Market Close
The UK’s main index suffered its biggest daily drop since 2009 as it fell away from the 6,000 mark for the first time in more than two years.
On what some are calling ‘Black Monday’ the FTSE 100 was hit to the tune of £80bn today as investors fled from risk.
"The volatility index has now doubled in less than three trading days and this is a clear example that panic rather than prudence is driving traders’ thinking," claimed Alastair McCaig, at spread betting firm IG.
Investors followed a sell-off in China, which saw the Shanghai Composite register its biggest one-day loss for more than eight years, down 8.5% to 3,210.
Markets across the world continued the sell-off trend, particularly in Europe where the German Dax was 4.6% lower while the French Cac40 lost 5.4%.
Across the pond, US stocks joined in the misery party. Of the three main US benchmarks, the tech-laced Nasdaq Composite was hardest hit in the first hour of trading, tumbling 3.4% to 4,546.
The S&P 500 was off 3.1% at 1,909 while the Dow Jones average, although down 2.8% at 15,998, was showing signs of having hit bottom and bouncing back a little.
Connor Campbell at spread-betting firm Spreadex said: “As expected the US open brought with it a tsunami of selling, with the Dow Jones hurtling to a 1000 point drop in the first few minutes of the session.
“The US markets soon stabilised, but the Dow still fell below 16000 for the first time in nearly 18 month, and at points has threatened to post the worst one-day decline in its history.”
Back in the UK, the FTSE 100 ended 4.67% lower, 288 points, at 5,898 with only one company managing to eke out a gain.
The sole riser on the FTSE 100 was RSA Insurance (LON:RSA) after talks with Zurich progressed well over the weekend, with a deal likely to value the company at £5bn.
Time is running out for a deal to be done before tomorrow’s deadline and Zurich has asked for an extension. Shares in RSA rose 3.7p to 495p.
The dramatic sell-off in China hurt the miners as a slowdown in the world’s second largest economy would affect the demand for metal.
Platinum eased 3% to US$988 and silver lost 2.17% to US$15.02.
As a result platinum miner Anglo American (LON:AAL) dropped 8.53% to 670p while silver miner Fresnillo (LON:FRES) eased 5% to 647p. Copper miner Glencore (LON:GLEN) was the biggest faller of the day, plummeting 9.9% to 142p.
On the FTSE 250, with Brent Crude and West Texas Intermediate dropping 5.9% and 5.5% respectively, Premier Oil (LON:PMO) was the biggest faller, losing 13.9% to 88.8p, while Tullow Oil (LON:TLW) lost 10.59% to 181p.
In small caps, Geong International (LON:GNG) confirmed it is in preliminary discussions regarding a possible offer for Geong by Hanafin. Shares rocketed 78.6% to 4p.
African Potash (LON:AFPO) was the biggest gainer of the day as it signed its first memorandum of understanding (MoU) with a Zambian fertiliser supply company.
Shares skyrocketed 80% to 1.89p after it announced the first supply deal following the landmark agreement struck earlier this month with Comesa - the free trade union of 20 African countries.
US open
It's a "risk off" day - and then some - in US markets this morning after a massive shake-out overnight in Asian markets.
"The volatility index has now doubled in less than three trading days and this is a clear example that panic rather than prudence is driving traders’ thinking," claimed Alastair McCaig, at spread betting firm IG.
Meanwhile, Augustin Eden at rival spread betting firm CMC Markets says the three main drivers of the current fall-out are: China, Greece and the Fed.
Of the three, China seems to be having the most deleterious impact.
Investors have followed a sell-off in China, which saw the Shanghai Composite register its biggest one-day loss for more than eight years, down 8.5% to 3,210.
Of the three main US benchmarks, the tech-laced Nasdaq Composite was hardest hit in the first hour of trading, tumbling 3.4% to 4,546. The S&P 500 was off 3.1% at 1,909 while the Dow Jones average, although down 2.8% at 15,998, was showing signs of having hit bottom and bouncing back a little.
Consumer electronics giant Apple (NASDAQ:AAPL) was down 2.5% at US$103.20 after it confirmed the iSight camera may malfunction in some of its iPhone 6 plus smartphones.
