FTSE 100 closes 193 pts lower
New York trading volatile as Dow rally swiftly reversed
US blue chips suffered biggest one-day fall since 2011 on Monday
FTSE 100 finished 2.64% lower on Tuesday as the global stock slide, which started in the US, continued.
Britain's blue chip benchmark closed down over 193 points at 7,141. FTSE 250 also tanked, to close down 2.17%, or almost 428 points, at 19,262.
The Dow Jones, having finished Monday 4.6% lower, was up 182 points at the time of writing, as Wall Street slowly recouped losses.
In Germany, the DAX is down 294 points, while in Paris the CAC 40 shed over 124 points, or 2.35%.
"Stocks quickly moved off the low of the session in early trading but are nowhere near the breakeven point for the day.
"Even though this major stock decline originated in the US, stocks on this side of the pond have been well and truly caught up in the chaos," said David Madden, at CMC Markets.
3.30pm: Chaotic early session in New York
The Footsie stayed weak with an hour of trading to go in London as volatility was the watchword of the day in New York, with a swift bounce back from an opening plunge evaporating, leaving traders nervous and confused.
Around 3.30pm, the FTSE 100 index was down 104 points at 7,230 off lows but largely moribund with all eyes on Wall Street.
Sad photo of Wall Street traders reacting as stock market plunges. pic.twitter.com/671pG4Db4L— Binyamin Appelbaum (@BCAppelbaum) 5 February 2018
After an hour of chaotic trading, the Dow Jones had again turned 170 points lower having swung from an opening 500 point drop to a near 300 point gain. Both the broader S&P 500 index and tech-laden Nasdaq composite also saw an early rally swiftly reversed.
Connor Campbell, financial analyst at Spreadex said: “The Dow was all over the place after the bell. With the futures promising the index was going to spill its guts, it was a welcome relief that the index instead quickly shifted into the green.
“The index is still pretty damn volatile, however, with its gains ranging anywhere from 100 to 350 points. It’s also worth noting that the Dow did something similar yesterday, ducking an immediate bloodbath only to completely lose its bottle by the end of the session.”
Gold shines for Highland
In London, among some positive corporate news, Highland Gold Mining Ltd (LON:HGM) was a good gainer in late afternoon trading, up 1.4% at 148.1p after the AIM listed firm provided an updated mineral resource estimate for its flagship Kekura project which showed increased total gold reserves though at slightly lower grades.
But Sanne Group PLC (LON:SNN) featured among the afternoon fallers, shedding 4.1% at 686p as it warned of an adverse impact from foreign exchange movements during the second half, although it said it still expects 2017 underlying earnings to be in line with its expectations.
And blue chip financial services firm Hargreaves Lansdown PLC (LON:HL.) lost 3.3% at 1,771.5p despite reporting double-digit growth in net business inflows, pre-tax profit, and revenue in the first half of its financial year as it cautioned over Brexit uncertainty and the Financial Services Compensation Scheme levy which will hit its second half results.
2.50pm: US stocks rally after opening drop
The FTSE 100 index remained under pressure in late afternoon trading but held off earlier lows as Wall Street saw a big opening drop quickly reversed after yesterday's plunge.
Around 2.50pm, the UK blue chip index was still about 123 points, or 1.7% weaker at 7,211, but held off the hefty session low of 7,079.41.
In New York, following Monday’s 1,100 point drop, the Dow Jones shed another 500 points in the first minutes of trading, but that drop was soon recouped and the US blue chip index bounced 270 points higher, with both the broader S&P 500 index and tech-laden Nasdaq composite also recovering as some bargain hunters emerged.
However traders remained braced for further volatility as a spike in bond yields on expectations for more US rate hikes than previously anticipated this year amid inflationary concerns kept the mood cautious.
David Cheetham, chief market analyst at XTB.com, commented: “The price action for US stocks since the initial knee-jerk reaction to Trump’s victory has been characterised by an unprecedented period of low volatility, with the S&P500 going 404 consecutive days with a 5% correction - its longest ever streak.
