FTSE 100 shares were dragged lower by education publisher Pearson (LON:PSON) on Monday which plunged as much as 11% after it reported falling sales amid "challenging" trading.
The company which last year sold off the Financial Times to Nikkei of Japan to focus on its core businesses said underlying sales fell 7% in the first nine months of the year, with sales in North America - its largest market - down 9%.
Despite the decline, Pearson said cost cutting meant it was still on track to meet its profit targets for 2016.
The FTSE 100 ended down 0.9% at 6,947, led lower by Pearson down 8.4% to $762.5p.
Meanwhile the midcaps also suffered, with the FTSE 250 index off 1% to 17,792.
Ladbrokes (LON:LAD) shares fell 0.9% to 137.9P. The bookmaker, which is planning to merge with Coral, announced the two had sold 359 shops to rivals Betfred and Stan James as part of the conditions they must meet in order for their tie-up to be approved by competition authorities.
FTSE 100 rival Paddy Power Betfair plc (LON:PPB) also came off, by 1.8% to 8700p in sympathy.
But the biggest FTSE 250 decliner on Monday was Paypoint Plc (LON:PAY) down 5.8% to 1100p. Barclays raised its target price on Paypoint from 890p to 1030p, highlighting the valuation disparity between payments and technology, with the former having underperformed during the third quarter.
That, the broker said, was "difficult to justify" given its structurally higher growth. Be that was it may, the new target price remained below the shares' closing prices in London on Monday.
The second-biggest decliner on the FTSE 250 was publisher Euromoney Institutional Investors plc (LON:ERM) which fell by 5.2% to 944p but there was no fresh news.
The FTSE AIM 100 Index ended flat at 3,967 as did the FTSE AIM All-Share Index at 826.
Only 20% of London’s stocks gained and 44% fell.
UPDATE AT 11.30AM - FTSE 100 slips further
The FTSE 100 continued its morning slump, falling back to 6,954.
One of the small caps that followed the markets lower was Starcom Plc (LON:STAR), which slumped more than 20% to 2.4p after a court judgement in Israel concluded that its principal subsidiary in the countrycould have a case to answer following a recent claim.
Africa-focused oil and gas explorer Lekoil Ltd (LON:LEK) also fell, although not quite as sharply, by 5% to 21p after it told investors it had raised just over £10mln through a discounted share placing.
At the other end of the spectrum, Image Scan Holdings Plc (LON:IGE), posted a bullish pre-close trading update which saw happy investors propel its share price to 7.25p - a 12% gain.
UPDATE AT 9.30AM - FTSE 100 lower out of blocks as Brexit worries persist
As predicted, FTSE 100 is lower out of the blocks, and has dipped below 7,000 as the markets fret about the state of the global economy and the continued trailing of the pound.
Sterling is 0.03% lower against the dollar, at the time of writing, and also a shade lower against the Euro, while FTSE 100 is down almost 39 points, at 6,975. The pound is down over 5% against the dollar this month.
Top loser is education publisher Pearson (LON:PSN), down 5.35% to 789p, which joins big miners to be down in the dumps today.
It comes after a lacklustre performance in its third quarter from the publisher, which is pulling out all the stops on the cost-savings front to stay on course to meet full-year expectations.
Customers have been running down high stock levels, the company warned, and this has been hitting sales, which were down 7% year-on-year in underlying terms in the first nine months of the year, unchanged from the performance level at the half-way point of the year.
Also weighing on investor sentiment at the start of the week are more Brexit woes with reports of a split between the Treasury and the rest of the government over the UK banking sector and passporting to the single market.
The biggest riser in the City was oil and gas group Oilex (LON:OEX) which gushed over 23% higher to 0.50p as it struck a deal with its joint venture partner under the Cambay Field Production Sharing Contract (PSC) on the next planned well in the Cambay Field (Well C-78) in India.
Myanmar focused tech group Mysquar Ltd (LON:MYSQ) was also higher, gaining over 13% to 4.25p as it revealed the number of registered users across all its apps and games is now over 6mln.
That's a whopping 660% more users than it had when it listed on AIM in July 2015 and significantly trumps the 5mln expected by the end of 2016.
On the downside, multi- commodity mining group Strategic Minerals plc (LON:SML) ran out of steam after recent gains, with shares almost 11% down at 0.63p.
UPDATE AT 8.30AM ... FTSE 100 down 37 points as Pearson gets a caning
As expected, US Federal Reserve chair Janet Yellen has cast a shadow over the London market this morning, with blue-chip stocks opening mostly lower.