The market is in no mood to salute news of a content partnership announced by video streaming giant Netflix (NASDAQ:NFLX).
The Californian company has partnered with SoftBank Group (OTCMKTS:SFTBF), a Japanese telecoms and Internet giant, to start its video streaming service in Japan on September 2.
Computer chip behemoth Intel (NASDAQ:INTC) got of relatively lightly in the bloodbath, shedding 1.9% at US$26.05, after it said it plans to announce its lead role in a US$100 million infusion into Mirantis, the pure play open-source software OpenStack vendor.
Concerns over slowing growth have taken the shine off commodity plays, with sector giant Freeport McMoRan (NYSE:FCX) particularly hard hit, down 6.8%.
Energy firms were also getting it in the neck after Brent crude gave up about 4% to fall below US$44 per barrel in London trading, while West Texas Intermediate futures shed 4.2% to US%38.80.
Cabot Oil & Gas (NYSE:COG), down 6.9%, and Anadarko Petroleum (NYSE:APC), down 5.8%, were two of the biggest casualties.
Lastly, the inappropriately named RainDance Technologies has decided it has chosen a bad time to float on the market and has yanked its proposed initial public offering.
Update – 1.30pm
The FTSE 100 dropped further after lunch as the US markets gear up for their opening.
London’s main index was 4.2% lower, 259 points, to 5,929 as it fell away from the 6,000 mark.
What to expect from the US
With less than an hour to go before trading begins for the week in the US, analysts are expecting a miserable session.
The Dow Jones is expected to lose more than 655 points or 2.6% having dropped as much as 700 in pre-market trade and the Nasdaq is forecast to drop 4% or 167 points when the market opens.
Ilya Spivak, currency strategist, at DailyFX said the absence of meaningful events in European and US markets suggest the falls will continue throughout the day.
Stock to watch
Netflix is threatening to fall into bear-market territory, a fall of at least 20% from its peak, as it agreed to partner with Japan’s SoftBank Group for the Japanese launch of its video-streaming service on 2 September.
Lunchtime Report 12.45pm
On what some are calling ‘Black Monday’ the UK’s main index was hit to the tune of £40bn today as investors flee from risk.
Connor Campbell at Spreadex said: “So far, since the initial yuan devaluation on August 11th, estimates suggest that the global markets have haemorrhaged around $5 trillion in value.
“In fact, £40bn today alone has been lopped off the FTSE 100, with the UK index now only a 5% decline away from entering a bear market.”
The FTSE 100 continued to drop as the day progressed, losing 202 points or 3.2% to 5,984.
Investors have followed a sell-off in China, which saw the Shanghai Composite register its biggest one-day loss for more than eight years, down 8.5% to 3,210.
Alastair McCaig at IG said: “Regardless of what the Chinese government and PBoC might be saying and doing, they are currently learning a lesson that many have learned before them, namely you can only fight against market forces for so long before you end up losing.”
Markets across the world continued the sell-off trend, particularly in Europe where the German Dax was 2.88% lower while the French Cac40 lost 3.1%.
In America, analysts are expecting similar losses when the markets open.
Ilya Spivak, currency strategist, at DailyFX said the absence of meaningful events in European and US markets suggest the falls will continue throughout the day.
“S&P 500 index futures are trading down over 2% ahead of the opening bell on Wall Street, bolstering the case for continued risk aversion.”
Meanwhile, the Dow Jones is expected to lose more than 400 points or 2.6% and the Nasdaq is forecast to drop 4% or 167 points.
In corporate news, Bunzl (LON:BNZL) released half year results which were in line with market expectations and acquired four new businesses, one in Austria, one in the US and two in Australia.
Keith Bowman, at Hargreaves Lansdown said: “Fuelled by on-going cash generation, the group’s bolt-on acquisition led strategy continues to deliver, with resultant cost savings generated, as businesses are consolidated, remaining central.”
Despite the good news, shares dropped 3.5% to 1,722p.
The sole riser on the FTSE 100 was RSA Insurance (LON:RSA) after talks with Zurich progressed well over the weekend, with a deal likely to value the company at £5bn.