“This came to a stunning end yesterday and the nature of the declines suggests that traders may well be in for more volatile trade ahead.”
He added: “Taking a long-term perspective US benchmarks remain relatively robust from a technical point of view with all three major indices (S&P500, DJIA, NASDAQ 100) trading above their 200 day SMA (simple moving average) - a key trend identification tool used by technical traders.
“Finally, it is worth noting that there have been 4 notable corrections in the 9-year bull market for the S&P500 since the last financial crisis, with these ranging from 14-17% in size. The current pullback from peak-to-trough is around 12% and should buyers step in and provide support around this region once more then a recovery may well lie ahead.”
12.20pm: Blue chips remain blighted
The Footsie retreated from a slight rally and headed lower in lunchtime trading, with all eyes fixed ahead to the US restart following the plunge on Monday in New York that precipitated the global market rout seen today.
Around 12.15pm, the FTSE 100 index was off a massive 175 points at 7,159, but that was still well above its early drop to a session low of 7,079.41.
On Wall Street, after Monday’s 1,100 point drop by the Dow Jones, all 30 components of the US blue chip index were trading in negative territory in active pre-market trading
Neil Wilson, senior market analyst at ETX Capital noted: “Futures have been all over the place this morning but seem to be settling lower, ready to push through another run of levels on the downside.”
He pointed out: “The cue yesterday for the Dow’s plunge was when the 50-day moving average gave way, triggering algos and trend-following funds to dump stocks. The next support which seems to have gone after a couple of false starts is the 100-day moving average at 24071.”
Wilson added that with Dow futures well through that level at 23700, this average will be critical when the US markets open – “regain it and there is hope the rout could halt as it might be the excuse for algos to turn bullish, but failure to regain this could trigger a renewed bout of selling.”
Corporate news passed by
In London, there was little to inspire the market to rally, with fourth quarter numbers from BP PLC (LON:BP.) failing to provide a boost, with the oil major’s shares down 1.3% at 475.85p.
BP boasted of “strong delivery and growth” in the fourth quarter of 2017, highlighted by improved upstream production and underlying profit, however, a further US$1.7bn charge associated with the Deepwater Horizon Gulf of Mexico rig disaster meant the group reported only a small profit.
Elsewhere, mid cap transport operator Stagecoach PLC (LON:SGC) was also a big casualty, shedding 6.2% to 136.3p on news that its franchise to run the East Coast Mainline rail service will end earlier than expected.
In a statement to the House of Common’s on Tuesday afternoon, UK transport secretary Chris Grayling said Stagecoach would only continue running the London to Edinburgh rail line for "a small number of months and no more" having "got its numbers wrong" when bidding to run the service.
And Ocado Group PLC (LON:OCDO) fell 6.7% at 459.6p after the online grocer accompanied full-year results with plans for a placing of up to 31.5mln shares, around 5% of the company to raise £155mln to expand its Solutions business worldwide.
The FTSE 250-listed firm saw a sharp drop in profit for its last financial year and said this year’s earnings will be hit by costs related to its transformation into a technology provider rather than just a grocery delivery firm.
The FTSE 250-listed group said its chief executive Stephen Koseff, managing director Bernard Kantor, and Risk & Finance director Glynn Burger, who it said are considered part of Investec's founding members, are to leave the Anglo-South African company over the next year.
11.00am: Bitcoin hammered too
As global stock markets tumbled, the value of Bitcoin slid back below US$6,000 on Tuesday, a 13% decline to take losses by the cryptocurrency to more than half since the start of 2018.
Bitcoin has fallen heavily in recent sessions amid worries about a regulatory clampdown on the cryptocurrency market and as a number of banks banned credit card customers from buying cyptocurrencies.