At 8.30, the FTSE 100 index was down 37 points at 6,977, with barely a dozen of the top-share index’s constituents in the blue.
The biggest faller was textbook publisher Pearson PLC (LON:PSON), despite defying widely-held expectations of a profit warning when it issued a nine-month trading update this morning.
The company maintained its full-year guidance, but it appears to be having to go on a cost-cutting binge in order to do so, though sterling’s weakness is likely to be of assistance if it persists.
The shares dived 5.4%, with Liberum reiterating its “sell” recommendation, saying the group may have reiterated full-year guidance on operating profit and earnings per share level, but top-line revenue trends remain “very weak”.
Read No improvement in underlying third quarter sales at Pearson
“While earnings guidance has been reiterated, the continued weakness in top-line trends increasingly make Pearson look like a newspaper-style story, prone to a de-rating,” Liberum said, ahead of this morning’s investors’ conference call.
House builders were also in the dog-house, with Persimmon PLC (LON:PSN), down 2.1%, the hardest hit among FTSE 100 constituents, ahead of UK housing data today.
Utility company SSE plc (LON:SSE) shed 5p at 1,543p, despite confirming it is to sell its 16.7% stake in Scotia Gas Networks for £621mln, which could see the company return extra cash to shareholders. We’ll find out when the company issues its interim results on 9 November.
Among the small caps, Oilex Ltd (LON:OEX, ASX:OEX) soared 23% to 0.5p as it executed an agreement with its joint venture partner on the Cambay Field Production Sharing Contract (PSC), Gujarat State Petroleum Corporation Limited (GSPC), on the next planned vertical well in the Cambay Field (Well C-78).
“The signing of the agreement is a key milestone towards the proposed drilling of Well C-78, unlocking value and possibly securing an extension to the Cambay Field PSC term,” the company said.
Also wanted was MySQUAR Limited (LON:MYSQ), the fast-growing Myanmar-focused social media and apps developer.
The firm revealed the number of registered users across all its apps and games is now over 6mln, which is a whopping 660% more users than it had when it listed on AIM in July 2015 and significantly trumps the 5mln expected by the end of 2016.
The shares rose 13% on the news.
The news was less good from Starcom Plc (LON:STAR), which lost 8%, as it updated on its legal dispute with Top-Alpha Capital. A recent court judgement in Israel has concluded that there may be a claim (though unquantified) against the company's principal operating subsidiary in Israel and CEO Avi Hartmann and COO Doron Kedem.
Preview
FTSE 100 is tipped to open the new trading week lower after finishing just above the 7,000 level last week.
It comes after a mixed session in Asia where stock prices went lower but with an hour of trading still to go have recovered somewhat.
Britain's blue chip benchmark closed 0.51% or 35 points higher at 7,013 on Friday with the resolved spat between Tesco (LON:TSCO) and its supplier Unilever (LON:UNLV) being the big news of the day.
Today, spreadbetters at IG are calling Footsie to open around seven points later ahead of a week, which sees a large number of big cap offerings, both in the UK and oversees.
Tuesday sees fashion retailers ASOS PLC (LON:ASC) go head to head with Burberry (LON:PLC), with City analysts expecting growth at both firms, not least due to the impact of foreign exchange and the weaker pound. Housebuilder Bellway (LON:BLW) also posts full year earnings on the same day.
US earnings are also in full flow, wih results from oil, tech and consumer firms all due. On Wall Street, markets finished a tad higher, but not much, as traders mull over Janet Yellen's comments, eyeing a potential interest rate rise in December.
The Dow finished 0.22% up at 18,138, while the S&P500 and Nasdaq both added just 0.02%.
In China, the Shanghai Composite Index is 0.12% higher at 3,067, while the Nikkei 225 is up 0.27% to stand at 16,902.
The gold price is up slightly at US$1,255 per ounce while US crude eased a tad - down 0.22% to US$50.24 a barrel.
City Headlines
- Philip Hammond in Cabinet row over accusations he is trying to 'undermine Brexit' by delaying immigration policy - The Telegraph
- Software giant Misys to slash value of listing amid market turbulence- The Telegraph
- Banks could move assets out of UK by 2017 if 'EU passport' is lost- The Guardian
- Retailers prepare to hike prices by 5% after Christmas as pound plunges below 'Project Fear' forecasts - Thisismoney