The FTSE 100 closed sharply lower on Friday, but still ended the week higher than it stood seven days ago.
The leading share index (^FTSE) closed down 5.2% at 5,510.33 in London on Friday. The sell-off followed three days of gains for stocks globally and the FTSE 100 was still 6.8% higher than it stood at the end of last week.
“Investors are still showing nerves of holding positions over the weekend,” said Nigel Firth, a senior market analyst at AskTraders.
Michael Hewson, chief market analyst at trading platform CMC Markets, said negative sentiment was being driven by the fact the number of Covid-19 cases in the US had overtaken China’s total.
Confirmed Covid-19 cases in the US have risen to 85,991, according to John Hopkins University, surpassing China’s total of 81,782. Globally, infections have climbed past 530,000 and deaths have risen over 24,000.
“Against this sort of backdrop it is still way too early to sound the all clear, and while yesterday’s rebound was welcome it takes no account of the fact that the infection count and death rate is likely to continue to rise sharply in the coming weeks, and that in any subsequent recovery, consumer incomes and confidence will take some time to recover,” Hewson said.
The FTSE 100 sell-off was particularly sharp and partly driven by a rally for the pound. More than half of FTSE 100 company earnings are in dollars and so a stronger pound makes sterling-denominated shares look comparatively more expensive. Sterling was up 2.1% against the dollar to $1.2419 (GBPUSD=X) at 5pm on Friday.
Cruise operator Carnival (CCL.L) was the biggest faller on the FTSE 100, crashing 20.5%. The company is a significant dollar earner and is also suffering from slumping demand due to the Covid-19 pandemic.
Cruise businesses have been pummelled by the recent global collapse in international travel. Worse still, CNBC reported that the wording of the US’s historic $2tn stimulus bill could leave many cruise operators unable to tap state aid.
Elsewhere, retailer Next (NXT.L) fell 11% after taking the “difficult decision” to shut its online operations, which have continued while stores have been shut.
“Next has listened very carefully to its colleagues working in warehousing and distribution operations to fulfil online orders,” the company said in a statement. “It is clear that many increasingly feel they should be at home in the current climate.”
The cancellation of dividends by a string of London-listed companies also pushed markets lower. Royal Mail (RMG.L), Meggitt (MGGT.L), Domino’s Pizza (DOM.L) and Rightmove (RMV.L) all announced on Friday they were cancelling shareholder payouts.