Proactive Investors - Run By Investors For Investors
Markets

FTSE 100 closes down nearly 2% as the big sell-off continues

The UK blue-chip benchmark finished down nearly 139 points lower at 7,006 - not far from the 7,000 mark
London skyline
Footsie plunged on Thursday
  • FTSE 100 slumps

  • Blue-chip gauge back to session lows

  • US stocks fall but not as fast as expected

  • House builders under pressure 

FTSE 100 closed firmly lower as the big share sell-off continues but Wall Street stocks did  not slip as much as feared.

The UK blue-chip benchmark finished down nearly 139 points lower at 7,006 - not far from  the 7,000 mark.

Mid-cap cousin FTSE 250 plunged over 411 points at 18,827 as traders flee from equities due to the rising cost of debt and trade worries.

On Wall Street, the Dow Jones Industrial Average is down around 142 points at the time of writing, while the S&P 500 shed 114 points at 2,765.

Fiona Cincotta, senior market analyst at City Index, said: "The slide in equity markets continues but the ferocity has been toned down.

"The Dow Jones Industrial Average is down about 140 points, which seems positively sedate compared to yesterday’s 830 points.

"The dramatic US stock market plunge expected this morning did not materialise and instead the selloff has slowed down to a more regular pace," she said.

Among the top Footsie laggards were the house builders with Barratt Developments plc (LON:BDEV, down over 12% at 487.8p.

It comes amid uncertainty about Brexit and data showing declining house prices and stalling sales, particularly in the pricey London boroughs and the capital’s commuting belt.

Meanwhile, a rally in the gold price has bolstered Mexican-based Fresnillo plc (LON:FRES), up 8.65% to 839p and the top riser on Footsie, and South Africa’s Randgold Resources (LON:RRS), also up over 8% at 5,706p.

4.15pm: Footsie stuck in the red

British blue-chips were stuck in the red as they headed toward the close as Wall Street’s session was proving volatile in the early stages of US trade.

The FTSE 100 fell 134 points, or 1.9%, to 7,011, returning to intraday lows. The mid-cap FTSE 250 was knocked down 373 points, or 1.9%, to 18,865.

Meanwhile, investors whipped US equities around. Wall Street’s major indexes opened in the red, turned higher, then resumed the selloff the swept US stocks sharply lower Wednesday. The Dow Jones Industrial Average dropped nearly 300 points in early moves Thursday. Relatively soft inflation US figures had briefly helped Wall Street dig out of the red.

“This might be a dead cat bounce. There is still a fair bit of nervousness out there and this situation could easily change as the trading day progresses,” said Neil Wilson, chief market analyst at Markets.com.

But “solid” US growth fundamentals and anticipated earnings growth of roughly 20% this quarter are among reasons “to be optimistic” about the market’s outlook, said Wilson.

On the FTSE 100, the biggest percentage decliner was set to be house builder Barratt Developments PLC (LON: BDEV) as its shares sank 11.6% to 490.70p. Gold miner Fresnillo PLC (LON:FRES) was poised to be the biggest riser, up 8.6% to 838.70p.

3.pm: Footsie pares loss 

UK stocks struggled in mid afternoon action Thursday, but came off intraday lows as US stocks darted into positive territory in early trade.

The FTSE 100 fell 81 points, or 1.2%, to 7,066, after having lost as much as 1.9%. The mid-cap FTSE 250 also pared its decline, to 279 points, or 1.5%, to 18,959.

But the Dow Jones Industrial Average moved up 76 points and the Nasdaq Composite turned up 0.2%, but the S&P 500 was off 0.2%. Futures had indicated US stocks would extend Wednesday’s slide that, among other things, left the Nasdaq down 4.1%. 

“Critically investors are trying to understand what the driver is behind the nose-dive, but with US interest rates marching relentlessly higher, equity valuations are looking increasingly overblown,” said James Hughes, chief market analyst at Axi Trader, ahead of Wall Street’s open.

“The US economy may be on a strong footing right now, but elsewhere there are signs of a slowdown and there’s a genuine sense building that a return to corrective territory could be on the cards,” he said.

