London Close
Britain’s blue chip stocks ended the day significantly lower having pared losses earlier in the afternoon, despite gains in the US.
The FTSE 100 ended the day 102 points lower, 1.68% to 5,979 after a late sell-off as analysts worried the positive US open would run out of steam by the end of the session.
Connor Campbell at Spreadex said: “The Dow Jones initially jumped over 400 points as trading got underway, with the added bonus of better than expected durable goods orders adding to the positive atmosphere.
Those kinds of gains were a bit too enthusiastic for investors, with the index dropping back to a more reasonable 200 point increase as the session continued.
“Yesterday saw similar scenes at the open only for the US markets to fall at the final hurdle, leading to the muted trading that has defined this Wednesday,” Campbell added.
Chris Beauchamp at IG said: “Having seen US markets embark on a rollercoaster ride yesterday, the omens did not look good for European markets today.”
China’s injection of fresh liquidity has been seen as a positive move, as the PBoC looks to build on yesterday’s rate cut, but the picture still remains finely balanced he warned.
In Europe, the French Cac40 was 1% lower to 4,516 while the German Dax lost almost 1% to 10,030.
Back on the FTSE 100, miners weighed heavily on the index as the central bank actions caused further falls in commodity prices
Silver miner Fresnillo (LON:FRES) softened 45p to 594p while gold miner Randgold Resources (LON:RRS) dropped 184p to 3,817.
Meanwhile, Advertising and marketing group WPP (LON:WPP) backtracked 34p to 1,327p as it forecast a better third quarter but voiced caution about the global economy.
At the other end of the index, Weir Group (LON:WEIR) was boosted by M&A news within the sector.
Oil service company Schlumberger is to merge with Cameron in a combined stock and shares deal worth US$14.8bn. Weir’s shares gained 2.1% to 1,360p.
Away from the index, gambling stole the headlines with the news that Paddy Power (LON:PAP) has made plans to merge with rival Betfair (LON:BET) in a deal to create a gaming giant.
Paddy said its shareholders would own 52% of the group while Betfair investors would have a 48% stake. Shares in Betfair rose 21.2% to 3,154p while Paddy Power jumped 18.5% higher at 93p.
In the small cap space, Solo Oil (LON:SOLO) surged as oil services giant Schlumberger suggest there are 10.99bn barrels of crude across the 55 square miles near Gatwick Airport owned by the explorers.
Meanwhile, Solo and Aminex are now ‘ready’ to start producing gas from the Kiliwani North field onshore Tanzania. Solo’s shares jumped 15% to 0.45p.
Elsewhere, Asiamet Resources (LON:ARS) gained 17.3% to 1.35p as it uncovered a high-grade copper zone at Beruang Kanan (BK), in Kalimantan, Indonesia, that has the potential to transform the economics of the project.
Lunchtime Report
London’s blue-chip stocks stayed deep in negative territory on Wednesday as China's efforts to sort out its economy baffled traders.
The FTSE 100 Index dropped 81.17 points to 6000 after the People's Bank of China (PBoC) cut interest rates by 25 basis points and further relaxed bank lending limits.
It pumped US$21.8bn into the system and lowered the main interest rate to make borrowing money easier and encourage economic growth.
Economists and analysts said market reaction to injections and withdrawals of stimulus was becoming more volatile.
CMC Markets analyst Jasper Lawler said: "Rather than getting ahead of the game with a well thought-out plan for stabilising the economy, the People’s Bank of China appears to be reluctantly easing policy any time there’s a drop in share prices.
"The net effect is that markets clamour for more stimulus while at the same time losing faith it will actually work."
Other analysts said China needed to do more. Jameel Ahmed at FXTM Analysis said: "The interest rate cuts from the PBoC are nowhere near enough to support continuously declining economic momentum in China."
Overnight, the news provided temporary respite, helping Chinese equities rise as much as 4% before a late sell-off sent the Shanghai Composite a further 1.3% lower at 2,927.
Miners weighed heavily on the Footsie as the central bank actions caused further falls in commodity prices.
Copper miner Antofagasta (LON:ANTO) softened 9p to 570.5p and platinum miner Anglo American (LON:AAL) dropped 5.8p to 677.9p.
In the mid-cap space, Paddy Power (LON:PAP) has announced plans to merge with rival Betfair (LON:BET) in a deal to create a gaming giant.
Paddy said its shareholders would own 52% of the group while Betfair investors would have a 48% stake. Shares in Betfair rose 17.3% to 3,054p while Paddy Power jumped 17.1% higher at 91.9p.
It represents the latest move in consolidation of the sector, following on from news of Ladbrokes's (LON:LAD) planned merger with Gala Coral. Ladbrokes meanwhile, lost 3.8% to 97.7p.
