By This Is Money Reporters
17.30 (CLOSE): Jitters over technology stocks deepened today as investors ended a challenging week with a fresh flight from risky assets.
The uncertain mood for world markets was compounded when weaker-than-expected figures from JP Morgan Chase dragged banking stocks lower.
The latest sell-off, which left the FTSE 100 Index 1.2 per cent or 80.3 points lower at 6561.7, was triggered by the tech-laden Nasdaq index suffering its worst session since 2011 on Thursday night.
Sea of red: Tech sell offs sent the Footsie plummeting.
Japan’s Nikkei index responded by falling to its lowest level in six months, although US stocks showed signs of stabilising on Friday. The pound was slightly lower in the session, at 1.67 against the US dollar and 1.20 on the euro.
Investors have been dumping technology, internet and biotech stocks in recent days due to fears that their valuations may be overdone. The Nasdaq’s slump of 3 per cent yesterday meant it is now 7 per cent lower than its record high reached at the start of March.
Sentiment was dealt a further blow later in the session when JP Morgan Chase reported a 20 per cent fall in first-quarter earnings to 4.8billion US dollars (2.9billion), driven by its mortgage and investment banking businesses.
Alpari market analyst Craig Erlam said: ‘There’s a lot of pessimism in the markets right now driven largely by the disappointing data of recent months, the potential for another flare up in the Ukraine and the US Federal Reserve’s decision to continue scaling back its asset purchases.’
Chip designer Arm Holdings, whose technology is found in a range of Apple devices, was one of the biggest fallers in London as its shares slumped 5 per cent or 45.5p to 958.5p.
Outside the top flight, tech fallers included West Yorkshire-based set-top box manufacturer Pace, which fell 7 per cent or 30.9p to 404.7p.
Elsewhere, online grocery delivery firm Ocado fell 14.7p to 377p and Hertfordshire-based multimedia specialist Imagination Technologies slipped 12.4p to 199.7p.
Morrisons was one of just a handful of FTSE 100 stocks on the front foot as its shares lifted 3.9p to 201.2p. Rival Sainsbury’s was flat at 309.6p.
Other fallers in the top flight included Sports Direct International after a week in which founder Mike Ashley sold more than 200million worth of shares in the company.
Mr Ashley achieved a price of 850p but the stock now stands at 771p after the move spooked investors and led to a further fall of 5 per cent or 39p today.
In a quiet session for corporate news, women’s fashion chain Bonmarche impressed investors by announcing that results for the year to March are likely to be slightly ahead of its expectations.
Like-for-like sales increased by 13.5 per cent in the most recent quarter and brought the figure for the year as a whole to 10.4%. Shares were 3.5p higher at 290.5p.
The biggest FTSE 100 risers were Morrisons up 3.9p at 201.2p, Fresnillo ahead 9p at 908.5p, Resolution up 1.6p at 278.9p and Unilever ahead 13p at 2635p.
The biggest fallers were International Airlines Group down 21.8p at 392.1p, Hargreaves Lansdown off 67p at 1257p, Sports Direct International down 39p at 771p and Ashtead off 43.5p at 880p.
15.00: The Footsie fell further back in mid-afternoon trading as US stocks extended yesterday’s sharp falls in opening trade today after JPMorgan Chase & Co, the first of the major Wall Street banks to report results saw its earnings come in below expectations.
With an hour and a half of trading to go, the FTSE 100 index was down 1.5 per cent, or 100.7 points at 6,541.2 just fractionally above its low point for the session.
In opening deals in New York, the Dow Jones Industrial Average was down 60.6 points to 16,109.6, while the tech-laden Nasdaq Composite index lost another 3.6 points at 4,050.5 albeit stabilising after falling to its lowest level since 2011 yesterday.
Over the week, the Dow has fallen by 2 per cent and the Nasdaq is off 2.6 per cent, on track for a third straight week of declines.
JPMorgan was a big Wall Street faller, with its shares shedding nearly 4 per cent after it reported a 20 per cent drop in first quarter earnings to $ 4.8billion (2.9billlion) driven by a weaker performance from its mortgage business and a decline in revenues from investment banking due to weaker fixed-income trading.
Britain’s banks beat a retreat in tandem with their US peer, with Lloyds Banking Group the worst off down 2.0p to 72.6p.
Chip designer ARM Holdings was also a big blue chip casualty, down 50.0p to 954.0p as US technology stocks continued to be sold-off by investors amid concerns overvaluations after strong gains in the past year
And as tech stocks took another battering, online grocery delivery firm Ocado also suffered, losing 13.3p to 378.4p.