Time is running out for a deal to be done before tomorrow’s deadline and Zurich has asked for an extension. Shares in RSA rose 1.66% to 499p.
On the FTSE 250, with Brent Crude and West Texas Intermediate dropping 4% and 3.9% respectively, Premier Oil (LON:PMO) was the biggest faller, losing 11.4% to 91.4p, while Tullow Oil (LON:TLW) lost 8.4% to 185p.
The more UK-based index lost 3.1% to 3,342.
In small caps, African Potash (LON:AFPO) led the way higher as it signed its first memorandum of understanding (MoU) with a Zambian fertiliser supply company.
Shares skyrocketed 55% to 1.63p after it announced the first supply deal following the landmark agreement struck earlier this month with Comesa - the free trade union of 20 African countries.
On the other side of the coin, Minera IRL (LON:MIRL) sacked interim CEO amid allegations of impropriety.
The board voted unanimously to remove Diego Benavides. Shares dropped 16.1% to 3.25p.
Update - 11.45am.
Houston – we have a riser.
Finally pushing into the green for the first time today is RSA Insurance, which, as mentioned earlier, is progressing in talks over a potential takeover deal with Zurich Insurance.
With some analysts going as far as to call today ‘black Monday’ the FTSE 100 continues to drop as the day progresses, losing 172 points or 2.8% to 6,014.
In blue chip corporate news today
Bunzl (LON:BNZL) released half year results which were in line with market expectations and acquired four new businesses, one in Austria, one in the US and two in Australia.
Keith Bowman, at Hargreaves Lansdown said: “Fuelled by on-going cash generation, the group’s bolt-on acquisition led strategy continues to deliver, with resultant cost savings generated, as businesses are consolidated, remaining central.”
AstraZeneca (LON:AZN) swapped in on a rival’s executive. Dr Sean Bohen - joining on September 15 from Genentech, a Roche subsidiary - will be in charge of small molecules and biologics investigational medicines portfolio, as well as patient safety, the FTSE 100 drug company said.
Meggitt (LON:MGGT) won a C$25mln contract from Department of National Defence in Canada, to provide in-service support to the Canadian Armed Forces.
Update - 10.30am
Still no risers on the FTSE 100 which slipped slightly further to 6,041, another ten points lower taking it 2.3% or 145 points lower on the day so far.
Pharma company AstraZeneca has been replaced by RSA Insurance (LON:RSA) as the best of a bad bunch. Zurich Insurance is seeking more time for British insurer RSA's offer, after the two parties advanced on their prospective £5bn deal over the weekend. Shares were 0.2% lower making it the best performer on the index.
Notable risers and fallers in mid-morning trading
African Potash (LON:AFPO) up 61.9%. Shares skyrocketed after it announced its first supply deal following the landmark agreement struck earlier this month with Comesa - the free trade union of 20 African countries. The company has signed a memorandum of understanding with a Zambian fertiliser supply group for more than 50,000 million tonnes of fertiliser.
88 Energy (LON:88E) up 26.3%. The company signed a funding agreement with Bank of America for a US$50mln credit facility, meaning it is full funded ahead of the spudding of its Icewine exploration well onshore in Alaska.
San Leon Energy (LON:SLE) up 14%. The Poland-based oil company confirmed a weekend report it had received a bid approach from an unnamed company.
Blinkx (LON:BLNX) down 31%. The company, which was spun out of data search group Autonomy, issued a profit warning. The firm expects to post an operating loss for the first half after second quarter trading has been below expectations.
MediaZest (LON:MDZ) down 24.6%. The company said its pre-tax losses widened in its 2015 full-year results on the back of declining revenue, caused by a project delay.
Xcite Energy (LON:XEL) down 10.5%. The company continues to pursue funding solutions for the development of the Bentley heavy oil field in the North Sea adding that the industry remains challenging. It highlighted that the low oil price has seen some projects in sector being deferred and an increasing number of North Sea assets had been put up for sale.
London Open
London’s blue chip stocks plummeted this morning as a sell-off in China spooked markets worldwide.
The Chinese Securities Index, CSI 300, went limit down at one point, with trading halted after it fell over 9%.
