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(Alliance News) - Monday's tepid tone continued in London at midday, with the pound strengthening as England's lockdown eased and putting pressure on the internationally exposed FTSE 100.
The large-cap index was down just 0.030 of a point at 6,740.56. The mid-cap FTSE 250 index was up 18.07 points, or 0.1%, at 21,504.80. The AIM All-Share index was up 0.6% at 1,199.29.
The Cboe UK 100 index was flat at 672.01. The Cboe 250 was up 0.1% at 19,242.77, and the Cboe Small Companies up 0.1% at 13,912.66.
AJ Bell investment director Russ Mould highlighted that the FTSE 100 failed to advance on England's lockdown easing.
"There may be some nervousness in the markets off the back of crisis-hit hedge fund Archegos Capital and its fire sale of Chinese technology and US media stocks after being hit by margin calls," said Mould. "With both Credit Suisse and Nomura warning of a hit in the fallout from the saga, investors have been reminded of the interconnectedness of the global financial system and how this creates a risk of contagion when something goes wrong."
Credit Suisse, shares slumping 13% in Zurich, warned of a sizeable hit to its first-quarter results after a US-based hedge fund defaulted on a margin call.
Nomura cautioned on a "a significant loss arising from transactions with a US client". The Japanese financial holding company estimated a USD2 billion hit based on market prices as of Friday, though it said the estimate was subject to change. Nomura shares closed down 16% in Tokyo.
The Financial Times on Sunday reported that private investment Archegos Capital was behind a sale which sent media stocks in the US tumbling on Friday. ViacomCBS and Discovery Channel owner Discovery both fell 27% in New York on Friday.
Meanwhile, in London, citing "volatile" market conditions, Deliveroo on Monday said it will price shares for its highly anticipated stock market listing towards the bottom of its range. It comes after a week in which a raft of leading fund managers said they will reject the listing – which could be the UK's biggest for a decade – amid concerns over workers' rights.
Wall Street is on course for a lower open on Monday. The Dow Jones is called down 0.4%. The broader S&P 500 also is seen starting 0.4% lower and the tech heavy Nasdaq Composite set for a 0.3% slide.
As well as concerns over market volatility, a stronger pound was holding back the FTSE 100, while stocks in continental Europe were aided by a weaker euro - particularly the export-heavy German DAX.
The CAC 40 in Paris was up 0.4% while the DAX 30 in Frankfurt was up 0.5% at midday Monday.
Dramatic infection spikes in Europe have forced a tightening of unpopular restrictions across the continent, with a snowballing of cases in France intensifying pressure on health infrastructure.
"In 10 days, 15 days or three weeks we may be overwhelmed," senior Paris hospitals official Remi Salomon told BFMTV, pleading for a new lockdown – including for schools.
And in Germany, Chancellor Angela Merkel on Sunday pleaded with state governments to stop straying from agreed pandemic measures, with her government under pressure over a sluggish vaccine rollout and testing delays.
Belgium also has tightened restrictions – all schools and universities will be closed from Monday, effectively extending the Easter holiday to three weeks.
Amid the resurgence of infections, the Ifo warned that the eurozone's economic outlook is "uncertain". Ifo predicts the eurozone economy to fall 0.4% quarter-on-quarter in the first three months of 2021, following the 0.7% decline in the fourth quarter of 2020.
The Ifo noted that the bloc's vaccination campaign is proceeding "more slowly than hoped".
The euro fell to USD1.1772 on Monday from USD1.1796 late Friday.
In contrast, England forged ahead with its lockdown easing as stay-at-home orders were relaxed to allow outdoor gatherings of up to six people.
Sterling rose to USD1.3834 on Monday from USD1.3795 at the London equities close on Friday - putting pressure on the FTSE 100 index, which is filled with overseas earners.
Against the yen, the dollar was quoted at JPY109.58 on Monday versus JPY109.60.
Amongst FTSE 100 constituent, shares in BT Group rose 1.8% after Morgan Stanley raised the telecommunications giant to Overweight from Equal Weight.
Renishaw shares rose 5.6% after Bloomberg reported that the engineering firm is attracting potential interest from Danaher and Hexagon.
The recent FTSE 100 entrant earlier in March put itself up for sale. Executive Chair David McMurtry and Non-Executive Deputy Chair John Deer, the company's founders, said they intend to sell their "very substantial" shareholdings in Renishaw. Together, the founders own around 53% of the group, and have expressed a preference for the disposal of their entire combined shareholding.
In the FTSE 250, housebuilder Crest Nicholson rose 2.5% after Jefferies raised the stock to Buy from Hold.
Elsewhere in London, Zegona Communcations shares shot up 31% after investee Euskaltel received a takeover bid from MasMovil Ibercom.
Zegona is the largest shareholder in Spanish telecommunications provider Euskaltel, with more than a 21% stake in the firm. MasMovil's offer at EUR11.17 per share in cash values Euskaltel's equity at EUR2.0 billion, equating to an enterprise value of EUR3.5 billion. This values Zegona's stake at EUR428 million.
In commodities, gold was quoted at USD1,727.09 an ounce on Monday, down from USD1,733.46 on Friday.
Brent oil was trading at USD64.98 a barrel at midday, rising from USD64.35 late Friday even after the massive container ship that has been blocking the Suez Canal for almost a week started to move.
However, Suez Canal Authority chief Osama Rabie was yet to confirm the end of rescue operations, having said early on Monday that efforts to fully free the vessel would resume late morning. The SCA said that the ship had been moved to point "80%" in the right direction, after the stern had been freed.
A Dutch salvage company that has been brought in to dislodge the large container ship in the Suez Canal cautioned that more work was needed before the vessel is totally free.
While the ship's stern has been cleared from the side of the canal, "the bow is still completely stuck," Peter Berdowski, head of the Boskalis dredging and heavy lift company, told Dutch radio early Monday. "Something is moving, that's the good news," he said, but it's too early to give the all-clear.
He described the bow as still "lying on the beach like a whale".
By Lucy Heming; lucyheming@alliancenews.com
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