- FTSE 100 closes down 40 points
- US stocks continue negative performance
- Tech sell-off undermines SMT
4.50pm: FTSE closes in negative territory
The UK's main index lost 40 points on Monday to finish in the red at 7,445 points, a 0.5% loss on the day.
London's blue chip index wasn't alone in its performance, as US stocks were all down at the midday mark of New York trading.
IG's Chris Beauchamp commented: "On Wall Street losses are concentrated in tech, retail and other consumer discretionary stocks, while in London those deepest in the red are housebuilders and those with a connection to the outlook for the broader global economy."
He added: "The broadly indiscriminate selling appears set to continue for the time being, but given how 2021 was broadly lacking in volatility of this kind a healthy pullback is just the thing markets need, even as investors fret about how hawkish the Fed will become."
3.45pm: FTSE 100 heads deeper into the red
Well, that’s what you get for griping that nothing was happening with the Footsie. The index is now definitely moving – southwards at an increasing pace.
The index of heavyweight London-listed shares is down 45 points (0.6%) at 7,441, with Scottish Mortgage Investment Trust PLC (LSE:SMT), down 6.0% at 1,125.5p, the index’s second-worst performing constituent, reflecting the sell-off of technology stocks on the NASDAQ market in the US.
2.50pm: Lethargic retreat
London’s leading stocks continue to slide slowly into the red, like a Norfolk coastal hillside slipping gently into the sea.
The FTSE 100 was down 8 points (0.1%) at 7,477, with engineering companies Spirax-Sarco Engineering (LSE:SPX) PLC and Halma PLC (LSE:HLMA) among the prominent fallers; the former is off 5.6% and the latter is down 4.3%.
Despite the lacklustre performance of the blue chips, there have been three eye-catching share price movements among the tiddlers.
Tintra PLC (AIM:TNT) soared 224% to 170p after it agreed on the first subscriptions under its current funding round, raising a total of US$3mln, lobbing out shares at 504p a throw to the US-based family office of Omar Mangalji, a member of the Canadian Mangalji family, and an unnamed Gulf-based investor.
For each new share under the subscriptions, the investors will receive two warrants to subscribe for new shares at an exercise price of 50p for a period of five years, conditional on either the market capitalisation of the company exceeding US$250mln for a period of three consecutive trading days or a future funding round being concluded with a post-money valuation of US$250mln or greater.
In the oil and gas sector, Chariot Limited rocketed 37% to 10.15p and Canadian Overseas Petroleum Ltd leapt 24% to 25.25p after both announced discoveries – the former making a gas discovery at the Anchois-2 well and the latter an oil discovery in Wyoming.
1.25pm: Dull times continue
The lunchtime trading session has been every bit as dull as the morning session.
The FTSE 100 is down 4 points (0.0%) at 7,481.
Mid-caps are faring less well with the FTSE 250 down 183 points (0.8%) at 23,171, despite investors piling into Cineworld Group PLC (LSE:CINE), the heavily indebted cinema chains owner. Cineworld is up 9.3%.
Fellow mid-cap Assura PLC edged 0.1% higher to 69.3p after a solid trading update.
The primary care property investor and developer said the final three months saw another quarter of progress, with some of its buildings acting as major vaccination hubs.
12.15pm: Investors take a flutter on gaming stocks
Aside from housebuilding stocks getting a hammering, it has been a quiet trading session in London.
The FTSE 100 index has barely moved more than 10 points from Friday’s closing value. It is currently down 7 points (0.1%) at 7,478, with the housebuilders entirely responsible for the loss. Gaming stocks Entain PLC (LSE:ENT) and Flutter Entertainment PLC (LSE:FLTR) found some favour, however, with gains of 1% or more.
US stocks are expected to open mixed following a choppy start to the year, which saw the Nasdaq decline by around 4.5% in the first week of trading, while the S&P 500 was down around 1.9%.
Futures for the Dow Jones Industrial Average rose 0.03% in Monday pre-market trading, while the broader S&P 500 index shed 0.47% and those for the tech-heavy Nasdaq 100 declined 1.37%.
11.00am: Banks find support as interest rate hike expectations rise
London’s index of heavyweight shares continues to show a lack of movement normally associated with Tottenham Hotspur’s most expensive signing.
The FTSE 100 was unchanged at 7,485.
“The initial exuberance of the New Year was soon replaced by a more wary outlook, as the impact of earlier than expected rate hikes were being priced in,” said Richard Hunter at interactive investor.
“An initial 5% hike in the oil price has lifted the majors, with Shell regaining its place as the largest FTSE100 company by capitalisation.
“The banks are also being boosted on the possibility of a rising interest rate environment. Equally, the sector has more recently come into vogue on valuation grounds, with investors considering the banks to be sitting on relatively cheap valuations, and with the currently preferred picks being Barclays and Lloyds. Further colour may also arise from the US banks later in the week on a read-across basis,” he added.
9.45am: Travel stocks offset weakness of housebuilders
Depending on whether you are invested in travel-related stocks or housebuilding stocks, it has either been a good start to the week or a poor one.
