LONDON MARKET CLOSE: Stocks slide as Evergrande crisis fears return

(Alliance News) - Stocks in London ended mostly lower on Thursday as fresh concerns about fallout from China's Evergrande Property Services Group saga hit sentiment.

Concerns over Evergrande returned to haunt investors after the embattled Chines firm said the planned sale of its property services arm had collapsed. Evergrande shares finished 8.0% lower in Hong Kong.

There had been hope that the USD2.58 billion sale of a 50.1% stake in Evergrande would provide it with much-needed capital to service its debts. Evergrande said it would continue to implement measures to ease its liquidity issues, cautioning that "there is no guarantee that the group will be able to meet its financial obligations".

The FTSE 100 index closed down 32.80 points, or 0.5%, at 7,190.30. The FTSE 250 closed down 49.62 points, or 0.2%, at 22,917.05 and the AIM All-Share closed up 3.34 points, or 0.3%, at 1,241.43.

The Cboe UK 100 ended down 0.6% at 712.80, the Cboe UK 250 closed down 0.1% at 20,672.60 and the Cboe Small Companies ended down 0.3% at 15,532.20.

The CAC 40 stock index in Paris ended down 0.3% and the DAX 40 in Frankfurt ended down 0.3%.

"European markets have spent much of the day floundering after Evergrande's deal to sell USD2.6bn worth of their property services business fell through. While the ramp-up in commodity-driven inflation has helped lift the outlook for miners, today's selloff across metals and energy has led to major decline for the likes of Rio Tinto, BHP, Anglo American, and Glencore," said IG Group's Josh Mahony.

In London, blue-chip miners - reliant on China as a customer - ended among worst performers, with Anglo American down 2.7%, BHP Group down 3.7%, Rio Tinto down 4.8% and Glencore down 2.5%.

Anglo American separately on Thursday said out rose marginally in the third quarter and predicted it is on track to deliver its full-year production guidance. In its report for the third quarter ended September 30, the London-based miner said output was up 2% compared to the third quarter last year, with operating levels generally maintained at about 95% of normal capacity.

Rentokil closed down 2.1% after the pest control and hygiene firm noted strong momentum through the third quarter despite a decline in disinfection revenue following the one-off boost provided by the virus pandemic last year. In addition, Peel Hunt downgraded the stock to Hold from Add.

Barclays lost 0.8% even as the lender reported a surge in profit in the third quarter, leading to record profits for the year-to-date, with investment banking fees and Equities business performing strongly.

In the three months to September 30, the London-based lender recorded pretax profit of GBP1.96 billion, up 70% from GBP1.15 billion the year before.

Barclays booked a credit impairment charge of GBP120 million in the quarter, sharply lower from GBP608 million the year before. For the first nine months of the year, it benefited from a GBP622 million credit impairment release, as opposed to being hit by a charge of GBP4.35 billion a year ago.

Total income in the third quarter increased 5.0% to GBP5.47 billion from GBP5.20 billion. Net interest income slipped to GBP1.94 billion from GBP2.06 billion, but net fee, commission & other income increased to GBP3.53 billion from GBP3.15 billion.

Near the top of the FTSE 100, RELX closed up 1.8% after the information and analytics provider highlighted an improved year-to-date performance across its operations.

RELX reported underlying revenue growth of 6% for the first nine months of 2021. Full year underlying growth rates in revenue and adjusted operating profit, as well as constant currency growth in adjusted earnings per share, are all now expected to be "above historical trends".

The Risk division performed particularly well in the period, with underlying revenue growth of 10% on the back of demand for fraud prevention and identity software products. Underlying revenue in the Exhibitions unit grew 9%, driven by a gradual reopening of exhibition venues across geographies.

Underlying revenue growth is expected for the year from all of the firm's divisions, RELX stated.

Unilever closed up 1.2% after the consumer goods firm reported a slowdown in underlying sales growth but retained its full-year guidance.

Third quarter underlying sales growth was 2.5% on a year ago, slowing from the 5.0% achieved in the second quarter. The year-to-date figure was 4.4%, moderating after first-half growth of 5.4%.

Nonetheless, Unilever backed its full-year underlying growth guidance range of 3% to 5%. It also held margin guidance despite warning that cost inflation remains "at strongly elevated levels", and this is expected to continue into next year.

Elsewhere, Provident Financial ended up 2.6% after the subprime lender said it may resume dividends if trading conditions continue to improve between now and the end of 2021.

Provident Financial said trading in the third quarter of 2021 "improved significantly" as it it benefited from better market conditions.

The pound was quoted at USD1.3808 at the London equities close, lower from USD1.3820 at the close Wednesday.

The euro stood at USD1.1640 at the European equities close, soft from USD1.1647 late Wednesday. Against the yen, the dollar was trading at JPY113.85, down from JPY114.24.

Stocks in New York were mostly higher at the London equities close following upbeat US labour market data.

The DJIA was down 0.2%, but the S&P 500 index up 0.1% and the Nasdaq Composite up 0.2%.

US initial jobless claims hit another post-pandemic low, data from the Department of Labor showed.

For the week to October 16, initial jobless claims fell to 290,000 from 296,000 the week before. This marked the lowest level since March 14, 2020, when it was 256,000. Consensus, cited by FXStreet, had expected the reading to edge up slightly to 300,000.

IBM was weighing on the Dow, down 7.6%, after the Armonk, New York-based technology firm reported late Wednesday a weaker profit performance for the third quarter of 2021.

For the three months ended September 30, net income declined 33% to USD1.13 billion from USD1.70 billion the same period a year before. Diluted earnings per share also dropped 34% to USD1.25 from USD1.89. This was due to an overall increase in expenses to USD6.85 billion from USD6.60 billion, particularly for research & development, and selling, general & administrative costs.

Brent oil was quoted at USD84.12 a barrel at the equities close, down sharply from USD85.02 at the close Wednesday.

Gold stood at USD1,780.15 an ounce at the London equities close, marginally lower against USD1,783.82 late Wednesday.

The economic events calendar on Friday has UK retail sales at 0700 BST and PMI readings from Germany, the eurozone, the UK and the US at 0830 BST, 0900 BST, 0930 BST and 1445 BST respectively.

The UK corporate calendar on Friday has third-quarter results from InterContinental Hotels Group and London Stock Exchange Group.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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