LONDON: British stocks came off vaccine-fuelled highs on Wednesday after Finance Minister Rishi Sunak flagged a major hit to economic growth from the coronavirus, prompting an index of domestically-exposed stocks to mark its worst tumble in nearly a month.
The midcap index closed 1.1% lower, with industrials and consumer discretionary stocks weighing the most. The blue-chip index shed 0.6%, dragged by major banks and healthcare stocks.
Uncertainty over the UK’s exit from Europe also hurt sentiment, after the European Union’s head said the bloc could not guarantee a trade deal, and was prepared for a no-deal Brexit.
British stocks had touched a multi-month highs on the back of several positive updates in the development of a coronavirus vaccine.
But even amid progress towards a cure, the pandemic’s economic ructions are just beginning to be felt. Britain’s budget deficit is expected to climb to its highest level outside wartime, and its economy will shrink by 11.3% in 2020, Sunak said while unveiling a one-year spending plan.
Among individual movers, Unilever topped the FTSE 100 with a 5% jump, ahead of the Nov. 29 deadline for the cross-border merger of its British and Dutch corporate entities.
Roadside recovery company AA Plc jumped 7.1% after it agreed a sale to private equity groups that values the company at 219 million pounds.
Publisher Future bottomed out the midcap index after it agreed to buy the owner of price comparison website Go Compare for 594 million pounds ($793 million).
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