Market: Blue chips tumble as brokers fear widespread dividend cull

Scrapped dividends dominated talk among traders today after a string of FTSE companies binned payments and moved to sure up cash reserves to stave off the coronavirus pandemic.

Micro Focus was first up - cancelling its final 2019 dividend - after the software company warned that sales were likely to be affected by the virus.

The company tried to reassure backers that the company remained capitalised, with robust profits and strong cash flows, but nervous investors sold off the stock as it tumbled 14% or 57p at 345p.

Ferrexpo was next in line as the iron ore pellet producer told the market it will not declare a dividend until the impact of the coronavirus pandemic is over, despite recording higher profits last year.

Analysts had forecast the company, which has a strong balance sheet, to declare a final 2019 dividend of 13 cents per share, taking payments for 2019 to 26 cents a share.

Shares in Ferrexpo fell 0.8p at 122p.

There are deep fears in the City that this is the start of dividend culls and that even oil majors like BP and Shell could be about to follow suit. BP was down 14.6p at 245p and Shell was down 64p at 962p.

One trader said: “Counting on companies to pay dividends for 2019, let alone 2020 seems a foolish gamble now.”

Sentiment was at rock bottom across the market as aggressive economic interventions from governments across the globe failed to reassure investors. The premier blue chip FTSE 100 index was down 213.61 points at 5081.29.

The biggest losers were aerospace engineers after analysts at JP Morgan slashed their earnings forecasts for the industry across Europe as airline giants have stopped ordering new carriers.

Rolls Royce was down 58p at 330p and Meggitt fell 71p at 244p.

There were a handful of risers, including delivery food firm Just Eat Takeaway.com which is expected to benefit from people being told not to leave the house. Its shares gained 410p at 7005p. Similarly home goods seller Kingfisher was also on the rise as analysts predict there will be is a boom in DIY activity. It added 9.2p at 134p.