OK ... You are a hard sell crowd. Then let me show you a different perspective. Bitcoin does this every year at this time: pic.twitter.com/mtMPQW0Hns— John McAfee (@officialmcafee) 5 February 2018
The virtual currency, which hit a peak of almost US$20,000 in December, fell as low as US$5,920 on the Luxembourg-based bitstamp exchange this morning, its lowest level since mid-November, before recovering slightly.
Although European stock markets were off their worst levels in late morning trading, the FTSE 100 index still nursed a 133 point drop at 7,201.
10.00am: Footsie off lows but still depressed
The FTSE 100 index came off its worst levels but still remained sharply lower in mid morning trading as the global rout in stock markets continued to take a toll.
Around 10am, the UK blue chip index was down 140 points at 7,192, having hit a session low of 7,079.41, reflecting a 1,100 point plunge overnight by the Dow Jones on Wall Street and sharp falls in Asian and European markets today.
That really is a hell of a decline for the FTSE100 over the last 5 days - briefly trades to December 2016 levels: pic.twitter.com/OLr5qM96cF— David Jones (@JonesTheMarkets) 6 February 2018
James Knightley, chief international economist at ING, commented: “The catalyst for the biggest US equity sell-off for six years is being blamed on a delayed realisation that inflation pressures are rising perhaps more quickly than anticipated (US wage growth last Friday is only one of a number of signals), which has been leading to increases in interest rate expectations and bond yields.
“Equity markets have finally woken-up after a period of low volatility/complacency that had led to rapid gains. Selling was then exacerbated by programme trades yesterday and the resulting market panic was the catalyst for flows into safe-haven Treasuries, driving yields lower once again.
“However,” the economist added, “we have to remember that yesterday’s fall in the S&P500 only takes us back to the level of December 14 and equity futures are indicating a positive open on Wall Street (at the time of writing). As such, this appears to be more of a ‘healthy’ correction rather than the start of a broader re-evaluation for earnings.
“Indeed, the US economy is in great shape right now and the financial sector is in a more robust position than it was ahead of the last major sell-off. That is not to say that we won’t see further falls in coming days, but in an environment where growth is good and earnings are expected to rise globally, there are decent underpinnings.”
8.55am: Shaking the tree
"In terms of the UK, rather more apples have fallen as the tree has been shaken. Over the last year the index is completely flat, whilst in the year to date it has fallen 6.4%," said Ricard Hunter of Interactive Investor.
"The previous benefit of weaker sterling has evaporated, and whilst participation in the previous rally was somewhat half-hearted, the same cannot be said of the UK market’s reaction to the current jitters.
"Even so, many of the previous reasons for optimism remain. Corporate earnings continue to justify valuations, the general synchronised economic recovery is still intact, and even an aggressive increase in the interest rate across the pond would still likely leave them at relative historic lows. Meanwhile, for the moment, yields remain attractive with many considering equities to be the investment destination of choice.
"Providing that the current situation of letting some air out of the tyres does not result in a puncture, this reset could be seen as a justified reaction to recent exuberance.”
- All the benchmark European stock indexes retreated— Bloomberg (@business) February 6, 2018
- The German DAX falls 2.4%
- FTSE 100 drops 2.3%
- U.S. stock index futures are volatile
How low can it go?https://t.co/StYnUpMzSB pic.twitter.com/Rj38IKU2Gk
8.30am: Bad, but could have been worse
The FTSE 100 fell 250 points at the open, but recovered its poise a little in a hectic opening few minutes in the wake of the bloodbath on Wall Street.
By 8.30am, the index of blue-chip shares was off 180 points or around 2.5% to 7,154.50.
Overnight, the Dow Jones plunged more than 1,100 points, recording its worst one-day performance since 2011.
It marked a second day of heavy losses for US equity investors amid interest rate hike fears with the current wobble sparked by wage data released on Friday.