Among decliners in London, Hargreaves Lansdown PLC (LON:HL. fell 4.5% following the wealth management’s firm first-quarter update. ShoreCapital said figures from Hargreaves were slightly weaker than it had expected and pointed to a slowdown in net new business. 

READ: Jupiter and Hargreaves Lansdown results underline impact of weaker investor sentiment

A number of FTSE 100 companies traded without dividend rights Thursday. Home builder Barratt Developments PLC (LON: BDEV) tumbled 10% to 497.40p, and British Gas parent Centrica PLC (LON:CAN) stepped down 2.6% to 148.75p, lender HSBC Holdings PLC (LON:HSBA) moved 2.9% lower to 634.30p, but supermarket chain Tesco PLC (LON:TSCO) outperformed, rising 1.2% to 218p.

1.00pm: US stock futures point to lower open

The pummelling of UK stocks stretched into early afternoon trade Thursday while US stock futures indicated there will be no let-up in selling when Wall Street opens.  

The FTSE 100 sank 125 points, or 1.8%, to 7,022, moving ever closer to losing grip of the 7,000-mark. 

The picture looks dreary for Wall Street’s start as futures for the Dow Jones Industrial Average tumbled nearly 250 points. S&P 500 futures fell 22 points.

Helal Miah, investment research analyst at The Share Centre, said: “The sell-off has been gathering strength for about two weeks now lead by the Asian markets as concerns were raised about China’s growth rate, but fingers will also point at the hike in tariffs between the US and China and the impending trade wars.”

Meanwhile, “over here in the UK, the rise in sterling off the back of a possible Brexit deal have not helped UK shares,” he said. The pound has risen above $1.3200 against the dollar this week. 

Nasdaq futures gave up 60 points. The tech-heavy Nasdaq Composite suffered a sharp fall of 4.1% on Wednesday.

The “question that some investors will be asking is one of whether we will see a quick bounce back like we saw at the start of the year,” Miah added.

“This time round it may be different; previously the sell-off and bounce back had been led by the FANGS and tech companies. With increasing questions about these companies’ valuations and all the other overhanging worries in the global economy, it may be a while until we see those all-time highs again,” he said.

11.30am: Footsie's loss deepens

The FTSE 100 continued to lose ground in late morning trade Thursday, with a gloomy outlook on the UK residential housing market adding to concerns for investors worldwide who are ditching equities.

The FTSE 100 slumped 133 points, or 1.9%, to 7,012. Losses also mounted on the mid-cap FTSE 250 as it fell 374 points, or 1.9%, to 18,865.

Shares of home builders are among those registering declines in London trade. Barratt Developments PLC (LON:BDEV) tumbled 8%, Taylor Wimpey PLC (LON:TLW) lost 3.2% and Berkley Group Holdings PLC (LON:BKG) fell 2.9%.

In addition, with the broader selloff, the shares were under pressure after September polling by the Royal Institution of Chartered Surveyors showed UK house-sales expectations over the next 12 months have turned negative. In new buyer demand, a gauge of enquiries slipped, with a net balance reading widening to -11%, from -9% in August.

“Respondents continue to cite the mixture of affordability constraints, a lack of stock, economic uncertainty and interest rate rises to be holding back activity to a certain degree,” said RICS.

“It would seem the market won’t be performing its usual post-summer sales encore ahead of the Christmas wind down as the level of market stock and buyer interest remains at a low, but we certainly aren’t seeing the final curtain fall on the UK property market,” said Russell Quirk, chief executive of online estate agent Emov.

He added: “We expect that the Christmas break will provide an opportunity for many to mull over their options and while the market may be slightly slower out of the blocks in 2019, a rejuvenated level of activity and an ongoing shortage of housing will see prices continue to creep up.”

10.15am: Blue-chips fall further as US corporate earnings season nears

The slide in UK stocks worsened Thursday morning as an equity rout rolled through markets worldwide.

The FTSE 100 dropped 122 points, or 1.7%, to 7,021. The mid-cap FTSE 250 index suffered a loss of 34 points, or 1.8%, to 18,896. Continental European stocks and Asian shares were hit hard as well following Wall Street’s tumble in the prior session.