But supermarket firms themselves were among the few blue chip gainers today, rallying after recent falls, with William Morrison up 3.7p to 201.0p and rival Sainsbury’s was 0.8p higher at 310.4p.
Grocery sales at modern convenience stores are on the rise, bucking the trend of slowing grocery sales at the UK’s leading supermarkets, according to global information company Nielsen. In the four weeks to March 29, consumers spent 4.3 per cent less at the UK’s leading supermarkets but value sales at smaller convenience stores were up 0.6 per cent year-on-year, despite the late Easter.
But Tesco missed out on the recovery, shedding 1.2p at 282.8p as investors stayed nervous ahead of a trading update from Britain’s biggest retailer due next Wednesday.
13.00: The Footsie nursed some hefty losses at lunchtime as a sell-off in technology stocks continued after hefty falls overnight on Wall Street blighted global markets, with further weakness expected across the Atlantic later today after some disappointing earnings news from US banks.
By midsession, the FTSE 100 index was down nearly 1.5 per cent, or 89.6 points at 6,552.4, just holding off the morning low of 6,551.24.
US stock index futures pointed to further falls in New York after a sharp turnaround yesterday which saw the tech-laden Nasdaq composite index post its biggest drop for three years.
Builders battered: Housebuilders were also big fallers in London today, mirroring losses by their US peers on valuation grounds
Sentiment was dealt another blow when first quarter results from US banking giant JP Morgan Chase came in below Wall Street expectations.
The global sell-off marked a resumption of the slump seen at the start of the week. Investors will now be looking to next week’s first quarter economic growth data from China, which should provide hints about whether there will be any further stimulus announcements from authorities in Beijing.
Craig Erlam, market analyst at Alpari (UK) said: ‘There’s a lot of pessimism in the markets right now driven largely by the disappointing data of recent months, the potential for another flare up in the Ukraine and the US Federal Reserve’s decision to continue scaling back its asset purchases.’
Chip designer ARM Holdings, whose technology is found in a range of Apple devices, was one of the biggest fallers in London as its shares slumped 5 per cent or 49.0p to 955.0p, while blue chip software Sage Group dropped 9.5p to 389.5p.
Outside the top flight, listed dotcom businesses also suffered as investors fretted over valuations, with recent new issues particularly under pressure – online takeaway food firm Just Eat shed 13.25p to 236.75p, online electrical appliances retailer AO World lost 7.0p at 273.0p and online fashion firm Boohoo dropped 3.3p to 50.5p.
Housebuilders were back under pressure today, also mirroring their US counterparts with the sectors having been strong performers as the housing market helped fuel economic recovery.
Blue chip Persimmon was a big faller, down 23.0p to 1,319.0p with the firm due to release its latest results next week.
But Deutsche Bank strategist Jim Reid put the big falls in the US tech, biotech and housebuilding sectors into context in a note today.
He said: ‘If we define the beginning of the bull market as having started on 9 March 2009 when stocks hit their financial crisis-lows, the Nasdaq technology and biotech indices have gained 254 per cent and 281 per cent respectively. The S&P 500 homebuilders index has gained 256 per cent over the same period.
‘For comparison, the S&P 500 has gained “only” 177 per cent. Tech, biotech and homebuilders are now down 5 per cent, 19 per cent and 12 per cent from their year to date peaks. This compares with 3.1 per cent retracement in the S&P 500 from the record highs posted in early April this year. So it does seems that sectors that have benefited the most from easy policy are those that are selling off the most right now.’
Other fallers in London’s top flight included discount airline easyJet, which dropped 67.0p to 1,694.0p, while British Airways owner International Airlines Group fell 18.0p to 395.9p. IAG shares were one of last year’s star gainers doubling in value.
And financial services firm Hargreaves Lansdown slumped 6 per cent, down 79.6p to 1,244.4p knocked by a price target cut from Morgan Stanley.
The investment bank, which slashed its target price to 1,495p from 1,670p – albeit still above current levels – said in a note that pressure on pricing and weaker net interest income will weigh on Hargreaves Lansdown’s earnings over the coming year.
In a quiet session for corporate news, recently listed women’s fashion chain Bonmarche impressed investors by announcing that results for the year to March were likely to be slightly ahead of its expectations.
Like-for-like sales increased by 13.5 per cent in the most recent quarter and brought the figure for the year as a whole to 10.4 per cent. Bonmarche shares were 3.5p higher at 290.5p.
And a new issue managed to make headway in spite of the market conditions today, with shares in plastic piping firm Polypipe pushing up to 250.5p from an offer price of 245.0p.
09.30:Technology stocks were at the forefront of another market sell-off today after Wall Street’s Nasdaq index suffered its worst session since 2011 and Japan’s Nikkei index responded to the slump by falling to its lowest level in six months.