“The speed and nature of the massive decline in the Dow Jones raise some serious market structure questions. When things got really ugly at around 2.40pm EST, there was just a total absence of buyers,” said Neil Wilson of ETX Capital.
“Where were the market makers? It looks like instead of bidding for stocks, HFT [high frequency] market makers either abandoned ship or joined the selling.”
In Asia, the markets took a bath too, with Japan’s Nikkei ending a turbulent session off 4.7%.
The sole riser early on was gold miner Randgold (LON:RRS), with investors buying into it as proxy for the yellow metal, a safe haven for investors in times of turmoil.
The fallers were largely US-focused stocks such as Ashtead (LON:AHT), or those holding large American investments.
Proactive news headlines:
Production from Highlands Natural Resources PLC’s (LON:HNR) East Denver project in Colorado has topped 100,000 barrels oil equivalent. Achieving this landmark took just 64 days from the start of initial production in December, Highlands added.
Directa Plus PLC (LON:DCTA) has announced the launch of two new textile collections containing the company's Graphene Plus (G+) by Colmar, the high-end sports and activewear company, and Eurojersey SpA, a producer of high quality warp-knit technical fabrics under its Sensitive® Fabrics brand. The group said both collections were unveiled at ISPO 2018, the sport and sportswear international trade fair held in Munich.
SDX Energy Inc (LON:SDX, CVE:SDX) has revealed positive well testing results for the recently drilled ONZ-7 well at the Sebou permit, onshore Morocco. ONZ-7 achieved an average flow rate of 10mln cubic feet of gas per day during the test. The well will now be prepared for production, with the connection to nearby infrastructure anticipated in the coming days.
Jubilee Metals PLC (LON:JLP) has elected to exercise its option to earn 40% of the Kabwe lead, zinc and vanadium project in Zimbabwe. Jubilee's effective interest will therefore go to just over 57%, as it already owns a stake in its partner at Kabwe, BMR Group PLC (LON:BMR).
Galantas Gold Corp (LON:GAL) has announced that the appeal against its planning consent at the Omagh gold mine in Northern Ireland has been delayed until 15 February, due to illness on the part of the litigant. Galantas already has consent to work at Omagh, where there is a history of gold production.
Anglo Asian Mining PLC (LON:AAZ) has set production guidance for the year to December 2018 of between 78,000 and 84,000 ounces of gold equivalent. That represents roughly a 13% on the 2017 number and comes as a number of expansion initiatives at Anglo Asian's Azerbaijan mines complete.
Bacanora Minerals Ltd (LON:BCN) (CVE:BCN), the London and Canada-listed lithium company, has appointed Eileen Carr as a non-executive director and Janet Boyce as chief financial officer. The board strengthening comes ahead of the start of construction at its Sonora lithium project in Mexico.
AdEPT Telecom PLC (LON:ADT) said it was notified today that on 5 February 2018 Christopher Kingsman, a non-executive director of the company again increased his shareholding following the purchase of 5,000 ordinary shares by Greenwood Investments Limited at a price of 285p each. Following the purchase, the group added, Kingsman has a total beneficial interest in 4,020,000 ordinary shares held via Greenwood Investments, representing approximately 17.0% of the company’s current issued share capital.
Collagen Solutions PLC (LON:COS) has confirmed it will be hosting an afternoon presentation for investors on Monday, 26 February 2018 in the Copper Bar, upstairs at Balls Brothers, 6 Adams Court, Old Broad St, London, EC2N 1DX at 5.30pm for a 5.45pm start. The group said Jamal Rushdy, Collagen’s CEO will give an update on recent news and key milestones expected this year on ChondroMimetric®, the Company's proprietary product, a minimally-invasive surgically placed scaffold for the repair of knee cartilage defects. He will also provide a summary of the Company's core business activities over the next period, the firm added.
6.45am: Plunge predicted
The Footsie is set plunge in early trading on Tuesday, testing the 7,000 level after US stocks suffered their biggest falls since 2011 overnight and Asian markets followed suit today amid fears over inflation and US rate hike concerns.
