the times | Monday June 29 2020 2GM 31
Business
James Dean US Business Editor
The recovery of London’s stock market
from the coronavirus sell-off is the
weakest among its peers, with New
York, Frankfurt and Tokyo surging
ahead, figures show.
One analyst described London as
“the most unloved equity market”
because of its sluggish performance this
quarter compared with other leading
financial centres.
Stock markets tumbled at the end of
March as the coronavirus spread across
the world and most big economies went
into lockdown. Markets have rallied
since then but the recovery has not
been evenly spread.
With two days of trading to go, the
FTSE 100 has risen by 8.6 per cent for
the quarter, compared with a 21.7 per
cent jump for Germany’s Dax 30, a
19 per cent climb for Japan’s Nikkei 225
and a 16.4 per cent rally for America’s
S&P 500.
Fears of a second wave of infections
are being compounded by concerns
about Brexit, which appears to be inhib-
iting London’s recovery, analysts said.
Steven Wieting, chief investment
strategist and chief economist at Citi
Private Bank, said: “There’s still a great
deal of uncertainty over Brexit but even
as we’re facing a global economic
contraction they are still arguing over a
trade agreement that has to be in place
by the end of the year.”
The stronger US recovery has been
fuelled by significantly higher govern-
ment spending than in Britain. The
British government’s coronavirus res-
cue package is worth about 4 per cent of
GDP this year whereas the US package
is worth about 13 per cent, according to
research by Citi.
Mr Wieting said: “Really there has
been no loss to personal income in the
US. Initially it seemed quite promising
that there would be a larger fiscal offset
in the UK, but that didn’t emerge.”
Sharon Bell, an analyst at Goldman
Sachs, suggested the London market
looked “exceptionally cheap”. “The most
unloved equity market will becomemore attractive, but only if three things
take place: [Brexit] transition negotia-
tions are seen to be going well, oil prices
recover further and the UK economy
continues to improve,” she said.
Wall Street’s Nasdaq index, which
features many of the world’s largest
technology companies, has notched up
the best performance of any big index,
rising by 26.7 per cent, putting it on track
for its best quarter since 2001. The FTSEcommodities currencies
$
50
35
20
5Brent crude (6pm)
$40.50 (-1.46)world markets (Friday’s close, change on the week)
$Gold
$1,765.88 (+25.23)
1,850
1,750
1,650
1,5506,500
6,000
5,500
5,000
May 29 Jun 8 16 24 May 29 Jun 8 16 24 May 29 Jun 8 16 24 May 29 Jun 8 16 24 May 29 Jun 8 16 24FTSE 100
6,159.30 (-64.77)
1.300
1.250
1.200
1.150$
1.200
1.150
1.100
1.050¤£/$
$1.2332 (-0.0029)£/€
€1.0997 (-0.0051)May 29 Jun 8 16 24Dow Jones
25,015.55 (-855.91)
28,000
26,000
24,000
22,000Brexit and lack of stimulus drag FTSE down
London market is left in
shade as rivals zoom on
100 is on course for its best quarter since
2013, figures from Dow Jones Market
Data and Factset show.
Demand for computer hardware and
software, cloud services, social net-
working and online shopping during
the lockdown have prompted shares in
Alphabet, Amazon, Apple, Facebook
and Microsoft to soar. The five techno-
logy companies now account for about
a quarter of the market capitalisation of
the broader S&P 500.
The outperformance of technology,
telecommunications and healthcare
stocks have buoyed the S&P 500 more
so than the FTSE 100, which is weight-
ed more towards sectors that have per-
formed badly during the downturn,
such as energy.
Profit downgrades have been sharper
in the UK than in Europe, research by
Goldman Sachs found. FTSE 100 profits
have been marked down by 42 per cent
for this year and 26 per cent for 2021,
compared with downgrades of 38 per
cent and 22 per cent for companies in the
pan-European Stoxx 600 index.A bitter good news One in three adults plan to go to a pub when they reopen in England this weekend, a survey suggests, spending about £210 million. Report, page 34
YUI MOK/PABorrow big
and spend,
L&G chief
tells Johnson
Louisa Clarence-SmithThe chief executive of Legal & General
has warned that “history will judge
us unkindly” unless the government
embarks on a multibillion-pound
investment programme to revitalise the
economy.
Nigel Wilson, 63, said it was “very
odd” that ministers had not invested
more with interest rates mired at histor-
ic lows. He said investment should be
directed at climate change, infrastruc-
ture projects and retrofitting housing.
“Let’s stop talking about it and get on
with stuff we can do,” he told The Times.
“And we can give confidence to people
because actually they’re going to see
new jobs created so they can look for-
ward with a bit more optimism to the
future.
“History will judge us very unkindly
if we don’t take this opportunity to
invest when rates are so low and invest
in the right things.”
His call comes a day before Boris
Johnson is due to give a speech on
restarting the economy after the
Covid-19 pandemic. The prime minis-
ter is expected to pledge to spend tens of
billions of pounds on building schools,
hospitals, housing developments and
infrastructure.
Mr Wilson said the lack of invest-
ment in new industries had resulted in
investors bidding up the value of estab-
lished assets such as physical retail,
often against the long-term trends in
the industry. He said L&G would be
“stepping up” by accelerating its own
investment programme.
L&G has pledged today to make all of
its new homes carbon neutral from- “As we accelerate building, we
have to avoid stoking up a climate crisis
that would be at least as serious as the
Covid emergency,” Mr Wilson said.
The former McKinsey consultant
was a member of David Cameron’s
business advisory group in 2015-16 and
is one of a group of advisers on the gov-
ernment’s social care green paper.
Since becoming chief executive of
L&G, the FTSE 100 insurer, in 2012, he
has pushed the firm into housing and
infrastructure development, hoping to
generate long-term income stream to
pay out on retirement policies.
He said that for every pound L&G in-
vests in regional cities it has created £3
in the local economy. “I worry that if we
don’t give confidence that we are doing
things to deliver the right outcome to
people that we will see a worse eco-
nomic performance than we should be
able to deliver. But we should be able to
self-determine our success because
rates are so low.”
Leading article, page 25
Leading equity markets
Second-quarter gain, to Friday’s close
Dax 30
Germany21.7%Nikkei 225
Japan19.0%S&P 500
US16.4%Cac 40
France11.7%FTSE 100
UK8.6%