London open: Stocks edge higher as investors mull borrowing figures

(Sharecast News) - London stocks edged higher in early trade on Friday as investors mulled over the latest UK borrowing figures, but the FTSE 100 was still on course for heavy weekly losses amid ongoing concerns about the coronavirus and its impact on the economy.
At 0850 BST, the top-flight index was up 0.3% at 5,838.28.

Richard Hunter, head of markets at Interactive Investor, said: "It has been a generally torrid week for markets, with Covid-19 regaining centre stage as the ongoing lack of a vaccine and further tightening rules threaten to derail what was becoming a slow recovery.

"In the UK, further relief measures announced by the Chancellor were a welcome development, but the moves were never going to be a panacea for the UK's economic ills. Fiscal support looks likely to wane over the next few months with a further wave of unemployment looking inevitable, as the latest lockdown restrictions begin to bite on several affected sectors."

Investors were digesting the latest figures from the Office for National Statistics, which showed the government borrowed £35.9bn in August - the third highest monthly figure on record - as tax revenue fell and it spent to deal with the economic effects of the Covid-19 crisis.

August's net borrowing figure was a record for the month and £30.5bn more than a year earlier. But the total was less than in March and April as the economy picked up and some workers returned to work from furlough. It was also less than the average economists' forecast of £38bn.

Central government bodies spent £78.5bn on day-to-day activities in August - £19.5bn more than a year earlier. Estimated spending included £6.1bn for the Coronavirus job retention scheme and £4.7bn of support for self-employed workers.

Tax receipts were an estimated £37.3bn - £7.5bn less than a year earlier as VAT, corporation tax and income tax receipts dropped sharply as the government offered relief to the hospitality sector and others.

August's borrowing took public sector net debt to £2.024trn or 101.9% of economic output, the highest figure as a share of the economy since 1960-61.

"The government borrowed another huge sum in August as it continued to absorb much of the cost of the Covid-19 crisis," said Capital Economics UK economist Andrew Wishart. "But while the chancellor announced some modest further support yesterday, the big picture is that fiscal support will fade over the autumn causing many more job losses to be realised.

"After an impressive rebound in Q3, we think the resurgence of the virus and new restrictions will cause GDP to stagnate for the rest of this year, hurting tax revenues."

In equity markets, Aviva rose following a report that a consortium of Germany's Allianz and life insurer Athora Holdings is in talks to buy the French operations of the London-listed insurer. Reuters cited sources as saying the deal could be worth between €2bn and €3bn.

Vodafone rallied following a report by El Economista newspaper that it has begun talks to buy Spanish rival MasMovil with the three buyout funds that recently took it over.

Pennon nudged up after saying it was on track to report first-half results in line with its own expectations and was considering the best use of funds from the sale of its waste management business.

Elsewhere, Chilean copper miner Antofagasta was boosted by an upgrade to 'buy' at Investec.

On the downside, West End landlord Shaftesbury was in the red after it scrapped its final dividend and said almost half of rents due for the second half had been waived or were still due amid the Covid-19 crisis.

Market Movers

FTSE 100 (UKX) 5,838.28 0.27%
FTSE 250 (MCX) 16,878.77 0.45%
techMARK (TASX) 3,704.89 -0.03%

FTSE 100 - Risers

United Utilities Group (UU.) 884.60p 3.78%
Melrose Industries (MRO) 112.25p 3.08%
M&G (MNG) 149.65p 2.39%
Pearson (PSON) 547.60p 2.05%
Aviva (AV.) 284.60p 2.01%
Royal Dutch Shell 'A' (RDSA) 1,033.80p 1.95%
Royal Dutch Shell 'B' (RDSB) 996.60p 1.89%
Evraz (EVR) 334.40p 1.89%
Fresnillo (FRES) 1,210.00p 1.68%
BP (BP.) 236.25p 1.66%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 91.80p -3.61%
Johnson Matthey (JMAT) 2,284.00p -1.13%
Persimmon (PSN) 2,390.00p -1.12%
Ocado Group (OCDO) 2,795.00p -1.06%
AstraZeneca (AZN) 8,480.00p -0.92%
Rolls-Royce Holdings (RR.) 148.80p -0.87%
Hikma Pharmaceuticals (HIK) 2,519.00p -0.87%
InterContinental Hotels Group (IHG) 3,936.00p -0.81%
Rio Tinto (RIO) 4,775.50p -0.77%
Smith (DS) (SMDS) 275.00p -0.76%

FTSE 250 - Risers

PZ Cussons (PZC) 238.00p 10.96%
Cineworld Group (CINE) 44.68p 8.03%
Airtel Africa (AAF) 58.30p 4.48%
Henderson Smaller Companies Inv Trust (HSL) 749.00p 3.74%
Ascential (ASCL) 278.40p 3.73%
Law Debenture Corp. (LWDB) 498.50p 3.53%
Frasers Group (FRAS) 344.20p 2.99%
Hilton Food Group (HFG) 1,198.00p 2.92%
Drax Group (DRX) 262.40p 2.90%
ICG Enterprise Trust (ICGT) 794.00p 2.85%

FTSE 250 - Fallers

Pets at Home Group (PETS) 367.60p -5.74%
Sirius Real Estate Ltd. (SRE) 73.00p -4.45%
National Express Group (NEX) 135.50p -3.21%
Micro Focus International (MCRO) 246.00p -3.00%
SSP Group (SSPG) 188.90p -2.98%
Wizz Air Holdings (WIZZ) 3,034.00p -2.00%
Meggitt (MGGT) 247.10p -1.94%
Morgan Advanced Materials (MGAM) 220.50p -1.78%
Crest Nicholson Holdings (CRST) 177.30p -1.72%
Workspace Group (WKP) 485.00p -1.70%