FTSE 100 tumbles as IAG, Rolls Royce, and Sage share prices drop

By - Team Kalkine Media


  • FTSE 100 dropped by 68 points on Monday, 26 October 2020
  • Covid-19 cases continue to rise in the nation despite tighter restrictions in place throughout the UK

The premium FTSE 100 index closed 1.16 per cent lower to 5,792.01 points while the domestically focused FTSE 250 plummeted by 1.42 per cent to 17,853.30 points on Monday, 26 October 2020.

The daily toll of new infections of the deadly virus continue to rise in the UK, raising concerns over a delayed end of the coronavirus pandemic in the country. Close to 20,900 people tested positive for a Covid-19 infection on 26 October across Britain. This daily toll was much lower at around 6,000 on 26 September, exactly a month back. 

Not just the FTSE, but the Eurozone and the US markets also witnessed a downfall on Monday. For instance, the Dow Jones Industrial Average Index fell by more than 650 points to close at a value of 27,685.38 on 26 October.

The Nasdaq Composite Index also dropped by 189 points to touch a value of 11,358.94 on the same day.

The primary reason cited by market analysts for this trend was a rapidly rising coronavirus counts in the US.

Similarly, the European markets seemed worried over the fate of an already weakened economy of the continent with the advent of the second Covid-19 wave. With a spike in infections across Europe, restrictions had been reimposed in many countries.

Europe’s Stoxx 600 Index fell by 1.8 per cent on 26 October after a sharp downfall seen across Germany’ blue-chip technology stocks.

Economists are increasing worried that the global economy might be going into a reverse gear due to the renewed set of restrictions in place around the world. As these measures get stricter, the economic activity could get more sluggish, they indicated.


(Source: Government of UK)

Let us now take a closer look at the top blue-chip companies who turned the FTSE 100 index red on the above- mentioned day. 

International Consolidated Airlines Group

The company stock (LON: IAG) stumbled by 8.2 per cent on 26 October to close at a value of GBX 100.70 points as compared to a higher value of GBX 109.00 observed on the previous trading day. The company stock had plummeted by almost one-fourth of its year 2020’s high value of GBX 459.13, attained on 17 January, before the lockdown was imposed in the UK.

In its latest released financials, the owner of British Airways reported a loss worth £1.16 billion for Q3 2020, which was much worse than market analyst forecast. The group announced slashing its flights to 30 per cent of its total capacity for the October to December 2020 period, as a result of the renewed travel restrictions by various European countries.

The company statement mentioned that while the company might not reach a breakeven net cash flow during Q4 2020 from its operating activities, its liquidity position remained strong.


Rolls-Royce Holdings plc

The company stock (LON: RR.) closed at a value of GBX 226.10 points on 26 October, lower by 7.22 per cent from the previous day close. The stock has displayed a wide variation in its 52-week high (GBX 113.60) and low (GBX 779.60) figures with a negative year to date return of 66.81 per cent.  

The UK based aero engine manufacturer planned to close some of its factories on a temporary basis, according to reports. Moreover, it was contemplating over lowering the total number of working hours and slashing benefits to reduce cost.

Earlier, the company had informed its employees that it might undertake certain restructuring measure in the wake of the ongoing coronavirus-led crisis that had drastically slashed the demand for aircrafts. At the same time, the company assured that it was not going in for any more job cuts in the near-term.


Sage Group plc

The company stock (LON: SGE) retreated by 6.22 per cent on 26 October to close at a value of GBX 650.80 points. Few days back, on 22 October, the Sage stock was trading at a reasonably higher value of GBX 698.60 points.

Apart from other things, the technology firm had been focusing on development of its mid-market solutions along with its digital and cloud platforms. Additionally, it was going in for new technologies to strengthen its existing product lines.

As per the company’s latest financial update, its recurring revenue for the January to September 2020 period was close to £1.2 billion, up 9 per cent from the corresponding period value in the previous year. The company had reported about acquiring new customers and migrating the existing ones to the Sage Business Cloud platform. 


Yet another lockdown?

The total number of reported coronavirus infections were 894,690 till 26 October in the UK, taking the total number of related fatalities to 44,998.

With a rise in number of daily infections, some areas were moved into Tier-3, the highest level of coronavirus restrictions in the UK.

For instance, while Warrington entered this tightest level of restrictions on 27 October, the Nottingham city would be entering the Tier-3 zone from 29 October, according to the local government officials.

Other regions where Tier three restrictions are already in place include South Yorkshire, Greater Manchester, Liverpool City, and Lancashire.

Many experts predicted that there might be a need to go in for a complete national lockdown once again, if the infection rate is not controlled with the existing set of three level restrictions across the UK.

In fact, if media reports are to be believed, Scotland government is already working on a five level set of restrictions where level zero meant close to normalcy and level five indicated a complete lockdown, similar to the first national lockdown put in place on 23 March. 

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