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(Alliance News) - Stock prices in London opened the week lower on Monday, as renewed tensions between the US and China and revived interest rate fears dented risk appetite.
The FTSE 100 index opened down 42.11 points, 0.5%, at 7,859.69. The FTSE 250 was down 133.15 points, 0.7%, at 20,460.31, and the AIM All-Share was down 4.37 points, 0.5%, at 885.42.
The Cboe UK 100 was down 0.5% at 785.61, the Cboe UK 250 was down 0.5% at 17,848.09, and the Cboe Small Companies was down 0.1% at 14,195.30.
"Investors were rattled by a monstrous non-farm payroll number which prompted a rethink around the Federal Reserve's next move," said Richard Hunter, interactive investor head of markets.
According to the Bureau of Labor Statistics, US nonfarm payrolls rose by 517,000 in January, almost double the 260,000 seen December. January's number was well-ahead of the market consensus of 185,000, according to FXStreet.
Wall Street struggled on Friday following the jobs figures. The Dow Jones Industrial Average ended down 0.4%, the S&P 500 down 1.0%, and the Nasdaq Composite down 1.6%.
Meanwhile, the dollar continued to strengthen early Monday.
Sterling was quoted at USD1.2052, lower than USD1.2093 at the London equities close on Friday. The euro traded at USD1.0781, down from USD1.0844. Against the yen, the dollar was quoted at JPY131.77, up from JPY130.94.
In European equities on Monday, the CAC 40 in Paris was down 0.7%. The DAX 40 in Frankfurt was down 0.5%.
Manufacturing orders in Germany increased in December from November, figures from Destatis showed, due to a jump in large-scale orders.
On a seasonally and calendar adjusted basis, real new orders in manufacturing rose 3.2% in December from the month before, compared to a 4.4% monthly fall in November. Excluding large-scale orders, there was a 0.6% monthly decline in December. On an annual basis, orders fell 10.1% in December, compared to 10.2% in November.
In Asia on Monday, equities ended mixed. The Nikkei 225 index closed up 0.7%. In China, the Shanghai Composite finished down 0.8%, and the Hang Seng index in Hong Kong lost 2.3%. The S&P/ASX 200 in Sydney closed down 0.3%.
Concerns about new friction between the world's two largest economic powers were also weighing on risk sentiment.
A US decision to shoot down a Chinese balloon that Beijing claimed had veered off course has "seriously impacted and damaged" relations between the two countries, China's foreign ministry said on Monday.
The aircraft, which Washington said was a spy balloon, had spent several days flying over North America, leading the US to call off a planned visit to Beijing by US Secretary of State Antony Blinken.
Washington on Saturday said a fighter jet had shot it down off the coast of South Carolina, because of what it called Beijing's "unacceptable violation" of American sovereignty.
Beijing protested the move, claiming the balloon was a civilian aircraft that was blown off course.
"There is a chance this could be a short-lived wobble, given that the US State Department appears to have kept the diplomatic doors open, suggesting a planned visit to China by [Blinken] could happen as soon as conditions allow," said Hargreaves Lansdown's Susannah Streeter.
In the FTSE 100, Asia-focused insurer Prudential lost 3.0% , tracking weakness in Chinese stocks, while investor Scottish Mortgage fell 2.8% as tech stocks suffered.
Hargreaves Lansdown was the worst performer in early trade as Credit Suisse cut the stock to 'underperform' from 'neutral'.
Croda International was flat.
The speciality chemical company agreed to acquire South Korean biotechnology-devised beauty actives firm Solus Biotech for KRW350 billion, or around GBP232 million. The purchase will provide Croda with access to Solus' ceramide and phospholipid technologies, and growing capabilities in natural retinol. Croda said the acquisition will boost its exposure to "targeted prestige segments" as well as its Asian manufacturing capabilities.
In the FTSE 250, Vesuvius fell 2.2%, as it said it is managing a cyber incident.
The incident has involved unauthorised access to its systems. The molten metal flow engineering company said it has taken steps to investigate and respond to the incident, and is working with experts to understand the extent of the issue.
"We are taking steps to comply with all relevant regulatory obligations in light of the information that emerges from our ongoing investigations," the firm said.
3i Infrastructure slipped 2.8% to 331.67 pence, as it announced a proposed placing to pay down its debt.
The infrastructure investment firm didn't say the amount it hopes to raise but said the funds will be used to pay down drawings on its revolving credit facility, and as liquidity for future investment. The placing price of 330p represents a 3.4% discount to its closing share price on Friday.
At the end of 2022, 3i Infrastructure had drawn GBP555 million from its RCF, and held cash of GBP75 million, leaving undrawn commitments of GBP345 million. In the period since, the firm paid interim dividends of GBP50 million.
"Overall, the portfolio continues to perform well and the demand for infrastructure assets is strong," 3i said.
Gaming provider Playtech fell 1.5%, as it said it is seeking a declaration from English courts to settle a disagreement between itself and partner Caliplay.
Playtech said it is seeking clarification over whether Caliplay can still exercise an option to redeem the additional services fee element of their strategic agreement. In the six months to June 30 last year, the services fee amounted to EUR34.4 million. Playtech maintains the option has expired, and Caliplay disagrees, though it has not sought to exercise the option.
On AIM, IOG plunged 38%, as the oil and gas company said its plans to improve the flow rate at the A2 well in Southwark gas field in the UK southern North Sea have not worked.
IOG said the remediation of its A2 well managed to reduce water production by isolating certain zones. However, the perforations have failed to bring about the expected improvement in gas rates, which have been limited to 2.5 million standard cubic feet per day. The firm will now suspend the A2 well, and consider alternative longer-term remediation strategies and cycled production.
"We are clearly very disappointed with the Southwark A2 outcome, which is a very significant departure from our plans and expectations. We are already working hard to incorporate the data and learnings from A2 into the A1 well plan and will assess the implications for other similar assets in our portfolio," said CEO Rupert Newal
Gold was quoted at USD1,878.92 an ounce early Monday, up from USD1,867.11 on Friday. Brent oil was trading at USD80.74 a barrel, lower than USD81.44.
Still to come on Monday's economic calendar, there is the UK construction purchasing managers' index at 0930 GMT, before EU retail trade data at 1000 GMT.
The UK's construction sector is expected to remain in a marginal state of contraction in January, though the deterioration is forecast to ease from December. The PMI is forecast to rise to 49.5 points, according to FXStreet-cited market consensus, from a reading of 48.8 in the final month of 2022.
By Elizabeth Winter, Alliance News senior markets reporter
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