LONDON MARKET OPEN: Wall Street woes hit FTSE; Playtech plunges

(Alliance News) - Stock prices in London suffered deep declines in early dealings on Friday, with a poor session on Wall Street overnight and an uncertain handover from Asian markets knocking sentiment.

"Risk-off sentiment and a sell-off on Wall Street are sending shockwaves across global markets with main European bourses shedding more than 1% each on the final trading session of the week. The FTSE 100 is flirting with critical support at 7,500 with a break below potentially paving the way for further declines," Interactive Investor analyst Victoria Scholar commented.

The FTSE 100 index was down 73.20 points, or 1.0%, at 7,511.81 early Friday. The mid-cap FTSE 250 index was down 292.97 points, or 1.3%, at 22,422.01. The AIM All-Share index was down 11.56 points, 1.0%, at 1,144.89.

The Cboe UK 100 index was down 0.9% at 746.21. The Cboe 250 was up 1.2% at 20,118.88, and the Cboe Small Companies down 0.6% at 15,721.69.

In mainland Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt were each down 1.5%

In Asia on Friday, the Japanese Nikkei 225 index ended down 0.9%. In China, the Shanghai Composite ended down 0.9%, though the Hang Seng index in Hong Kong rose 0.1%. The S&P/ASX 200 in Sydney ended down 2.3%.

Stocks in New York opened strongly on Thursday but ran out of steam and suffered heavy declines.

In the US on Thursday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.9%, the S&P 500 down 1.1% and the tech-heavy Nasdaq Composite down 1.3%.

Netflix shares tanked 20% after-hours as the video streaming platform hailed content like Squid Game for aiding its popularity, though rising competition and slowing subscriber growth took the gloss off a strong end to 2021.

Fourth quarter net income was USD607 million, or USD1.33 per diluted share, rising from USD542 million, or USD1.19 diluted earnings per share, the year before.

Looking ahead, Netflix said for the first quarter of 2022, it expects to add 2.5 million subscribers, down from the 3.98 million it added at the same time in 2021. Netflix pointed to increased competition from other companies, such as Walt Disney and Apple, as a reason for the slowdown as it battles for market share.

"More gloom is descending as investors digest some major earnings disappointments, adding to concerns of an accelerating monetary tightening schedule," Interactive Investor's Richard Hunter commented.

"Despite a reliance on cyclical sectors such as major oil stocks and the banks, and with a recent tailwind arising from some M&A froth in the pharmaceutical space, the FTSE 100 is not immune from the deterioration in sentiment and has opened on a weaker footing."

Scottish Mortgage Investment Trust, which has stakes in large US tech firms, was London's worst blue-chip performer in early dealings. The stock was down 4.0%.

Miners also struggled. BHP shed 3.5% and Rio Tinto lost 3.0%.

Just a handful of large caps stocks were trading higher, among them was Avast, up 0.7%. It was the FTSE's best performer.

In the FTSE 250, Playtech plunged 14%. JKO Play confirmed it does not intend to make an offer to acquire the gambling software company.

Playtech had previously agreed to be acquired by Aristocrat Leisure Ltd in mid-October, but delayed the vote from January 12 to February 2 to give JKO more time to prepare an offer.

The board of the gambling company continues to recommend that shareholders vote to accept the offer from Sydney-listed Aristocrat, worth GBP2.1 billion at 680 pence per share. It is to date the only "firm" offer Playtech has received, noted previously by Aristocrat.

The euro traded at USD1.1337 early Friday, lower than USD1.1359 late Thursday. Against the yen, the dollar was quoted at JPY113.98 largely unmoved from JPY114.00.

In early UK data, retail sales were down 3.7% month-on-month in December as the Omicron variant hit footfall. However, sales were still 2.6% higher than pre-virus levels.

"Omicron's ominous arrival in December rudely interrupted the retail recovery party for high street stores. As more shoppers stayed away, hunkering down for more muted celebrations at home, tills were quieter and volumes lower, offering very little Christmas cheer for retailers. Department stores, fashion chains, toy retailers and other non-food stores saw sales plummet, by 7.1% overall," Hargreaves Lansdown analyst Susannah Streeter commented.

Sterling was quoted at USD1.3570 early Friday, down from USD1.3657 at the London equities close on Thursday.

Gold was quoted at USD1,831.65 an ounce early Friday, lower than USD1,845.00 on Thursday. Brent oil was trading at USD86.88 a barrel, down markedly from USD88.67 late Thursday.

Still to come on Friday is a eurozone consumer confidence reading at 1500 GMT.

By Eric Cunha; ericcunha@alliancenews.com

Copyright 2022 Alliance News Limited. All Rights Reserved.