(Alliance News) - London stocks slid at the open on Thursday as the closure of schools in New York and a record number of daily coronavirus infections in Japan created a risk-off mood among market participants.
The FTSE 100 index was down 44.14 points, or 0.7%, at 6,341.10 early Thursday. The mid-cap FTSE 250 index was down 114.10 points, or 0.6%, at 19,585.77. The AIM All-Share index was down 0.2% at 1,016.71.
The Cboe UK 100 index was down 0.8% at 631.34. The Cboe 250 was down 0.5% at 16,990.87, and the Cboe Small Companies down 0.1% at 11,245.72.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both down 0.7% early Thursday.
"Lockdown fears were ignited once again with New York City's seven-day rolling average of the test positivity rate reaching the 3% safety threshold that triggers a school system shutdown," said Axi's Stephen Innes.
New York Major Bill de Blasio said the schools would shut from Thursday "out an abundance of caution" after the city recorded a seven-day average positivity rate of 3%. New York City is the largest school district in the US with 1.1 million students.
The city has also re-imposed some restrictions on bars and restaurants.
The decision in New York came as the Johns Hopkins University tally on Wednesday showed that more than a quarter million people have died from Covid-19 in the US.
The US, which has now registered 250,029 fatalities, has by far the highest national death toll, ahead of Brazil with 166,699 deaths, India with 130,993 deaths and Mexico with 99,026. The country now routinely records over 1,000 deaths and 150,000 new cases every day.
Axi's Innes added: "Asian shares drifted off all-time highs as widening Covid-19 restrictions in the US weighed on Wall Street, while bonds were underpinned by speculation the Federal Reserve would have to respond with yet more easing. Japan also reported record news cases as Tokyo raised its pandemic alert to the highest level, shoving the Nikkei NK225 down."
In Asia on Thursday, the Japanese Nikkei 225 index ended down 0.4%. Against the yen, the dollar was quoted at JPY103.94, higher versus JPY103.71.
Japan's prime minister said the country is on "maximum alert" after logging a record number of daily coronavirus infections. More than 2,000 cases were recorded nationwide on Wednesday, with nearly 500 in the capital Tokyo alone.
"We are now in a situation of maximum alert," Prime Minister Yoshihide Suga told reporters.
In China, the Shanghai Composite closed up 0.5%, while the Hang Seng index in Hong Kong closed down 0.7%.
In some more positive vaccine news, latest trial results from the University of Oxford's ChAdOx1 nCov-2019 vaccine has been shown to trigger a robust immune response in healthy adults aged 56-69 and people over 70.
Phase two data, published in The Lancet, suggests one of the groups most vulnerable to serious illness and death from Covid-19 could build immunity, researchers say.
The study of 560 healthy adults – including 240 over the age of 70 – found the vaccine is better tolerated in older people compared with younger adults. The study also found the vaccine, being developed with AstraZeneca, was less likely to cause local reactions at the injection site and symptoms on the day of vaccination in older adults than in the younger group.
AstraZeneca shares were up 0.7% in early trade.
Elsewhere in London, travel and leisure stocks slipped on the renewed virus worries. Premier Inn-owner Whitbread fell 2.7% and British Airways-parent International Consolidated airlines fell 2.1%.
In the FTSE 250, cinema chain operator Cineworld was the worst performer, falling 9.6%. The firm is considering a company voluntary arrangement as part of talks with lenders, the Financial Times reported on Thursday.
The cinema chain, the FT said, looking to reduce its rent payments and to permanently close UK cinemas amid lockdown restrictions and a lack of blockbuster films. Citing "three sources close to the negotiations" the FT said the insolvency process is aimed at cutting costs and is part of talks with lenders, as Cineworld seeks access to capital while waiting for the return of major movie releases in the spring.
At the top of the mid-caps was Royal Mail, up 6.1% as it reported a big drop in interim profit but said parcel growth is expected to remain robust in the third quarter.
Revenue for the half-year to September 27 amounted to GBP5.67 billion, up 9.8% on a year ago. However, pretax profit dived 90% to GBP17 million from GBP173 million, and the firm posted an operating loss of GBP20 million versus a profit of GBP61 million a year prior.
For the Royal Mail arm, its UK business, revenue was up 4.9%, with parcels revenue up 33% but letters revenue falling 21%.
However, the UK unit posted an adjusted operating loss of GBP129 million, swinging from a profit of GBP75 million a year ago, as it took GBP95 million in costs from mix change - from handling fewer letters and more parcels - GBP85 million in Covid-19 costs, GBP147 million for voluntary redundancies and GBP32 million for international conveyance, due to a virus-driven shortage in airline conveyance capacity.
For GLS - which offers parcel, logistics and express services, throughout Europe as well as in the US and in Canada - revenue rose 22% and adjusted operating profit jumped 84% to GBP166 million.
Keith Williams, interim executive chair, commented on outlook: "We have updated our scenario for the full year. As parcel volumes at both Royal Mail and GLS have continued to be robust year to date, revenue performance in the scenario has improved.
"It remains difficult to give precise guidance but parcel growth is expected to remain robust in Q3, with more uncertainty over trends in Q4 due to the development of the Covid-19 pandemic, further recessionary impacts and trends in international volumes."
Sterling was quoted at USD1.3210 early Thursday, lower than USD1.3300 at the London equities close on Wednesday. The euro softened to USD1.1836 from USD1.1870 late Wednesday.
Gold was quoted at USD1,859.08 an ounce early Thursday, down from USD1,879.79 on Wednesday. Brent oil was trading at USD44.46 a barrel, flat on USD44.44 late Wednesday.
The economic events calendar on Thursday has the latest US jobless claims figures at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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