Advertising and marketing group WPP (LON:WPP) backtracked 37p to 1325p as it forecast a better third quarter but voiced caution about the global economy.
To small caps, and the unfortunately tickered Asiamet Resources (LON:ARS) has uncovered a high-grade copper zone at Beruang Kanan (BK), in Kalimantan, Indonesia, that has the potential to transform the economics of the project.
The latest hole produced an 11-metre section grading 2.96% copper. Significantly, it was intercepted from just six metres below surface. Shares rocketed 43.5% to 1.65p.
Oil explorer 88 Energy (LON:88E) gushed 7.6% to 0.56p on news that it had completed the acquisition of an 87.5% stake in the Icewine exploration project in Alaska.
LONDON OPEN
London’s blue chip stocks slipped back this morning despite the People’s Bank of China (PBoC) implementing stimulus measures.
The PBoC cut benchmark interest rates by 25 basis points and cut the reverse requirement ratio (RRR) by 50 basis points to 17.5%.
It pumped money into the system and lowered the main interest rate in a bid to make borrowing money easier and encourage economic growth.
Simon Smith at FXPro said: “Yesterday’s cut in both 1 year lending rates and required reserve ratio appears to have some stabilizing effect, although European equities were already recovering before this news.”
Some analysts, however, see this as just kicking a wider economic problem can further down the road.
“China needs to do more” Jameel Ahmed at FXTM Analysis said, adding “the interest rate cuts from the PBoC are nowhere near enough to support continuously declining economic momentum in China and the pressure.”
Overnight, the news provided temporary respite, helping Chinese equities rise by as much as 4% before a late sell-off sent the Shanghai Composite a further 1.3% lower at 2,927.
Back in the UK, the FTSE 100 was 1.3% down, 80 points to 6,000 with miners weighing heavily on the index.
A down day for commodity prices meant copper miner Antofagasta (LON:ANTO), 14p lower to 565p, and platinum miner Anglo American (LON:AAL), which dropped 14p to 669p, were the biggest fallers in the large cap space.
In the mid-cap space, Paddy Power (LON:PAP) has announced plans to merge with rival Betfair (LON:BET) in a deal to create a gaming giant.
Paddy said its shareholders would own 52% of the group while Betfair investors would have a 48% stake. Shares in Betfair rose 17.3% to 3,054p while Paddy Power jumped 17.2% higher at 92p.
It represents the latest move in consolidation of the sector, following on from news of Ladbrokes's (LON:LAD) planned merger with Gala Coral. Ladbrokes meanwhile, lost 4.7 % to 97p.
To small caps, and the unfortunately tickered Asiamet Resources (LON:ARS) has uncovered a high-grade copper zone at Beruang Kanan (BK), in Kalimantan, Indonesia, that has the potential to transform the economics of the project.
The latest hole produced an 11 metre section grading 2.96% copper. Significantly, it was intercepted from just six metres below surface. Shares rocketed 17.39% to 1.35p.
MARKET PREVIEW
Britain's blue chips are tipped to open lower midweek as China's stock market regains ground but global investor fears persist.
The FTSE100 closed Tuesday 182 points higher at 6,081 but today is set to open around 40 points lower, according to financial spreadbetter IG.
China's Shanghai Composite Index saw a surge overnight, and is back above the 3,000 level after the People's BanK of China pulled out all the stops to ease the selling flow.
It has pumped money into the system and now lowered the main interest rate in a bid to make borrowing money easier and therefore encourage economic growth and activity. Some analysts, however, see this as just kicking a wider economic problem can further down the road.
The scale and the unpredictable nature of the sell-off was summed up by IG analyst Chris Weston.
" The moves in global markets have been huge; this will happen when market players can’t get an accurate sense of the near- or long-term outcomes.
"Many market participants cannot even pin-point one specific reason for the elevated volatility. In saying that, the People’s Bank of China (PBoC) is blaming the strong selling being seen on potential tightening from the Federal Reserve, while most Asian emerging market nations are blaming the volatility on the Chinese actions.."
On Wall Street yesterday, there was topsy-turvy trading, with stocks reversing earlier gains as the rally came to a radical end in the afternoon session.
The Dow having gained over 300 points earlier, closed out 205 points down at 15,666, while the Nasdaq lost 20 points at 4,506.
UK investors will be greeted by a clutch of corporate offerings today, including from advertising giant WPP (LON:WPP), which reports half-year results and will almost certainly not be slow to point out that in the first half of last year, its performance was boosted by advertising spending associated with the FIFA World Cup.
Also reporting includes APR Energy (LON:APR), BH Macro (LON:BHMG), Bioquell (LON:BQE), Cambian Group (LON:CMBN), Cape (LON:CIU) and Carillion (LON:CLLN). There is a trading statement from bus and train firm Stagecoach Group (LON:SGC).