By This Is Money Reporters
17.30 (CLOSE): Blue-chip shares failed to hold onto early gains in the week’s first session as jitters over Ukraine, unexpectedly weak Chinese trade figures, and worries over the UK housing market got the better of investors.
Exports from China fell by 18 per cent in February, dashing hopes that trade will help boost its performance at a time when the country’s leadership is pursuing reforms.
The weekend update meant Japan’s Nikkei was down by more than 1 per cent and though the FTSE 100 initially resisted being pulled down it also closed in the red, down 23.2 points to 6689.4.
Mixed data: A cautious performance on Wall Street following a confusing US jobs report also weighed on the Footsie
It added to a 75-point drop on Friday in the wake of better-than-expected jobs data from America, fuelling expectations that the US Federal Reserve would hasten the end of its quantitative easing policy pumping billions into the economy every month.
But it was the Chinese data that was weighing on investors’ minds at the start of this week, leaving mining stocks on the back foot. Fresnillo fell 31.5p to 896p while Glencore Xstrata dropped 7.8p to 317p and Antofagasta was off 18.5p at 858.5p.
European equities saw a mixed picture. In Germany- exposed to the volatility in Ukraine due to the sourcing of its natural gas imports – the Dax dropped by nearly 1 per cent. But France’s Cac 40 held firm with a small rise.
On Wall Street, the Dow Jones Industrial Average was in negative territory.
In London, house building stocks were under pressure after Bank of England deputy governor Charlie Bean said policy makers were keeping a ‘beady eye’ on the surging property market.
He warned that a lack of supply combined with excessive growth in mortgage lending could create future financial stability risks.
The warning saw shares in Persimmon top the FTSE 100 fallers’ board, dipping by nearly 5 per cent, or 64p, to 1329p. On the FTSE 250, Barratt was off 18p at 430.3p and Bovis Homes fell 32p to 880.5p.
The anxiety also weighed on pound, off one cent against the greenback at 1.66 US dollars, and down a cent against the single currency at 1.20 euros.
Mobile phone giant Vodafone was another big faller as it continued to be linked to a possible deal worth 7 billion euros (5.8billion) to buy Spain’s Ono. Shares fell 8.6p to 230.1p
Banks were also under pressure, with Royal Bank of Scotland off 6.9p at 319.8p and Barclays down 6.4p at 242p.
Rolls-Royce delivered the biggest rise in the FTSE 100 Index as investors got their first chance to react to Friday’s news that the engine giant is to buy Daimler’s stake in a power controls joint venture formerly known as Tognum.
Germany’s Daimler has exercised its right to sell its 50 per cent shareholding, which is said to be worth about 1.9billion. The pair acquired the business through a joint venture set up in 2011. Rolls-Royce shares climbed nearly 2 per cent, or 17p, to 1043p.
The biggest FTSE 100 risers were Rolls-Royce, up 17p to 1043p, British American Tobacco up 50.5p to 3340.5p, Bunzl up 23p to 1597p and GlaxoSmithKline up 19p to 1672.5p.
The biggest fallers were Persimmon down 64p to 1329p, Vodafone down 8.6p to 230.1p, Petrofac down 48p to 1357p and Fresnillo down 31.5p to 896p.
15.15: The Footsie extended its falls in late afternoon trading as US stocks took an early triple-digit tumble, as concerns over weak China export data reignited fears about global growth.
With less than an hour and a half of trading to go, the FTSE 100 index was down 35.1 points to 6,677.5, close to its low for the session of 6,671.6, having reached a high at 6,757.0 in the morning.
Miners led the retreat in London as investors reacted to data over the weekend that showed Chinese exports unexpectedly fell 18.1 per cent in February, compared with a year earlier.
Falls again: The Footsie fell back further in late afternoon trade as US stock took an early tumble
Economists had been expecting an expansion of 5 per cent, and the number was also well off a rise of 10.6 per cent in January, putting pressure on economic growth plans for the world’s top consumer of metals.
Anita Paluch, dealer at Varengold Bank said: ‘It looks the big export machine is sputtering. The biggest copper consumer reported exceptionally bad export numbers that sent ripples across Asia.
‘Signs of faltering in the world’s second largest economy have been expected since policy makers decided to shift its model from investment and credit fuelled to one that relies more on domestic demand.
