LONDON MARKET OPEN: Red start as Evergrande concerns weigh on Europe

(Alliance News) - London's FTSE 100 started Thursday's session in the red, sentiment knocked by a further blow for embattled China Evergrande and jitters over rising Covid cases in the UK.

The FTSE 100 index was down 24.99 points, or 0.4%, at 7,198.11 early Thursday. The mid-cap FTSE 250 index was up 4.95 points at 22,971.62. The AIM All-Share index was up just 0.47 of a point at 1,238.56.

The Cboe UK 100 index was down 0.4% at 713.93. The Cboe 250 was down 0.1% at 20,690.64, and the Cboe Small Companies down 0.1% at 15,564.57.

In mainland Europe, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.5% early Thursday.

It was a shaky start in Europe as Evergrande jitters flowed through from Asia.

The Nikkei 225 index in Tokyo closed down 1.9%. The Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong was down 0.6%. The S&P/ASX 200 in Sydney ended flat.

"Nerves around Evergrande and the China property sector appear to be weighing on sentiment in Asia today," said Jeffery Halley, senior market analyst at Oanda.

Chinese property giant Evergrande's shares plunged after resuming trading in Hong Kong on Thursday, with the failure of a unit sale deal deepening fears the indebted firm will collapse and send shockwaves through the world's second-largest economy.

Evergrande had suspended trading on October 4 pending an announcement on a "major transaction" as it struggled with some USD300 billion of debt – with investors worried about the potential fallout from its predicament.

The stock was trading 14% lower in late afternoon trading in Hong Kong.

A deal worth HKD20.04 billion, or USD2.58 billion, to sell a 50.1% stake in its property services arm had fallen through, it said in a statement Wednesday, when it announced it would resume trading.

In London, miners, their fortunes closely tied to major industrial customer China, traded lower early Thursday amid worries over Evergrande's fallout on the Chinese economy. Rio Tinto was down 2.9%, Anglo American down 2.7%, and BHP Group down 1.9%.

Anglo American said Thursday that production rose marginally in the third quarter and predicted it is on track to deliver its full-year production guidance.

Smiths Group was down 2.3% as the stock went ex-dividend, meaning new buyers no longer qualify for the latest payout.

Barclays fell 1.0% despite the lender posting a record profit figure. Barclays reported pretax profit of GBP6.94 billion for the nine months to the end of September, a record figure and multiplied from just GBP2.42 billion a year ago.

"On top of a good first half, a strong third quarter performance means Barclays has delivered its highest [third quarter year-to-date] pretax profit on record in 2021, demonstrating the benefits of our diversified business model," said Chief Executive Jes Staley.

Total income dipped slightly, to GBP16.78 billion from GBP16.83 billion, but the bank's results were boosted by a GBP622 million credit impairment release, as opposed to being hit by a charge of GBP4.35 billion a year ago.

Barclays reported a "strong" Corporate & Investment Bank performance, with Investment Banking fees and Equities income having their best third quarter year-to-date performance on a comparable basis. It also saw a recovery on the consumer side, with strong volumes in the UK for mortgage and deposit volumes.

In the green early Thursday was Legal & General, up 1.1% after Jefferies raised the stock to Buy from Hold.

Renishaw topped the FTSE 250, up 7.0%, after saying its new financial year has started strongly with a record order book.

"We expect demand from the semiconductor and electronics sectors to remain strong and that there will continue to be a recovery in the machine tool and co-ordinate measuring machine markets," it said.

In the UK, worries are centred on rising coronavirus cases heading into winter. Health Secretary Sajid Javid said the government has no current plans to implement its Plan B for tackling coronavirus but warned that Covid-19 cases could reach 100,000 a day as the country enters a challenging winter period.

As of 9am on Wednesday, there had been a further 49,139 lab-confirmed Covid-19 cases in the UK. Meanwhile a further 179 people had died within 28 days of testing positive for Covid-19 as of Wednesday, according to government figures.

Hospital admissions stand at 868 on average per day over the last seven days, up from 780 a week earlier, a rise of 11%.

Javid told the Downing Street press conference the government was concerned about the number of cases, but that vaccines were "clearly working" when it came to hospital admissions and deaths.

Sterling was quoted at USD1.3806 early Thursday, easing from USD1.3820 at the London equities close on Wednesday.

The euro traded at USD1.1644 early Thursday, flat on USD1.1647 late Wednesday. Against the yen, the dollar fell to JPY114.07 versus JPY114.24.

Gold was quoted at USD1,782.13 an ounce early Thursday, down from USD1,783.82 on Wednesday. Brent oil was trading at USD85.17 a barrel, higher than USD85.02 late Wednesday.

The economic events calendar on Thursday has the latest US jobless claims numbers at 1330 BST.

By Lucy Heming; lucyheming@alliancenews.com

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