FTSE 100 on course for monthly decline as virus fears rise

"It is clear that until rising uncertainties over U.S. elections, Brexit and COVID-19 are addressed in a more definite manner and markets see more positive forward looking data, investors are going to stay away from risk assets," said Andrea Cicione, a strategist at T.S. Lombard. Fears of further economic stress due to rising COVID-19 cases, coupled with Brexit uncertainty, have washed out gains seen over the previous month and dampened risk sentiment.

London's FTSE 100 traded in a range-bound manner on Wednesday and was headed for a second monthly decline in six as growing economic uncertainty due to the COVID-19 pandemic as well as Brexit subdued risk appetite. The blue-chip FTSE 100 dropped 0.1%, led by oil and gas and healthcare stocks, while the mid-cap FTSE 250 was flat, with analysts warning of higher volatility during the session as investors rebalance their portfolios at the end of the quarter.

Meanwhile, data confirmed that Britain's economy shrank by a record 19.8% in the second quarter when COVID-19 lockdown measures were in force, slightly less than the initial estimate of a 20.4% fall. "It is clear that until rising uncertainties over U.S. elections, Brexit and COVID-19 are addressed in a more definite manner and markets see more positive forward looking data, investors are going to stay away from risk assets," said Andrea Cicione, a strategist at T.S. Lombard.

Fears of further economic stress due to rising COVID-19 cases, coupled with Brexit uncertainty, have washed out gains seen over the previous month and dampened risk sentiment. The global mood was subdued on Wednesday after a chaotic first U.S. presidential debate turned investors cautious, though strong Chinese factory surveys gave a boost to Asian shares.

In company news, oil producer Royal Dutch Shell gained 1.1% even as it said it plans to cut more than 10% of its workforce in a bid to shift its business to low-carbon energy. British online fashion retailer Boohoo dropped 2.4% even after it raised its full-year guidance and reported a 51% jump in first-half profit, while Morrisons dropped 0.2% even though it said it would create 1,000 jobs to fulfil online order demand as the retail industry continues to feel the brunt of rising COVID-19 cases.

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