Spread betting firm CMC Markets expects the UK blue chip index to open around 275 points lower at 7,060, having dropped 108.45 points on Monday.
On Wall Street, the Dow Jones slumped by 1,175 points, or 4.6% last night to close at 24,345, with other US benchmarks also dropping by around 4%.
Asian markets were even worse off today, with Japan’s Nikkei 225 diving 6.8% to near four-month lows.
Michael Hewson, chief market analyst at CMC Markets UK, commented: “Having seen such a decent month in January, it has taken six trading days for the gains in US markets this year to disappear, with the S&P500 closing over 4% lower and its worst one day decline since 2011.”
He added: “These declines have been a long time coming and in a sense have already started to become self-accelerating. At the end of last year margin debt levels on US stocks were at record highs, helping fuel the rise we’ve seen in the last few months.
“The sell-off in the last few days is likely to reverse this trend, and potentially accelerate it further, particularly if investors start to unwind it over concerns that we could fall further, which seems likely if events in Asia this morning are any guide.”
BP to report results
Corporate news will likely be a sideshow today although big oil will be in focus with full-year numbers due from BP PLC (LON:BP.)
The 2010 Deepwater Horizon oil spill continues to plague the FTSE 100 listed company, which is expecting to take a US$1.7bn charge in relation to the disaster in the fourth quarter of 2017.
BP has been winding down its settlement for the disaster that killed people in April 2010 and saw 4.2 barrels of oil spilt into the Gulf of Mexico.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said while costs relating to Deepwater Horizon are set to be higher than originally expected this year, charges are finally starting to decline.
“That should free up significant cash flow for reinvestment and debt reduction,” Hyett said.
BP should also benefit from a recovery in oil prices. The company has been ramping up production in line with the increase in oil prices, which analysts expect to lift revenues and profits.
Elsewhere, full-year numbers from online grocer Ocado PLC (LON:OCDO) will be fairly irrelevant with the focus on the group winning further international deals to fend off competition from US giant Amazon.
Earlier this month, Ocado signed up the second major international customer for its online solutions business, Canada's Sobey, less than two months after France's Casino signed at the end of November.
Credit Suisse has said it expects "at least two" more third-party deals to be announced over the next 12 months.
Significant announcements expected:
Economic data: US international trade numbers
Around the markets:
- Sterling: US$1.4120, unchanged
- Gold: US$1,329.80 an ounce, down 1.1%
- Brent crude: US$63.51 a barrel, down 1.0%
- Lloyds Banking Group is eliminating around 1,000 jobs across six businesses – The Independent
- Carillion knew of pension risk for six years - but continued paying huge dividends and racking up more debt – Daily Mail
- Carillion’s Canada business taken over by Fairfax – Financial Times
- BHP Billiton could make £16bn from ending dual listing, Elliott says – Daily Telegraph
- Rockhopper agrees drilling deal for Falklands oilfield – The Times
- Joules Chief exec Colin Porter makes almost £3mln selling shares in the fashion chain – The Guardian
- Anglo American swipes at South African mining regulation – Financial Times
- Unilever Europe President Jan Zijderveld to become Avon Products CEO as Sheri McCoy retires - CityAM
- Tesla sales drop in Hong Kong after tax breaks removed – Financial Times
- SpaceX aims big in ever-evolving rocket environment – Financial Times
- Nissan earmarks US$9.5bn in push to be top-three China brand – Financial Times
- Germany’s Berenberg targets UK expansion amid M&A boom Daily Telegraph
- Bitcoin ‘massacre continues’ US authorities ‘open’ to regulating cryptocurrency platforms – Daily Express
- Draghi warns market volatility could damage EU – ‘New headwinds have arisen’ – Daily Express
- Doritos to launch packets of crisps aimed specifically at women, who, it is claimed, prefer a “quieter” crunch – The Scotsman