LONDON (Alliance News) - London share prices were sharply lower Monday midday, while Wall Street is expected to follow European markets into the red, after a heavy sell off in Asian equities and concerns about the state of China's economy continued to play havoc with investor sentiment around the world.
The FTSE 100 traded down 2.8% at 6,014.42 midday, the FTSE 250 was down 3.1% at 16,353.68, and the AIM All-Share was down 3.1% at 709.81. Other major European indices also were down, with the CAC 40 in Paris falling 2.9% and the DAX 30 dropping 2.8%.
Meanwhile, US stocks also were called for a much lower open, having closed lower on Friday as well. The Dow Jones Industrial Average was seen down 2.6%, the S&P 500 down 2.4% and the Nasdaq 100 down 3.8%.
In a very light economic calendar in the US Monday, there is the Chicago Fed National Activity Index at 1330 BST, before Federal Reserve Bank of Atlanta President Dennis Lockhart speaks at 2055 BST.
As a result of China's weak economic data, yuan devaluation and stock market rout, analysts and investors are starting to change their minds and no longer believe that the Federal Reserve will raise US interest rates at its next meeting of September, as previously expected.
Alongside the concerns about China, the minutes of the Fed’s July meeting showed Federal Open Market Committee members looking for more convincing evidence on US economic data before raising rates.
"While America is creating jobs, growth has been tepid and recent performance data have been patchy," said Stephen Boyle, chief economist at Royal Bank of Scotland. "Fed members also fretted about the effect of China’s slowdown on the US. As a result, markets pushed back the expected date of the first rise to December."
In the US economic economic calendar this week, Markit services and composite purchasing manager's indices are expected on Tuesday, whilst initial and continuing jobless claims and gross domestic product data are due on Thursday. Investors also also be looking ahead to the Jackson Hole Symposium, starting on Thursday, for insight into the sentiment of Fed officials, though Fed Chair Janet Yellen will not attend.
In another attempt to slow the meltdown in its stock market, China's State Council published the finalized rules to allow pension funds managed by local governments to invest in domestic stock markets.
"Regardless of what the Chinese government and People's Bank of China 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," said Alistair McCaig, market analyst at IG.
The Hang Seng in Hong Kong ended down 5.2%, and the Shanghai Composite lost 8.5%. Both indices finished at lows they haven't seen since March. In Japan, the Nikkei in Tokyo ended down 4.6%.
"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," highlighted IG's McCaig.
On the London Stock Exchange, RSA Insurance Group was the only winner in the FTSE 100 at midday, up 1.1%. Zurich Insurance has asked the insurance company for more time to make an offer for the company, the FT reported on Sunday. According to the report, the two insurers made progress on the potential GBP5 billion plus deal over the weekend.
Mining stocks were leading the decliners, with the FTSE 350 Mining sector down 5.0%. Amongst its constituents, Glencore was down 6.3%, Anglo American, down 6.1%, and BHP Billiton, down 6.0%.
Separately, Anglo American said it has reached a deal to sell its interest in two copper mines to a consortium for up to USD500 million.
Oil-related stocks were also dragging down the blue-chip index as crude prices have fallen to new six-and-a-half-year lows. Brent oil hit a low of USD43.23 a barrel on Monday, standing at USD43.75 Monday midday, while West Texas Intermediate was trading at its low for the day at USD38.96 a barrel.
BG Group shares were down 3.9%, Royal Dutch Shell 'A' shares down 3.7% and BP down 3.2%. In the FTSE 250, Amec Foster Wheeler was down 4.2% and Petrofac was falling 3.8%.
Analysts say oil markets are oversupplied and demand from China is dwindling. Also, following the nuclear agreement reached last month, expectations that Iran will return to its position as one of the world’s biggest oil suppliers have been boosted, after UK Foreign Minister Philip Hammond on Sunday reopened the country's embassy in Tehran, four years after it was stormed by protesters angry at Britain's backing of sanctions against Iran over its nuclear programme.
Outside commodity stocks, Bunzl traded down 3.6%, even though the distribution and outsourcing company said its pretax profit rose in the first half on the back of better revenue and said it has made four more acquisitions. It said its pretax profit for the six months to the end of June was up to GBP147.1 million from GBP132.3 million a year earlier, an 11% rise, on the back of a 7% rise in revenue to GBP3.14 billion from GBP2.94 billion.
In the FTSE 250, Amlin was down 2.3%. The specialty insurer and reinsurer reported that profit in the first half was hit by a change to its accounting for the seasonality of catastrophe reinsurance earned premium, with the effects to unwind in the remainder of 2015. Chief Executive Charles Philipps also told journalists that Amlin is not for sale.
In the AIM-All Share index, African Potash was up 57%. The potash producer said it has signed a memorandum of understanding with a Zambian fertiliser supply company which will lead to the company supplying over 50,000 metric tonnes of fertiliser a year. This is the first MOU to be signed since African Potash struck a deal with the Common Market for Eastern and Southern Africa (COMESA) and the Mask Africa Crowd Farm Fund Ltd with a view to creating a production and distribution platform for fertiliser in Eastern and Southern Africa earlier in August.
Belfast-based television company UTV Media was up 8.3% after it confirmed it is holding talks on the potential sale of its television assets. In a short statement, UTV said the talks are "ongoing" and there is no certainty they will lead to a transaction being agreed. The Guardian newspaper reported over the weekend that ITV, the FTSE 100 broadcaster, is in talks to buy the company.