‘Yet, the decrease looks really bigger than it is in reality. courtesy of over- or fake – invoicing that has been employed by Chinese firms to get around restrictions put on capital.’
Among the week blue chip miners, Anglo American was the top FTSE 100 faller, shedding 135.5p to 1,429.5p, while Rio Tinto lost 181.0p to 3,129.5p.
On Wall Street, after notching up record gains again on Friday following a better than expected February jobs report the broad S&P 500 index shed 0.5 per cent, while the benchmark Dow Jones Industrial Average dropped 101.0 points in early deals today to 16,352.2.
Among individual stocks, however, shares of US banana firm Chiquita Brands jumped 16 per cent after the company announced an all-stock merger deal with Ireland’s Fyffes.
Fyffes’ London-listed shares leapt nearly 30 per cent higher, up 22.0p to 96.5p.
13.30: The Footsie drifted lower again at lunchtime as weakness in heavyweight miners on downbeat China export data countered some earlier enthusiasm from some a batch of corporate activity, notably by Rolls-Royce.
In a roller coaster session, the FTSE 100 index was down 5.4 points to 6,707.1, falling back after earlier reaching a session high at 6,757.0.
Analysts stressed that recent market swings should be seen in the context of an equities rally which has helped the UK benchmark bounce nearly 5 per cent off the lows it hit in early February.
Tasty Rolls: Engine maker Rolls-Royce is to buy German firm Daimler’s stake in a power controls joint venture, formerly known as Tognum
The disappointing update from the Chinese economy meant mining stocks dominated on the blue chip fallers board, with Antofagasta down 22.25p to 854.75p and Anglo American off 33.0p to 1,428.5p.
Mobile phone giant Vodafone was another big faller as it continued to be linked to a possible 5.8billion deal to buy Spain’s Ono.
Banks were also under pressure today, with Royal Bank of Scotland off 6.5p at 320.2p and Barclays down 3.5p at 244.85p.
But on the upside, Rolls-Royce delivered the biggest rise in the FTSE 100 as investors got their first chance to react to Friday’s news that the engine giant is to buy Daimler’s stake in a power controls joint venture, formerly known as Tognum.
Germany’s Daimler has exercised its right to sell its 50 per cent shareholding, which is said to be worth about 1.9billion. The pair acquired the business through a joint venture set up in 2011.
Saxo Bank trader Adam Seagrave said: ‘The market has taken the news well this morning from RR’s perspective.
‘They are well positioned to finance the deal from their net cash balance, and whilst the venture has already added new capability to RR’s reciprocating engines business, the feeling is they will be able to extract further synergies in a long-term growth market.’
In other corporate moves, Reckitt Benckiser has agreed to buy the global rights to the K-Y brand of intimate lubricants from Johnson & Johnson for an undisclosed price.
Reckitt, which already owns Durex condoms, said K-Y had 2013 sales of over $ 100million, with the majority coming from the United States, Canada and Brazil. Reckitt shares gained 27.0p at 4,853.0p.
Elsewhere on the blue chip risers board, shares in Aviva continued to surge in the wake of a well-received set of annual results last Thursday.
The stock has now risen by 14 per cent this year as investors back the strategy of chief executive Mark Wilson.
09.40: London shares managed to overcome an opening wobble to push higher in early morning trade despite heavy losses overnight for Asian markets following the release of unexpectedly weak Chinese trade figures.
The China trade numbers, released at the weekend, saw the Nikkei 225 index in Tokyo drop by more than 1 per cent today but the FTSE 100 index was 18.8 points higher at 6,731.4 recovering after falling by 75 points on Friday in the wake of US payroll data.
The better-than-expected US jobs report fueled concerns among investors that the US Federal Reserve will hasten the end of its equity supportive bond buying programme.
Miners drag: Falls by the heavyweight mining sector limited the Footsie’s gains today after disappointing export data from China
David White, financials trader at Spreadex said: ‘Fears over the ongoing unrest in the Ukraine (also) continue to have participants tethered to safe havens more so than usual.
‘Indeed, the market is notoriously bad at pricing in geopolitical risk and has a tendency to overcharge for volatility, presenting binary outcomes through sometimes chaotic price shocks. Those with a strong appetite for risk, and perhaps those a little reckless, will look to use event risk to pick up quality and position for relief.
