FTSE trounced by Asian woes
BIG trouble in China plunged London’s Footsie further into the red as fears of faltering economic growth in the Far East knocked commodity prices, which in turn dragged down London’s mining stocks.
Concerns about China’s growth emerged again after its stock market continued to slump which helped push copper and iron ore prices to five month lows. China is the world’s largest consumer of metals and mining giants including Anglo American and trading giant Glencore were caught in the sell-off. Mining and oil stocks make up around 22pc on the benchmark index so when they are out of favour the whole index is dragged down.
Localised issues also weighed on mining shares – Zambia, Africa’s number two copper producer, plans to cut power supplies to mines by up to 30pc after a drought hit hydroelectric production.
The wooden spoon went to Glencore, down 6.8pc or 17p to 230.6p and Anglo American kept it company, down 50.9p to 832.3p.
Rio Tinto weakened 85.5p to 2492.5p, Mexican precious metal miner Fresnillo fell 31.5p to 655.5p and Chile’s Antofagasta lost 26.5p to 642.5p.
Investors continued to focus on Greece and its future ahead of more emergency meetings with eurozone leaders.
The oil price also remained weak in response to the nervous sentiment in the market – falling another 1.6pc to $55 – after the biggest single-day decline in more than three months on Monday.
The general market turmoil combined with fears about further oversupply of oil weakened it further. Iran’s attempts to agree a nuclear deal allowing it to sell its oil and the restart of an oil terminal in Libya weighed on the price of oil.
Oil giants BP eased 10.95p to 418.55p and Royal Dutch Shell declined 35p to 1753p. The FTSE 100 is now down 8pc since the end of May and lost 1.5pc yesterday – a 103.47 point decline to 6432.21. The FTSE 250 fell 230.35 points to 17,212.93.
Engineer Rolls-Royce continued its descent after its third profit warning on Monday. Its shares slumped 6.3pc at the start of the week and fell another 5.3pc or 43p to 759.5p yesterday. Analysts at Natixis, Investec, Bernstein and RBC all reduced their price targets on the stock yesterday. Peer BAE Systems fell 2pc to close 8.8p lower at 445.5p.
French oil services firm Technip announced a huge restructuring programme to save £500m in costs with 6,000 jobs at risk. It said cost reductions will be made in markets where ‘ new project awards are under pressure (for example the North Sea)’. It employs around 1,000 people in the North Sea and London listed oil services firms fell in sympathy. Weir Group dipped 84p to 1582p, Petrofac lost 60p to 831p, Amec Foster Wheeler weakened 32p to 778p and Wood Group was 43.5p adrift at 589.5p.
Amid a sea of red a few shares still managed to post gains yesterday.
Shopping centre to City office owner Land Securities got a boost from analysts at UBS who upgraded it to buy and raised the price target to 1425p. Shares in the property company were top of the blue chip table, up 1.6pc or 20p to 1250p.
Investec’s banking guru Ian Gordon decided it was time to stop being so downbeat on Lloyds Banking Group and upgraded it to hold with a target price of 86p.
He thinks the dividend and the ‘continued rapid progress with the sell down of the UK Government stake’ is a reason to be slightly more cheery.
Royal Bank of Scotland got a better write up from Gordon. The serial doomsayer issued a buy recommendation with a 395p price target and said hope of a share buyback and the government’s planned sell down of its stake over the next few years is a reason to pile in. The government owns a 16pc stake in Lloyds and 78pc in RBS. But investors were yet to follow Gordon’s advice and Lloyds lost 0.15p to 84p and RBS eased 9.7p to 336.8p.
Reports emerged yesterday that online betting firm GVC and Canada’s Amaya Gaming’s bid for Bwin.Party Digital Entertainment could come in around 110p a share valuing it at £900m. The bidders are up against 888. Bwin shares rose 0.4p to 100.6p.
Mid-tier support services, outsourcing and construction firm Interserve edged down 18.5p to 618p despite reporting an in-line with expectations trading update.
Small cap recruitment specialist Robert Walters upgraded its profit forecast and posted an 11pc rise in second-quarter net fee income. The firm has benefited from expansion in Asia and banks bulking up on compliance officers and its shares climbed 26.75p to 439.5p in response.
Belfast-based IT firm Kainos is set to float at 139p on the main market of the London Stock Exchange on Friday to raise £52m valuing it at £161m.
÷ SHARES in digital voucher specialist Eagle Eye Solutions scanned in a 9pc or 18p rise to 216.5p after announcing a deal with supermarket group Sainsbury’s. It also said its revenue has risen 165pc to £4.9m in the year to July. The AIM-listed digital specialist now has more than 30pc of the UK grocery market and said it has £4.3m in the bank. Its other customers include Asda and bookmaker Ladbrokes.