“So far, we may describe the selloff as profit taking with many investors reconsidering their asset allocation weightings in their portfolios. Some investors will also be watching key technical levels, given that the S&P 500 is testing the 200 days moving average,” said Hussein Sayed, chief market strategist at FXTM, adding that “a close below for two or three days may intensify the selloff for a couple of more days.

In London, shares of only five FTSE 100 companies were higher in mid-morning trade, led by gains of 1.7% each for miners Fresnillo PLC (LON:FRES) and Randgold Resources (LON:RRS).

Barratt Developments (LON:BDEV) shares sank 10%, falling with other homebuilders, after a downbeat report about UK house prices from the Royal Institution of Chartered Surveyors.

The US is poised to remain the driver of sentiment for global equities in the foreseeable future, said Sayed.

“Now it’s up to the earnings season which kicks off on Friday to convince investors that earnings are still robust and the outlook is rosy. If corporate America paints a gloomy picture due to trade disputes, higher import prices, a stronger dollar, and other variables, this will confirm that stocks have topped out for 2018.”

9.00am: Footsie slammed at the open 

UK stocks were knocked down in early morning trade Thursday, caught in the selloff that’s swept global equities as investors position themselves in the face of higher US interest rates.

“In our view the two main catalysts behind the current equity selloff were recent commentary by Fed officials on terminal level of rates and by the Trump Administration on US-China trade,” said Maneesh Deshpande, head of equity derivatives strategy at Barclays, in a note published Thursday.

The FTSE 100 dropped 81 points, or 1.2%, to 7,061.85, hitting its lowest since early April. The mid-cap FTSE 250 index also stumbled on Thursday, losing 347 points, or 1.8%, to 18,892.

In continental Europe, the Euro Stoxx 50 index fell 0.9% and Germany’s DAX lost 0.8%.

The rout kicked off on Wall Street, where the Nasdaq sank 4.1%, while Dow Industrials and the S&P 500 tumbled more than 3%.

“Fundamentals have not changed but we expect volatility to remain elevated in the short term and do not recommend buying this dip,” said Deshpande.

In London trade, bank stocks were among those losing ground. HSBC PLC (LON:HSBA) dropped 2.1% to 639p and Lloyds Banking Group PLC (LON:LLOY) fell 1% to 58.52p.

Hargreaves Lansdown PLC (LON:HL.) sank 9% following the wealth management firm’s first-quarter trading update.

READ: Hargreaves Lansdown Q1 net revenue rises 16% in "uncertain market environment"

Among advancers, packing company Mondi PLC (LON:MNDI) rose 1% after the company posted a 30% rise in earnings.

READ: Mondi posts 30% rise in earnings as it continues to tackle impact of war on plastic

6.48am: Footsie set to drop at the open 

The FTSE 100 is expected to start Thursday in sharp decline following other major global indices in what appears to be a dramatic sell-off.

CFD and spread betting firm IG Markets sees the London index falling 130 points, calling the FTSE 100 at 7,022 to 7,025 with just over an hour to go until the open.

“The bloodbath for global equities comes as investors adjust to a world of higher US interest rates and US treasury yields,” said Jasper Lawler, analyst at London Capital Group. “As concerns increase over higher interest rates dampening growth, investors are evolving their trading strategies accordingly.”

“US equities experienced their worst sell off in 8 months overnight. The Nasdaq suffered its biggest one-day decline since June 2016. The S&P tumbled over 3.3% on its fifth straight day of falls, the longest S&P sell off since Trump took office two years ago.

“European stocks are pointing to heavy losses on the open as equities are set to continue to freefall.”

New York’s Dow Jones fell 831 points or 3.15% to close Wednesday at 25,598, while the S&P 500 gave up 94 points or 3.29% to finish at 2,785.

The Nasdaq, meanwhile, fell further losing 315 points or 4.08% to 7,422 by the end of the session.

In Asia, Japan’s Nikkei slumped 979 points or 4.17% to 22,520 while the Hong Kong’s Hang Seng dropped 983 points or 3.73% to 25,209. The Shanghai Composite was 118 points or 4.34% lower at 2,606.