Miners continued to dominate on the blue chip fallers board, tracking weaker copper prices after top metals consumer China said its exports fell by 18 per cent in February, dashing hopes that trade will help boost the economy at a time when the country’s leaders are pursuing reforms.
Antofagasta dropped 22.25p to 854.75p and Anglo American dipped 33.0p to 1,428.5p.
But among the blue chip risers, engine giant Rolls-Royce gained 3 per cent, or 32.5p to 1,058.5p. The engineering group said it would fund the purchase of German carmaker Daimler’s 50 per cent stake of a jointly owned power systems company using cash and some borrowing.
British Gas owner Centrica was 5p higher at 329.6p boosted by a broker upgrade, with Credit Suisse hiking its rating for the energy distributer to neutral from underperform.
‘Centrica has been the worst performing utility across the past six months, falling circa 18 per cent vs. the pan-euro sector up 22 per cent,’ Credit Suisse analysts said in a note.
‘Our FY Dec 2014 EPS estimates have fallen circa 16 per cent since the November profit warning. We think the risks are now reflected in the share price, and forecast an end to negative momentum.’
Other utility stocks were also higher, with Severn Trent up 30.0p at 1,885p and United Utilities ahead 10.5p at 793.5p.
Among the meagre corporate news on Monday, small cap Goals Soccer Centres rose 0.5p to 217p after it announced plans for a City fundraising as it looks to accelerate the roll-out of new five-a-side football sites in the UK and US. It also announced an improvement in full-year profits to 9.6million.
08.30: The Footsie eased back in early trade today, led lower by weakness in heavyweight miners following disappointing export data from tops metals consumer China, and with lingering concerns about the situation in Ukraine.
The FTSE 100 index opened 10.4 points lower at 6,702.2 with miners occupying four of the top 5 slots on the fallers list, led by Anglo American down 136.5p to 1,428.5p.
Weak mining stocks also pressured the UK blue chip index late on Friday, sending it down 75.82 points to close at 6,712.67 having reversed earlier gains on the back of stronger-than-expected US jobs data.
Sentiment was impacted as the poor exports data from China triggered a sharp decline in base metals prices which also followed the country’s first domestic bond default last week.
Jonathan Sudaria, dealer at Capital Spreads said: ‘The negative cues seem to be stacking up, China, Ukraine and a good Non Farms pointing to no slowdown in tapering are not a conducive environment for bulls.
‘However, equities have shown a remarkable ability to shrug off negativity and the major indices are still chopping around recent highs. Supporting markets is the mentality that equities are the only game in town, so for now the “buy the dips” strategy looks to be holding.‘
Overall trading was subdued with few corporate earnings released and little in the way of economic data scheduled, aside from a Lloyds Bank employment confidence survey due at 9.30 am.
But the falls in London were constrained by a positive survey on the British economy, released overnight, which said the longest downturn for at least a century will end this summer as the economy finally recovers the ground lost in the Great Recession.
Gross domestic product is still 1.4 per cent below its pre-recession peak having dropped by a punishing 7.2 per cent in 2008 and early 2009.
But in a boost for the Chancellor ahead of next week’s Budget, the British Chambers of Commerce believes it will make up the rest of the shortfall in the second quarter of this year – more than six years after crisis struck.
Stocks to Watch include:
VODAFONE – The British telecoms group has reached a preliminary deal to buy Spanish cable group Ono after raising its initial bid for the company , two people with knowledge of the discussions said.
UNILEVER – Unilever has bought a majority stake in water purification company Qinyuan, its biggest Chinese acquisition in ten years, the consumer goods company said without disclosing what it paid.
GLAXOSMITHKLINE – The drug maker said it had paid $ 1.05billion to increase its stake in its Indian pharmaceuticals unit to 75 per cent, as it banks on rising demand for medicines in emerging markets.
WILLIAM MORRISON – Britain’s fourth-biggest grocer is expected to report its lowest annual profit in five years on Thursday and could also detail plans to sell about 10 per cent of its freehold property and return surplus cash to shareholders.
TESCO – Tesco is preparing the ground for the departure of its finance director amid tensions with its chief executive as the retail giant attempts to reverse the declining fortunes of its core UK operations, Sky News reported.
ROLLS-ROYCE – The British engineer said it would fund the purchase of German carmaker Daimler’s 50 per cent stake of a jointly owned power systems company using cash and some borrowing.
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