ended the session in the green. 

Germany’s DAX closed 0.85 per cent up, while France’s CAC 40 edged up 0.04 per cent. 

“In another sign of just how untethered to reality the markets are — or rather, how bound they are to the constantly shifting relativities of ‘good’ and ‘bad’ news — globally stocks have had their best quarter for 11 years,” said Spreadex analyst Connor Campbell. 

“This as investors swallowed the initial Covid-19 panic and went about trying to force through a rally, headlines be damned,” he continued. “At the moment, however, it looks like indices are going to be shaving a few points off that quarterly increase.”

Read more: China passes national security law in turning point for Hong Kong

Asian markets rose as upbeat economic data from the US and China rekindled hopes of a faster economic recovery, helping to offset concerns about US sanctions against Hong Kong following Beijing’s implementation of a controversial new security law. 

Hong Kong’s Hang Seng index rose 0.24 per cent on Tuesday, while the Shanghai Composite added 0.79 per cent. Japan’s Nikkei 225 climbed 1.24 per cent.