UK stocks fall with airlines and housebuilders among worst hit

  • 3/28/2020
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UK-listed shares ended a recent run of gains and fell heavily on Friday, with housebuilders and airlines among the worst affected as the fallout from the coronavirus lockdown continued to spread through corporate Britain. The FTSE 100 fell by 5.25% on Friday after rising for three consecutive days - although that still left it 308 points, or 5.93%, higher than the start of a week of volatile trading. The FTSE 250 tracking mid-cap companies lost 3.97% on Friday. The property industry was left reeling on Friday after the government put the brakes on the housing market on Thursday night, urging buyers and sellers to put plans on hold until the coronavirus restrictions were no longer in place. The move prompted a sell-off of shares in some of the UK’s largest housebuilding firms. Barratt Developments and Taylor Wimpey were among the biggest fallers on the FTSE 100, down by 5.3% and 9% respectively, while Persimmon lost 11%. The property website Rightmove lost 6%. Redrow shares fell 8.6% after the housebuilder issued a Covid-19 update to investors. The company said it had stopped building new homes, was putting a significant number of employees on temporary leave and was in talks with banks to shore up its finances as the coronavirus hammers the construction industry. A slew of companies warned of negative effects from the virus response. They included: Gatwick airport, which said it would shut one of its two terminals following a collapse in passenger numbers. Rolls-Royce, the aircraft engine manufacturer, said it planned to significantly reduce all non-essential activity at its civil aerospace sites in Britain from midnight. Cairn Energy, a North Sea oil producer, said it had that cut spending plans. More than 4,000 oil rig contractors in the North Sea have already lost their jobs, according to the lobby group Oil & Gas UK. Finsbury Food Group stopped production at its Manchester factory with the market for food services at pubs, restaurants and schools all but disappearing. The crisis has forced large parts of the economy to shut down as people are advised to work from home where possible, and anyone with symptoms of Covid-19 being required to self-isolate. The prospect of the disease spreading could also imperil the operation of other services. Royal Mail on Friday warned that it could be forced to reduce postal services because of the impact of the coronavirus. In a statement to the stock market, it said: “In recent weeks, we have seen rising levels of sick absence as colleagues self-isolate or care for family members. We cannot rule out reductions to services as Covid-19 develops.” The company also cancelled its dividend for the year, warning that its UK parcels, international and letters business would be materially loss making in the 2020-21 financial year, while profits at its European parcels division GLS would be “significantly reduced”. Many companies have warned they cannot estimate the size of the financial impact from the crisis. Balfour Beatty, a builder of infrastructure and other large construction projects, postponed its annual meeting and dividend on Friday, saying it did not know what the final impact of the lockdown would be.

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