LONDON MARKET OPEN: Miners weigh on FTSE 100 amid China lockdown fears

(Alliance News) - Stock prices in London opened lower on Monday with miners in the red amid fears Chinese authorities will impose fresh lockdowns in Shanghai to control a fresh Covid outbreak.

Shanghai recorded more than 120 virus cases at the weekend, having seen its first case of the highly contagious BA.5 Omicron strain, forcing officials to launch another mass testing drive.

With China fixated on its zero-Covid strategy of wiping out the disease, there is increasing concern that authorities will revert to another painful lockdown, with Shanghai residents having only emerged from a two-month confinement in June.

There have also been new infections uncovered in other parts of the country, including Beijing.

The FTSE 100 index was down 72.04 points, or 1.0%, at 7,124.16. The FTSE 250 index was down 159.59 points, or 0.8%, at 18,753.36. The AIM All-Share index was down 3.56 points, or 0.4%, at 883.18.

The Cboe UK 100 index was down 1.1% at 710.15. The Cboe 250 was down 1.0% at 16,314.62 and the Cboe Small Companies was 0.1% lower at 13,221.75.

In mainland Europe, the CAC 40 stock index in Paris was down 1.9%, while the DAX 40 in Frankfurt was down 2.0%.

"The FTSE 100 continues its attempts to be a relative oasis of calm, previously boosted by a stable of mature and defensive plays, as well as a large exposure to the mining and oil stocks which have generally performed strongly over the last few months. Even so, mining stocks are under particular strain in early trade given the Chinese developments and any earlier gains have evaporated," said Interactive Investor's Richard Hunter.

In the FTSE 100, miners were among the worst performers amid China lockdown fears. Antofagasta was down 4.6%, Anglo American down 4.0% and Glencore down 2.5%.

Dechra Pharmaceuticals was down 2.0%. The veterinary products firm reported annual revenue progress, though it cautioned that growth rates are normalising as pandemic tailwinds ease.

For the year ended June 30, revenue increased by 14% at constant exchange rates and 12% at actual exchange rates. In financial 2021, revenue grew 20% at constant currency and 18% on a reported basis to GBP608.0 million.

Chief Executive Officer Ian Page said: "We are delighted that the financial year just ended was another record year for Dechra and in line with expectations, with group revenue growth slowing to more normal levels as expected in the second half as the impact of the pandemic on our markets unwinds. Whilst we expect current macroeconomic uncertainties to continue, the veterinary pharmaceutical market remains resilient and in growth."

In the FTSE 250, Wizz Air was down 4.2% after the Hungarian airline said it expects a "material" profit in the second quarter but cautioned it will trim flight utilisation over the summer to cope with recent travel chaos.

For the first quarter to June 30, Wizz Air said it registered a EUR285 million operating loss and net loss of EUR450 million, but expects a "material" operational profit in the second quarter on strong summer demand.

Wizz's update came as London's Heathrow Airport warned it will ask airlines to cancel more flights this summer if it does not believe previous schedule reductions will sufficiently reduce disruption.

Rival airline operators Tui and easyJet were down 3.2% and 2.7% respectively in a negative read-across.

On Monday, the Japanese Nikkei 225 index closed up 1.1%. Japan's ruling party and partners won enough votes to form a supermajority in an upper house election held just days after the assassination of former prime minister Shinzo Abe, local media said Monday.

The yen was trading at 24-year lows against the dollar, however. Against the yen, the dollar was quoted at JPY136.75, higher against JPY135.88 late Friday. The greenback hit a high of JPY137.28 overnight.

In China, the Shanghai Composite was down 1.5%, while the Hang Seng index in Hong Kong was down 3.2%. The S&P/ASX 200 in Sydney ended down 1.1%.

The pound was quoted at USD1.1958 early Monday, down from USD1.2040 at the London equities close Friday.

The euro was priced at USD1.0125, down from USD1.0185.

Brent oil was trading at USD105.85 a barrel on Monday morning, down from USD106.00 late Friday. Gold stood at USD1,738.11 an ounce, lower against USD1,744.88.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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