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(Alliance News) - Stock prices in London opened lower on Friday following a sharp sell-off in the US on Thursday, while housebuilders fell after the UK competition regulator launched a probe into four of the country's largest developers.
In London, the blue-chip FTSE 100 index was down 15.63 points, or 0.6%, at 5,815.23. The mid-cap FTSE 250 index down 31.51 points, or 0.2% at 17,428.18. The AIM All-Share index was down 0.1% at 952.21.
The Cboe UK 100 index was down 0.5% at 579.69. The Cboe 250 was down 0.3% at 14,852.68. The Cboe Small Companies was down 0.1% at 9,445.65.
In mainland Europe, the CAC 40 index in Paris was down 0.4%, while the DAX 30 in Frankfurt was down 0.2%.
In the US on Thursday, Wall Street ended firmly in the red, with the Dow Jones Industrial Average down 2.8%, S&P 500 down 3.5% and Nasdaq Composite closing down 5.0%.
All three main indices in New York suffered hefty selling, but the tech-heavy Nasdaq led the way with tech giants such as Apple, Microsoft, Amazon and Facebook among the worst hit.
Analysts at FXPro said: "The drop overnight can easily be attributed to the rebalancing of portfolios that funds do before the end of the next financial year. They sell those shares that have risen sharply in price in recent months and have gained an unnecessarily high share in portfolios that are often restricted.
"The sale yesterday was also reinforced by robots who placed orders to close long positions to take profits in the light of the prolonged overbought market. Because of this, the strong decline had an even bigger slide."
The Japanese Nikkei 225 index closed down 1.1%. In China, the Shanghai Composite ended down 0.9%, while the Hang Seng index in Hong Kong is down 1.4%.
In the FTSE 100, gold miners Fresnillo and Polymetal International were up 2.8% and 1.0% respectively, tracking spot gold prices higher. Mexico's Fresnillo was the best large-cap performer.
The precious metal was quoted at USD1,936.33 an ounce Friday morning, up from USD1,926.09 an ounce at the London equities close Thursday.
International Consolidated Airlines was up 2.1% after the UK government said on Thursday that there would be no change to its coronavirus quarantine exemption list.
There had been speculation that Westminster would reimpose the quarantine requirement on Portugal due to a spike in Covid-19 cases, leading many holidaymakers to pay hundreds of pounds to fly home this week.
Conversely, housebuilders were at the foot of the large-cap index after the UK competition regulator said it has found "troubling evidence" house developers have handed out "potentially unfair" terms concerning ground rents in leasehold contracts and potential mis-selling.
As a result, the Competition & Markets Authority has launched an enforcement action as it believes housebuilders may have broken consumer protection law.
The CMA has written to four London-listed developers over the action, outlining its concerns: Barratt Developments, Countryside Properties, Persimmon and Taylor Wimpey.
Barratt Developments was the worst blue-chip performer, down 3.4%, Persimmon was down 2.8% and Taylor Wimpey was down 1.5%. FTSE 250-listed Countryside Properties was down 1.6%.
In response, Barratt said it is "committed to putting its customers first and will continue to cooperate with the CMA whilst it completes its investigation".
Taylor Wimpey also noted the enforcement action, adding: "The board takes this very seriously and Taylor Wimpey will continue to fully cooperate with the CMA, provide the further information to be requested by the CMA in the coming weeks and work with them to better understand their position."
The CMA will also be investigating certain firms who bought freeholds from these developers and have continued to use the same unfair leasehold contract terms.
Elsewhere, Ryanair Holdings was up 1.7% at EUR11.86 after the Irish carrier said it has raised EUR400 million in a share placing to institutional investors.
First announced late Thursday, Ryanair said the funds were being raised to help position the firm to "move quickly" should opportunities in the sector be thrown up.
A total of 35.2 million shares were placed at a price of EUR11.35 each, Ryanair said on Friday morning, the placing price represents a 2.6% discount to Thursday's closing share price.
The US dollar was subdued ahead of Friday's closely-watched jobs print, due at 1330 BST.
The pound was USD1.3270 early Friday, flat from USD1.3272 at the London equities close Thursday.
The euro stood at USD1.1843, up from USD1.1825. Against the yen, the dollar was trading at JPY106.19, flat from JPY106.17.
US nonfarm payrolls are forecast to rise 1.4 million in August, down from 1.8 million in July. The unemployment rate is predicted to drop to 9.8% in August from 10.2% in July.
In commodities, Brent oil was quoted at USD43.69 a barrel Friday morning, up from USD43.42 late Thursday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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