Meanwhile, around 8.5% was wiped from the Shanghai Composite overnight after a raft of worsening economic data in recent days and weeks has prompted overseas investors to pull the plug.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers said: “China’s contribution to a potential global slowdown has unsettled markets again this morning, with sellers pushing against an open door, exacerbated by light volumes as the City waits to return to full strength at the end of this holiday month.”
“The latest move by the PBOC saw the central bank announce that local government-managed pension funds will be able to invest in the markets for the first time, in an attempt to pour billions of yuan into an equity market that is currently drowning in losses” Connor Campbell at spread betting firm Spreadex added.
In the UK, the FTSE 100 was more than 2% lower, 135 points, to 6,051 with not a single constituent managing to eke out a gain.
The dramatic sell-off in China hurt the miners this morning as a slowdown in the world’s second largest economy would affect the demand for metal.
Nestling at the bottom of the index was copper miner Glencore (LON:GLEN) which lost 5.3% to 150p, while platinum producer Anglo American (LON:AAL) was next, 5% lower to 696p.
Sitting at the top of the index, but still in the red, was AstraZeneca (LON:AZN), which nabbed Dr Sean Bohen, an executive from Roche subsidiary Genentech, to join as executive vice president of global medicines development and chief medical officer. Shares eased 0.69% lower to 4,026p.
It wasn’t any prettier elsewhere, with only 6 firms on the FTSE 350 managing to make gains.
With Brent Crude and West Texas Intermediate briefly below US$45 and US$40 a barrel respectively, Premier Oil (LON:PMO) was a big faller, losing 5.33% to 97.7p.
In small caps, it wasn’t all doom and gloom, although risers were still hard to come by.
African Potash (LON:AFPO) led the way higher today as it signed its first memorandum of understanding (MoU) with a Zambian fertiliser supply company.
Shares skyrocketed 58% to 1.65p after it announced the first supply deal following the landmark agreement struck earlier this month with Comesa - the free trade union of 20 African countries.
Meanwhile, Poland-focused oiler San Leon Energy (LON:SLE) confirmed a weekend report it had received a bid approach. Shares jumped 13.9% to 60.95p.
At the other end of the spectrum, London’s biggest loser was Internet media group Blinkx (LON:BLNX) after it issued a profit warning.
Blinkx, which was spun out of data search group Autonomy, saw shares tank 31% to 18p.
Market preview
Brace yourself. The FTSE 100 is set to lose more than 250 points at the open following the meltdown of the Chinese stock market.
The spread betting firm IG is predicting the blue-chip index will fall 251.8 points to 5,935.85, as Europe is caught by the contagion from the East.
Almost 9% was wiped from the Shanghai Composite overnight after a raft of worsening economic data in recent days and weeks has prompted overseas investors to pull the plug in the last few days.
That dash for the exit accelerated in the first trading day of the new week.
Even an orchestrated attempt to support the equity markets came to nought as pension funds run by local governments were allow to invest in stocks.
According to the financial news group Bloomberg more than 750 Chinese share fell by more than their 10% daily limit.
China’s collywobbles set Asia completely off kilter with the Hang Seng in Hong Kong off 5% and Japan’s Nikkei Index down 4%.
A number of the lesser stocks benchmarks, such as those of Taiwan and Indonesia, are headed for bear market territory. This marks a 20% fall in the value of stocks from a recent peak.
The knock impact of China’s dramatic fall from grace is likely to be felt acutely in London, according to CMC Markets commentator Michael Hewson.
“Factor in further uncertainty in Europe as Greece gets set for another election on September 20, as well as elections in Spain and Portugal coming up before year end as well, and we have a recipe for a big cocktail of uncertainty,” he said.
“Against that back drop it appears that we are set for further heavy losses in the short term as investors await the next moves from central bankers, though with interest rates already at record lows, there is a risk that these toolboxes we hear so much about could be getting rather depleted.”
Elsewhere, Brent Crude and West Texas Intermediate briefly fell below US$45 and US$40 a barrel respectively.
The summer lull in corporate news means it is likely to be fairly quiet week. Miner BHP Billiton and WPP, the advertising and marketing giant, are the biggest names slated to report.