London close: Stocks finish weaker amid China, gas price concerns
(Sharecast News) – London stocks remained in negative territory at the close on Monday as the September slide continued, dragged lower by weakness in the mining sector and heavy losses for Prudential.
The FTSE 100 ended the session down 0.86% at 6,903.91, and the FTSE 250 was 1.09% lower at 23,401.72.
Sterling was in the red as well, recently trading down 0.49% on the dollar at $1.3674, and losing 0.55% against the euro to change hands at €1.1655.
“With Chinese mainland markets closed today, along with Japan, the Evergrande-inspired sell-off in the Hang Seng has bled into Europe with big falls for the FTSE 100 and the DAX,” said CMC Markets chief market analyst Michael Hewson.
“The fear of an Evergrande bankruptcy appears to be leading to concern about China’s very own Lehman moment, and a big overspill across the region, with two bond payments due this week, and concerns over whether they get paid.
“Coming as it does with concerns about soaring energy prices, debates about whether inflation is transitory or persistent, how much the global economy is slowing, and whether central banks can look at tapering their bond-buying programmes, and there appears to have been a collective throwing in of the towel, as markets adopt a safety-first approach and move into cash and bonds.”
The energy sector was in focus for much of the session, after it emerged the UK government was considering emergency steps to help bailout the energy industry as wholesale gas prices spiralled.
According to the BBC, the government was looking at offering state-backed loans to help keep struggling firms afloat, and to encourage firms to take on customers from rivals that collapse.
The Financial Times said the government was also considering creating a Northern Rock-style ‘bad bank’ to absorb potentially unprofitable customers from failing firms.
Citing people familiar with the matter, the newspaper added that emergency calls had taken place over the weekend, with the largest energy suppliers asking the government for “substantial support” to handle what could be millions of customers from failing companies.
Most existing household tariffs are not enough to cover the cost of supplying new customers, the FT noted.
On the economic front, the UK manufacturing sector surged in the third quarter, as the economy continued to emerge from the pandemic.
According to the latest Make UK/BDO manufacturing outlook survey, the output balance was 42% in the third quarter, up from 36% in the previous three months and the highest in the survey’s 30-year history.
Total orders improved to 49% from 34%, boosted by significant demand both domestic and overseas.
Domestic orders increased to 48% from 27% in the second quarter, while export orders rose to 37% from 22%.
“The improvement levels of investment we have seen for a second quarter in a row are hugely positive and are indicative of an industry that is confident of a future worth investing in,” said Richard Austin, head of manufacturing at BDO.
In equity markets, Prudential slumped 7.96% after the life insurer announced plans to raise £2bn through a public offer and international share placing on the Hong Kong Stock Exchange.
The 173-year-old company said it intended to use most of the proceeds to pay down debt and give it “financial flexibility in the light of the breadth of opportunities to invest for growth in Asia and Africa”.
Anglo American was knocked 4.92% lower by a downgrade to ‘equal weight’ from ‘overweight’ at Barclays, with miners more generally under pressure amid worries about China.
Moneysupermarket was under the cosh by 9.06% after a rating downgrade at Peel Hunt, while Wagamama owner Restaurant Group slid 4% despite an upbeat note by Shore Capital, which reiterated its ‘buy’ stance on the shares.
On the upside, AstraZeneca leapt 3.4% after the pharmaceuticals company said a new breast cancer drug reduces the risk of disease progression or death.
British Airways and Iberia owner IAG ascended 10.94% as it emerged that vaccinated passengers would be able to travel to the United States from the EU and UK from November onwards.
As things stand, only US citizens, their families, green card holders and those with national interest exemptions can enter the US.
However, according to the FT, the White House is set to announce a new travel policy, marking the end of the 18-month blanket ban on travel imposed by former US President Donald Trump at the start of the pandemic.
Energy group SSE nudged up 0.43% after saying it had made no decision on whether to split off its renewables business after reports that activist hedge fund Elliott Management was pressuring for a breakup of the firm.
SSE said it would provide an update on plans to “further accelerate growth” with its interim results in November.
Catering group Compass was up 1.26% ahead of its pre-close trading update on Tuesday, while J Sainsbury rose 1.59% on reports the supermarket chain was working with a boutique investment bank to help defend itself from a potential takeover.
British Gas owner Centrica managed gains of 4.58% amid surging gas prices and following news it will take on customers from failed rival People’s Energy.
FTSE 100 – Risers
International Consolidated Airlines Group SA (CDI) (IAG) 166.18p 11.16%
AstraZeneca ((AZN)) 8,550.00p 6.04%
Rolls-Royce Holdings (RR.) 115.70p 4.23%
Polymetal International (POLY) 1,349.00p 2.31%
Unilever (ULVR) 3,988.00p 1.79%
GlaxoSmithKline (GSK) 1,407.00p 1.35%
Sainsbury (J) (SBRY) 286.00p 1.27%
Reckitt Benckiser Group (RKT) 5,925.00p 1.07%
Compass Group (CPG) 1,483.00p 1.06%
Smiths Group (SMIN) 1,381.50p 0.73%
FTSE 100 – Fallers
Prudential (PRU) 1,331.50p -7.89%
Standard Chartered (STAN) 412.70p -6.63%
Schroders (SDR) 3,583.00p -6.62%
Smith (DS) (SMDS) 430.50p -5.16%
Intermediate Capital Group (ICP) 2,072.00p -4.78%
Anglo American ((AAL)) 2,470.50p -4.65%
Ashtead Group (AHT) 5,710.00p -4.64%
Lloyds Banking Group (LLOY) 43.15p -4.22%
Barclays ((BA)RC) 175.26p -4.08%
HSBC Holdings (HS(BA)) 361.70p -3.82%
FTSE 250 – Risers
SSP Group (SSPG) 282.10p 5.89%
Centrica (CNA) 53.42p 4.58%
Petropavlovsk (POG) 21.60p 3.85%
easyJet (EZJ) 654.20p 3.78%
Drax Group (DRX) 492.00p 3.45%
Centamin (DI) (CEY) 92.60p 3.05%
TUI AG Reg Shs (DI) (TUI) 309.50p 2.25%
Frasers Group (FRAS) 670.00p 2.06%
Trainline (TRN) 371.20p 1.92%
National Express Group (NEX) 223.00p 1.92%
FTSE 250 – Fallers
Moneysupermarket.com Group (MONY) 218.80p -9.06%
Reach (RCH) 356.00p -8.37%
Liontrust Asset Management (LIO) 2,300.00p -5.54%
Volution Group (FAN) 533.00p -4.82%
Ashmore Group (ASHM) 347.80p -4.71%
Aston Martin Lagonda Global Holdings (AML) 1,811.00p -4.68%
Direct Line Insurance Group (DLG) 289.80p -4.67%
Jupiter Fund Management (JUP) 242.60p -4.19%
Coats Group (COA) 73.20p -4.06%
CLS Holdings (CLI) 226.00p -4.03%