Meanwhile, Blinkx was down 25%. The internet media company said it expects to post an operating loss for the half year after weaker-than-expected trading in the second quarter. The company said its performance in the first quarter was in line with expectations, but early indications from the second quarter were below its forecasts, and it now expects to post an operating loss in the first half to the end of September.
By Daniel Ruiz; danielruiz@alliancenews.com
Copyright 2015 Alliance News Limited. All Rights Reserved.
UK dividends calendar - next 7 days
Friday 10 May | |
AIB Group PLC | dividend payment date |
Alpha Group International PLC | dividend payment date |
Antofagasta PLC | dividend payment date |
Hammerson PLC | dividend payment date |
Hunting PLC | dividend payment date |
International Personal Finance PLC | dividend payment date |
Invesco Select Trust Global Equity Income PLC | dividend payment date |
Invesco Select Trust UK Equity PLC | dividend payment date |
Johnson Service Group PLC | dividend payment date |
Kerry Group PLC | dividend payment date |
Moneysupermarket.com Group PLC | dividend payment date |
Schroder Asian Total Return Inv Co PLC | dividend payment date |
Schroder European Real Estate Investments Trust PLC | dividend payment date |
Schroder Oriental Income Fund Ltd | dividend payment date |
Serco Group PLC | dividend payment date |
Smurfit Kappa Group PLC | dividend payment date |
Somero Enterprises Inc | special dividend payment date |
Taylor Wimpey PLC | dividend payment date |
Tufton Oceanic Assets Ltd | dividend payment date |
VPC Specialty Lending Investments PLC | dividend payment date |
Monday 13 May | |
Games Workshop Group PLC | dividend payment date |
Life Science REIT PLC | dividend payment date |
Seed Innovations Ltd | special dividend payment date |
Smiths Group PLC | dividend payment date |
VinaCapital Vietnam Opportunity Fund Ltd | dividend payment date |
Tuesday 14 May | |
BlackRock World Mining Trust PLC | dividend payment date |
Fidelity European Trust PLC | dividend payment date |
InterContinental Hotels Group PLC | dividend payment date |
Mondi PLC | dividend payment date |
OSB Group PLC | dividend payment date |
Rathbones Group PLC | dividend payment date |
Uniphar PLC | dividend payment date |
Wednesday 15 May | |
Capital Ltd | dividend payment date |
Grit Real Estate Income Group Ltd | dividend payment date |
Jardine Matheson Holdings Ltd | dividend payment date |
Just Group PLC | dividend payment date |
Rentokil Initial PLC | dividend payment date |
Thursday 16 May | |
abrdn Property Income Trust Ltd | ex-dividend payment date |
Alternative Income REIT PLC | ex-dividend payment date |
Aquila European Renewables PLC | ex-dividend payment date |
Balfour Beatty PLC | ex-dividend payment date |
BlackRock Latin American Investment Trust PLC | dividend payment date |
BP PLC | ex-dividend payment date |
Bunzl PLC | ex-dividend payment date |
Churchill China PLC | ex-dividend payment date |
EJF Investments Ltd | ex-dividend payment date |
Essentra PLC | ex-dividend payment date |
Fevertree Drinks PLC | ex-dividend payment date |
FRP Advisory Group PLC | ex-dividend payment date |
Greencoat UK Wind PLC | ex-dividend payment date |
GSK PLC | ex-dividend payment date |
Haleon PLC | dividend payment date |
Henderson Opportunities Trust PLC | ex-dividend payment date |
Income & Growth VCT PLC | ex-dividend payment date |
Irish Continental Group PLC | ex-dividend payment date |
James Halstead PLC | ex-dividend payment date |
Jarvis Securities PLC | ex-dividend payment date |
Kingfisher PLC | ex-dividend payment date |
M Winkworth PLC | dividend payment date |
Majedie Investments PLC | ex-dividend payment date |
Manx Financial Group PLC | ex-dividend payment date |
Mercantile Investment Trust PLC | dividend payment date |
Morgan Sindall Group PLC | dividend payment date |
Murray Income Trust PLC | ex-dividend payment date |
Ocean Wilsons Holdings Ltd | ex-dividend payment date |
Octopus Renewables Infrastructure Trust PLC | ex-dividend payment date |
PageGroup PLC | ex-dividend payment date |
Pershing Square Holdings Ltd | ex-dividend payment date |
Princess Private Equity Holding Ltd | ex-dividend payment date |
Property Franchise Group PLC | ex-dividend payment date |
Prudential PLC | dividend payment date |
RHI Magnesita NV | ex-dividend payment date |
Shell PLC | ex-dividend payment date |
Spectris PLC | ex-dividend payment date |
Supermarket Income REIT PLC | dividend payment date |
Target Healthcare REIT PLC | ex-dividend payment date |
TClarke PLC | ex-dividend payment date |
Tesco PLC | ex-dividend payment date |
TwentyFour Select Monthly Income Fund Ltd | ex-dividend payment date |
Unilever PLC | ex-dividend payment date |
Vaalco Energy Inc | ex-dividend payment date |
Vector Capital PLC | ex-dividend payment date |
Witan Investment Trust PLC | ex-dividend payment date |
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