LONDON (Alliance News) - London stock markets are trading sharply lower mid-morning Thursday amid a wider European sell-off sparked by a heavy fall on Wall Street on Wednesday.
The FTSE 100 is down 1.0% at 6,9018.59, the FTSE 250 trades down 1.4% at 17,254.21, and the AIM All-Share is off 0.4% at 714.35.
European stock indices are also trading lower, with the French CAC 40 down 1.4%, and the German DAX 30 down 1.7%. Asian indices were more mixed on Thursday. The Japanese Nikkei fell in line with other global stock exchanges, closing down 1.4%, while the Hang Seng ended down only 0.1% and the Shanghai Composite closed up 0.6%.
Wall Street closed sharply lower Wednesday, with the DJIA down 1.6%, the S&P 500 off 1.5% and the Nasdaq Composite down 2.4%. The sell-off on Wall Street was led by technology stocks, reflected by the particularly steep loss posted by the tech-heavy Nasdaq index. Futures indicate another lower open, with the DJIA and the S&P 500 pointed down 0.9%, and the Nasdaq 100 expected to open down 1.2%.
The underperformance of tech stocks on Wall Street has read through to London, with chip maker ARM Holdings trading amongst the worst performers in the FTSE 100, down 4.2%.
"US tech stock sell off proves contagious and continues to spook the global markets. The US rout was led by the likes of Apple, Intel and Microsoft," says Augustin Eden, research analyst at Accendo Markets.
"FTSE 100 resident ARM, which supplies the components that make Apple's devices work, has been trading at highs recently but there are concerns that the markets for smartphones and tablets are becoming saturated leading to many consumers opting for cheaper devices with the same guts as fashionable market leaders, just without the badge. Crucially, these pay lower royalties to parts suppliers like ARM," Eden adds.
London Stock Exchange Group, down 8.3% is the worst performer in the FTSE 100. Borse Dubai said it has sold its 17.4% stake in London Stock Exchange Group in a block sale managed by BofA Merrill Lynch, Barclays Bank and Nomura International. Borse Dubai had been the biggest shareholder in London Stock Exchange Group but said it will no longer hold any shares in the company on completion of the deal.
However, oil prices have surged amid concerns about the political situation in Yemen. Saudi Arabia has launched airstrikes targeting Houthi rebels in Yemen with the support of Gulf region allies and the US. Saudi ambassador in the US, Adel al-Jubeir, said the military action was aimed to defend the "legitimate government" of President Abd rabbu Mansour Hadi, who has taken refuge in the southern port city of Aden.
Brent oil hit a high of USD59.72 a barrel and currently trades at USD58.70 a barrel. West Texas Intermediate touched USD52.45 a barrel and is quoted mid-morning at USD51.17.
Weir Group, up 2.4%, BP, up 0.7% and BG Group, up 0.4% , are amongst the few FTSE 100 gainers. However, airlines International Consolidated Airlines Group, down 4.1%, and easyJet, down 3.8% are amongst the biggest fallers in the index.
easyJet raised its profit guidance for the first half of its financial year, thanks mainly to favourable exchange rate movements, with raised revenue per seat guidance offset by an increase in its cost per seat expectation as it was forced to do more de-icing and due to disruptions.
The low-cost airline said it now expects to report between a pretax loss of GBP5 million and a pretax profit of GBP10 million for the six months to end-March, compared with the forecast for a loss of between GBP10 million and GBP30 million it gave in January. This is mainly because it now expects a GBP20 million boost from favourable exchange rate movements, compared with the GBP10 million favourable impact it had previously expected.
The price of gold has also risen as investors look to the safe haven amid the fall in stock indices. The metal trades at USD1,209.90 an ounce, its highest level since the beginning of the month.
Fresnillo, up 2.5% and Randgold Resources, up 1.7%, are also amongst the best blue-chip performers.
In the FTSE 250, SuperGroup is the biggest gainer, up 5.6%. The fashion retailer maintained its profit guidance for the year as it outlined the outcome of its strategic review, including the acquisition of its North American distribution licence and plans to start paying dividends in its 2016 financial year. SuperGroup said it expects its profit for the 2015 financial year to be in the GBP60 million to GBP65 million range, in line with its previous guidance.
Bodycote, down 5.8%, Ladbrokes, down 5.3%, and Essentra, down 4.7% are three of the biggest fallers in the mid-cap index after they all went ex-dividend, meaning new buyers no longer qualify for the latest dividend payouts.
In the FTSE 100, Schroders, down 4.0%, and Prudential, down 3.4% are amongst the worst performers after they also went ex-dividend.
In the only domestic economic release of the day so far, British retail sales growth accelerated more than expected in February, data from the Office for National Statistics showed. Retail sales volume increased at a faster pace of 0.7% in February from January, when it gained 0.1%. The monthly growth exceeded a 0.4% increase forecast by economists. On a yearly basis, retail sales rose 5.7% in February, slower than a 5.9% rise seen in January, but higher than the 4.7% consensus forecast.
Still ahead in the economic calendar is UK CBI Distributive Trades survey at 1100 GMT, US initial and continuing jobless claims at 1230 GMT, and Markit services and composite Purchasing Managers' index for the US at 1345 GMT. European Central Bank President Mario Draghi will be speaking in Rome at 1300 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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