Beleaguered investors in Britain’s blue-chip index were left nursing further losses after a cautious outlook from the US central bank put global markets on the back foot.
The FTSE 100 ticked 1.61 per cent, or 98.64 points, lower to 6013.34 points, as minutes from the Federal Reserve’s July 28-29 meeting showed policymakers warning of an uncertain bounce-back from the pandemic, which has hammered economic growth.
Neil Wilson, chief market analyst at Markets.com, explained: ‘The Fed layered on the risks and caution thick, but didn’t come up with any sweeteners for the market in the shape of more easing.’
The release of the Fed’s minutes coincided with the latest jobs data from the US, which were worse than expected.
Claims for unemployment benefit edged back above 1m over the seven-day period, as the pace of layoffs speeded up.
Economists had predicted 925,000 claims, following 971,000 the week before. Instead, the number climbed to 1.1m, renewing concerns about the recovery of the world’s largest economy.
Ripples of worry spread across global markets. Germany’s Dax index slipped 1.1 per cent, and France’s CAC dipped 1.3 per cent.
In Asia, the Japanese Nikkei was down 1 per cent and China’s Shanghai Composite index fell 1.3 per cent.
Though the FTSE100 has made some recovery from its decade-low levels in March, it is still 22 per cent off its 2019 high of 7687 points.
While the coronavirus pandemic has proved to be a disaster for many businesses, online electrical goods retailer AO World issued a perky trading update.
The FTSE250 firm, which benefited from higher sales during lockdown as its bricks-and-mortar rivals were forced to close their doors, said UK revenue for the four months to July 31 was up 58.9 per cent to £401.3m.
Even since lockdown began to be eased, it said, demand for AO’s products had continued – leading the company to predict that customers have permanently shifted to shopping online for electricals such as fridges and washing machines. Shares climbed 3.4 per cent, or 6.6p, to 199.8p.
Asset manager M&G was weighing the FTSE100 down, after analysts at Deutsche Bank downgraded their recommendation on the stock from ‘buy’ to ‘hold’.
Although the firm’s half-year results showed costs were lower than expected, M&G also began trading ex-dividend, meaning anyone who buys the shares now will not be entitled to receive the latest shareholder payout. The double-whammy knocked shares by 6.1 per cent, or 11p, to 169p. Copper miner
Antofagasta slid 5.6 per cent, or 64p, to 1084.5p as it trimmed its dividend, following the lead of rivals such as BHP (down 3.3 per cent, or 59p, to 1730p) and Glencore (down 4.2 per cent, or 7.34p, to 168.78p) Antofagasta said the price of copper was 12.5 per cent lower in the first half of the year than over the same period in 2019, as the economic slump caused by the pandemic pushed down demand for the metal. The copper market is a key barometer of economic growth, as the metal is used in a range of sectors such as construction, electronics and manufacturing. But Antofagasta said its revenue was down 15 per cent in the first half of the year.
The effects of the economic downturn were also evident in half-year results from infrastructure investor John Laing. The firm reported a loss of £95m and said it is unlikely to meet its goal of investing £1billion by the end of 2021, due to coronavirus disruption and delays. Shares fell 7 per cent, or 21.4p, to 282.8p.
The FTSE 250 index of mid-sized UK companies followed the blue-chips down, dipping 0.49 per cent, or 86.96 points, to 17496.43 points.