In early morning trade, the FTSE 100 index was 65.9 points lower at 6,576.0, resuming the sharp declines seen earlier in the week after a modest rally yesterday.
Investors have been dumping technology, internet and biotech stocks in recent days as a result of fears that their valuations may be overdone.
Chips down: ARM Holdings was a big Footsie faller as the rout in technology stocks resumed
Ishaq Siddiqi, market strategist at ETX Capital said: ‘With earnings season in the US underway, tech company earnings will be under intense scrutiny with investors likely to dump their tech stocks on even the faintest sign of bad news out of a company.
‘US futures are currently trading higher however, rebounding after previous session weakness which indicates a firmer open on Wall Street later with earnings from JPMorgan and Wells Fargo set to be in key focus – expect a bit of a rebound for tech stocks but volatility is likely to stick around in the sector.’
Chip designer ARM Holdings, whose technology is found in a range of Apple products, was the biggest faller in London as it slumped 3 per cent or 35p to 969p.
Other big blue chip fallers included accountancy software business Sage, which was off 10.4p at 388.6p and pharmaceuticals giant AstraZeneca, which dropped 73p to 3,764p.
Outside the top flight, shares in Hertfordshire-based multimedia firm Imagination Technologies fell 5 per cent or 10.8p to 201.3p, while set-top box maker Pace shed 20.7p to 414.9p.
Supermarket firm William Morrison was one of just a handful of blue chips stocks on the front foot as its shares rose 2.65p to 200p. Rival Sainsbury was 2.5p higher at 312.2p.
08.30:The Footsie dropped back in early trade on Friday as a sell-off in global equity markets resumed overnight following an all too brief respite, with US stocks plunging again led by technology and biotechnology issues as valuation worries returned.
In opening trade, the FTSE 100 index was down 50.0 points at 6,591.9 having closed 6.36 points higher yesterday in a modest rally after big falls earlier in the week.
The fresh retreat followed a brutal session overnight in New York, where the Nasdaq index suffered its worst single-day drop since late 2011.
Down, down: US stocks dropped back sharply overnight as worries over technology valuations returned dragging global markets lower again
The tech-heavy index plunged 3.1 per cent, while the Nasdaq biotechnology index dropped 5.6 per cent as investors once again dumped recent high flying sectors on valuation concerns.
The selling pressure impacted the main market pulling the Dow Jones Industrial Average down 1.6 per cent and the broader S&P 500 index 2 per cent lower.
Japanese shares slumped to six-month lows on Friday, with the Nikkei 225 index dropping 2.4 per cent as the escalating sell-off on Wall Street spread to Asian markets, with concerns over demand in China also having an impact.
China’s consumer inflation rate increased in March as fresh food prices jumped, but persistent deflation in the industrial sector was another signal of weak demand and slowing growth in the world’s second-largest economy.
The consumer price index (CPI) rose 2.4 percent in March from a year earlier, the National Bureau of Statistics said on Friday, up from a 2.0 percent rise in February but just below forecasts.
Investors were in part taking profits as the latest US quarterly corporate reporting season started amid expectations that results would not be stellar enough to support the high valuations of some stocks.
Banking firms JPMorgan and Wells Fargo both report later today. Jonathan Sudaria, dealer at Capital Spreads said: ‘There was no news catalyst for such a sell off and the market action was orderly, steady and sustained.
‘Not the kind of flash in the pan knee jerk reaction you see to a headline or economic data release, but more symptomatic of the big money deciding that this point in the market cycle is a good place to liquidate.
‘The question on traders’ minds at the moment is how much more downside have we to come?’
There will be little data to attempt to calm the market nerves today, with only Britain’s latest construction output numbers due for release at 9.30 am, and US producer prices and the first reading of the University of Michigan/Reuters consumer sentiment report due this afternoon.
Stocks to watch include:
CO-OP BANK – The bond holder-owned lender apologised to customers after confirming a loss of 1.3billion for 2013 and said it would not make a profit in 2014 or 2015.
ROYAL MAIL – A British parliamentary committee will question independent financial adviser Lazard this month regarding its role in the sale of Royal Mail, a committee spokeswoman said on Thursday.
JUPITER – The fund management group said assets under management rose to 32.2billion the first quarter, after it took in 465million in new money.
ROYAL DUTCH SHELL – The oil giant has postponed an innovative project to provide subsea gas compression on Norway’s Ormen Lange field, one of the biggest gas fields in Europe.
BP – The oil firm can help enhance relations between Russia and the West and is talking to politicians across the world, its executives said on Thursday as they sought to calm shareholders’ concerns over the oil major’s large exposure to Russia.
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