Around the markets

Sterling: US$1.3222, up 0.2%

Gold: US$1,193 an ounce, up 0.34%

Brent crude: US$81.60 a barrel, down 4.16%

Bitcoin: US$6,238, down 4.76%

Significant announcements expected

Trading update: Hays PLC (LON:HAS)

Finals: WH Smith PLC (LON:SMWH), Volution Group PLC (LON:FAN)

Interims: N Brown Group PLC (LON:BWNG)

Ex-dividends: Barratt Developments PLC (LON:BDEV), GlaxoSmithKline PLC (LON:GSK)

Economic data: US CPI, US weekly jobless claims

Proactive news headlines 

Argo Blockchain PLC (LON:ARB) has unveiled plans to include the world’s largest cryptocurrency, Bitcoin, on its mining platform from the start of next month. 

Film services group FFI Holdings PLC (LON:FFI) has promoted its financial controller, Billy Cheung, to the position of chief financial officer following the resignation of Timothy Trankina.

The value of Circle Property PLC’s (LON:CRC) portfolio has increased by £14mln over the past six months.  

Customised electronics maker discoverIE Group PLC (LON:DSCV) remains on track to meet market expectations this year after enjoying a “strong” second quarter. 

Shanta Gold Limited (LON:SHG) said drilling at Bauhinia Creek (BC) East has converted 27,240 ounces into indicated resources from 33,746 ounces of inferred resources. 

Avacta Group PLC’s (LON:AVCT) chief technology officer, Dr Matt Johnson, will present new data for the firm’s Affirmer range of research tools and diagnostics reagents at the Biomarkers and Precision Medicine Congress (BPMC) in San Diego on 12 October. 

Telit Communications PLC (LON:TCM) has signed an agreement with China Unicom to provide the telecoms firm with its deviceWISE internet of things (IoT) platform. 

Base Resources Limited (LON:BSE) said Pacific Road Capital has notified the company that its voting power in ordinary shares has decreased from 22.1% to 20.8%. This is due to dilution following completion of the retail component of the company’s capital raise in January 2018 and the issue of shares upon vesting of performance rights pursuant to the Base Resources Long-Term Incentive Plan announced on October 4.

Zinc and gold explorer Erris Resources PLC (LON:ERIS) has appointed Anton du Plessis as its new chief executive after the resignation of Merlin Marr-Johnson. 

Azerbaijan-based gold, silver and copper miner Anglo Asian Mining PLC (LON:AAZ) expects production to be at the upper end of guidance following another strong quarter.

Africa-focused mining contractor Capital Drilling Limited (LON:CAPD) saw another uptick in activity in its latest quarter as exploration picked up. 

Touchstone Exploration Inc. (LON:TXP, CVE:TXP) has achieved a key production milestone, with its Trinidad assets breaching a targeted rate of 2,000 barrels per day. 

Chariot Oil & Gas Ltd (LON:CHAR) revealed that the Prospect S exploration well, offshore Namibia, did not encounter a hydrocarbon accumulation. 

Diversified Gas & Oil PLC (LON:DGOC) has announced its latest US acquisition, with a $183mln deal for Core Appalachia Holding Co LLC. 

Learning Technologies Group PLC (LON:LTG) on Thursday said Harry Hill, its non-executive deputy chairman, will leave the board of the e-learning group. 

The majority of shareholders in Chagala Group Limited (LON:CGLO) have backed a takeover offer from Kazakhstan-based firm Realty Invest Holding LLP (RIH), and the offer period for acceptance has been closed.

Results from a second batch of rock chip samples have confirmed gold mineralisation at ECR Minerals PLC’s (LON:ECR) Bailieston project in Australia.

Business news headlines

Trump takes aim at 'crazy' Fed as markets sink following US slump - Sky News

Elon Musk says James Murdoch will not replace him as Tesla chair - The Telegraph

IMF warns global economic stability at risk from no-deal Brexit - The Guardian

Britain's public finances worse than Gambia, Uganda and Kenya - Independent

Leading oil traders face off over price outlook as Iran sanctions near - Financial Times

World's top traders divided on oil outlook as Iran sanctions loom - Reuters

Economic growth 'boosted in part by warm weather' - Sky News

Brexit uncertainty taking toll on property market - The Guardian

Workers urge Amazon boss Jeff Bezos to restore share schemes - Sky News

Sears hires bankruptcy expert as debt deadline looms - Financial Times


© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use