The strength of travel stocks has been negated by the weakness of housebuilders, resulting in the FTSE 100 dipping 6 points to 7,480.
“Despite some tentative positivity in Asian trading, the UK index was not helped by a weak start for the housebuilding sector,” said Russ Mould at AJ Bell.
“The UK Government is reportedly looking for property developers to take on a greater share of the costs of repairing dangerous apartment blocks in the wake of the Grenfell tragedy in 2017.
“Many flat owners have been left with onerous costs for replacing flammable cladding and the latest reports on who will foot the bill should come as no surprise to the sector in that context.
“The housebuilders have benefited from generous incentives, such as Help to Buy and the mortgage guarantee scheme, in recent years; however, state support is not a one-way street and the sector needs to do its bit to look after its customers,” suggested Mould.
The four biggest fallers on the FTSE 100 are all housebuilders – Persimmon PLC (LSE:PSN), Berkeley Group Holdings PLC, Barratt Developments PLC (LSE:BDEV) and Taylor Wimpey PLC (LSE:TW.) – with falls of 2.3% or more while on the FTSE 250, which like the FTSE 100 is more or less unchanged, the biggest faller is Redrow PLC (LSE:RDW), which is off 3.4%.
In contrast, fading fears over the effects of the Omicron variant of Covid-19 continues to lure bargain hunters back onto the share registers of the likes of British Airways owner International Consolidated Airlines Group (LSE:IAG) SA and aerospace engineering giant Rolls-Royce Holdings PLC (LSE:RR.); the former is up 2.4% and the latter is 1.4% firmer.
8.35am: Builders on the back foot
The FTSE 100 defied early predictions for a positive start to open flat as a pancake.
Worries over an imminent US interest rate rise, which could be triggered by a red-hot inflation reading later this week, put a dampener on sentiment.
Friday’s American jobs numbers didn’t help the narrative, with the prospect of wage pressures adding to the jitters.
“The initial exuberance of the New Year has soon been replaced by a more wary outlook, as the impact of earlier than expected rate hikes were being priced in,” said Richard Hunter, head of markets at Interactive Investor.
“The non-farm payrolls figure was much lighter than expected, coming in at 199,000 jobs added versus a consensus of 400,000, suggesting a lack of available workers.
“That being said, over the course of last year around 6.5 million jobs were added, and unemployment now stands at 3.9%.
“This would tend to play into the Federal Reserve’s more recent view that full employment may already have been reached, which in turn could lead to wage pressure.
“This additional inflationary factor points to the Fed sticking to a course of monetary tightening, which now seems likely to lead to an initial rate hike in March.”
The housebuilders were the morning’s biggest casualties amid fears they will all have to bear significant additional costs from the cladding scandal.
The housing secretary Michael Gove will unveil plans this week for a £4bn grant scheme to pay for repairs demanded by banks and insurers in the wake of the Grenfell fire.
Persimmon, Berkeley Group, Barratt Development and Taylor Wimpey were down by 2%-3% in early trade.
6.50 am: FTSE 100 to make a cautiously positive start
The FTSE 100 looks set to open modestly higher and above 7,500 with London mirroring the cautious positivity seen across Asia’s main markets.
However, sentiment is on a knife-edge and is expected to remain so ahead of US inflation figures on Wednesday.
Another sky-high reading is expected to set the seal on an early hike to interest rates.
The Nasdaq 100 lost around 5% last week, its sharpest decline in almost a year, as tech investors prepared for an early hike to borrowing costs.
“Despite the surge in yields over the past week the fall in equity markets has been relatively contained; however further weakness in bond markets could translate into further equity market weakness in the days ahead, especially if US 10-year yields move through 1.8% towards 2%,” said Michael Hewson, an analyst at CMC Markets.
The question after that is whether the US Federal Reserve will then accelerate the tapering of bond purchases that indirectly also acted as a stimulant to equity markets.
Back here in the UK, it is expected to be a busy week for corporate news with post-Christmas trading updates on the cards from Tesco, Marks & Spencer, JD Sport, Whitbread and ASOS – to name just a few.
Around the markets
- Pound US$1.3596 (flat)
- Bitcoin US$ 41,955.40 (+0.2%)
- Gold US$1,791.50 (-0.33%)
- Brent crude US$81.74 (flat)
6.50am: Early Markets - Asia / Australia
Asia-Pacific shares were mixed on Monday as COVID-19 cases continue to rise sharply around the globe.
ANZ research analysts said in a morning note that “Early studies indicate that while Omicron is far more infectious than Delta, it is, mercifully, less likely to cause hospitalisations, and booster vaccines further reduce the risk of hospitalisation.
“Unfortunately, as pandemic-induced supply shortages continue to proliferate, it’s clear that the inflation rollercoaster ride isn’t over.”
South Korea’s Kospi dipped 0.95% while Japan’s markets are closed for a public holiday.
The Shanghai Composite in China gained 0.30% and Hong Kong’s Hang Seng index surged 0.81%.
Australia’s S&P/ASX200 closed 0.08% lower at 7447.10 points, as Australia on Monday surpassed one million COVID-19 cases, with more than half of them recorded in the past week.