A wave of job losses, a drop in UK house prices, a slightly weaker than forecast manufacturing PMI, and a troubling comment from ratings agency S&P all contributed to a tough start to July for the FTSE.
Upper Crust-operator SSP Group (LON:SSPG), Airbus, Arcadia, easyJet (LON:EZJ), Royal Mail (LON:RMG) and TM Lewin are among the names who have announced job cuts running into the thousands, as the government gradually wraps up the furlough scheme.
House prices fell 1.4% in June, while the final manufacturing PMI for last month was revised from 50.2 to 50.1, which means the sector barely returned to growth.
Perhaps most damning was S&P’s statement that an autumnal second wave of covid-19 cases, and a post-Brexit switch to WTO trade rules at the beginning of 2021, would be a ‘perfect storm’ for the UK economy. This comment followed news that it had cut the country’s GDP forecast to -8.1% for 2020.
Regardless of the exact reason, the FTSE’s 0.4% decline turned into a 1.5% plunge as the session went on, taking it back under 6100.
Admittedly that wasn’t the worst of it in Europe. Technical issues on the Xetra trading platform contributed to the DAX dropping 1.9%, with the French CAC matching that decline.
The Dow Jones is set to join its European peers in the red, with the futures pointing to a 240 point drop when trading gets underway. That would leave the US index around 30 points above the 25500 mark.
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