(Alliance News) - Stock prices in London were drifting further downwards at midday on Thursday, amid a lack of impetus with markets in the US closed for the Thanksgiving holiday, while the UK government allocated its post-lockdown restriction tiers in England.
The FTSE 100 index was down 32.15 points, or 0.5%, at 6,358.94. However, the large-cap index is up 8.5% this month alone.
The mid-cap FTSE 250 index was down 198.84 points, or 1.5%, at 19,370.55. The AIM All-Share index was up 0.2% at 1,033.36.
The Cboe UK 100 index was down 0.5% at 633.01. The Cboe 250 was down 1.5% at 16,670.62 and the Cboe Small Companies down 0.9% at 11,407.50.
In mainland Europe, the CAC 40 in Paris was down 0.1% and the DAX 30 in Frankfurt was flat.
"There is always a certain weariness about European markets on Thanksgiving Day, knowing that they are almost certainly condemned to a directionless session with little volume and not much movement, and even when there is it is likely to be quickly unwound once the Americans get fully back in the saddle from Monday," commented IG Group's Chris Beauchamp.
"Perhaps this year they will be thankful for the rest after the craziness of 2020 and all the volatility that has come with it. November has not been exactly quiet either, with stock markets finding their springboard to a fresh rally thanks to the election and vaccine news. That rally has cooled this week, leaving indices to drift back from their recent highs but without any real conviction," Beauchamp added.
Markets in the US will reopen for a half-day on Friday.
In London on Thursday, FTSE 100 stock DCC was up 3.0% after Morgan Stanley raised the Irish support services firm to Overweight from Equal Weight.
CRH was down 2.7% after Goldman Sachs cut the Irish building materials firm to Sell from Neutral.
Also among large caps, Persimmon, Imperial Brands and Land Securities were down 4.6%, 4.5% and 3.7%, respectively. The stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.
Aviva was down 2.0%. The insurer said it was making progress on its company simplification strategy and announced a new sustainable dividend policy.
Aviva declared a 7.0 pence per share interim dividend. The insurer currently expects to recommend a final 2020 dividend of 14p per share, subject to a decision to be taken in March 2021. The expected 2020 total dividend of 21.0p per share is then expected to grow by low to mid-single digits, it said. However, the expected total dividend for 2020 is 32% lower than the 30.9p paid out in 2019.
"While the dividend cut is unwelcome for existing shareholders, a reliable yield of around 6.5% may be attractive to new investors. Unfortunately, Aviva remains mired in untangling its historic network of businesses, and that will inevitably distract both investors and management from a core business that is showing some signs of promise," said analysts at Hargreaves Lansdown.
In the FTSE 250, Virgin Money UK was the worst performer, down 11%. The challenger bank was extending losses from Wednesday after reporting a jump in credit impairment charges, which it said reflected a "cautious approach to an uncertain economic environment".
Virgin Money also said it was still unable to give medium-term guidance due to the unprecedented nature of Covid-19 and unclear prospects in the UK. The stock closed down 7.7% on Wednesday.
Virgin Money's CET1 ratio ended September at 13.4%, slightly higher than 13.3% a year before. The lender did not declare a dividend in financial 2020, helping to aid its capital buffers.
"We continue to see the group loss-making in 2021 with CET1 declining to 11.6% and exposed to higher interest rate risk following the wind-down of the hedge," analysts at JPMorgan said.
The pound was quoted at USD1.3354 Thursday at midday, down from USD1.3382 at the London equities close on Wednesday. Sterling was retreating from an intraday high of USD1.3398 against the greenback in early trade.
The euro was priced at USD1.1907, flat from USD1.1909. Against the Japanese yen, the dollar was trading at JPY104.20, down from JPY104.38.
In commodities, Brent oil was trading at USD48.24 a barrel on Thursday at midday, higher from USD48.04 at the London equities close on Wednesday. Gold was quoted at USD1,814.70 an ounce, up from USD1,811.61 late Wednesday.
Much of England is facing tough coronavirus restrictions under the new post-lockdown tier arrangements, with bans on households mixing indoors and curbs on pubs and restaurants.
An online postcode checker went live before the official announcement to Parliament and indicated that Manchester, Birmingham, Hull, Newcastle, Bristol and Kent were among the places facing the toughest restrictions, while London and Liverpool are set to be placed in Tier 2.
UK Health Secretary Matt Hancock subsequently confirmed the changes in the House of Commons, with Manchester, Birmingham and Newcastle being placed into Tier 3.
In Tier 1, the rule of six applies indoors and outdoors, people are urged to work from home if they can and pubs are limited to table service.
Tier 2 restrictions mean a ban on households mixing indoors and pubs, and restaurants only able to sell alcohol with a "substantial meal". Tier 3 measures stipulate a ban on households mixing, except in limited circumstances such as parks.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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