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London open: FTSE 100 hits six-week low on China fears
The FTSE 100 was in the red again on Friday, hitting a fresh six-week low as fears about the financial crisis in China worsened overnight.
London’s benchmark index was trading 0.6% lower at 7,266 shortly after the opening bell. The index has not closed below this level since 7 July, following a 3.4% decline on the week. It has now declined on eight of the past ten trading sessions.
Macro fears dampen sentiment
China Evergrande, the heavily indebted property group and once the country’s second developer, filed for chapter 15 bankruptcy in New York – allowing it to protest its assets in the US as it works to restructure its debt and renegotiate with its creditors.
The Guangzhou-based group, which is thought to hold over $300bn in debt, defaulted on its repayments back in 2021, prompting a string of defaults at other building companies.
The latest news – just days after Country Garden told investors it could register a loss of $7.6bn in the first half of 2023 as it struggles to make its own bond repayments – will raise concerns about contagion to the wider financial services sector.
Back on home shores, data on Friday revealed that UK retail sales fell 1.2% in the month of July compared with June, official data showed on Friday, further than estimates as wet weather and the cost-of-living crisis hit volumes. Economists had forecast a fall of 0.5%, after a 0.6% increase in June.
Stocks on Wall Street fell on Thursday as 10-year Treasury yields hit a 15-year high on the back of expectations of higher-for-longer interest rates. US markets are expected to be volatile on Friday as stock option contracts with a notional value of $2.2trn will expire, according to Dow Jones.
China fears hit miners, financials
“The FTSE 100 is under pressure for the sixth straight session with China-sensitive stocks like Standard Chartered, Burberry and miners like Antofagasta and Anglo American in the red, pricing in concerns about the Chinese economy,” said Victoria Scholar, head of investment at Interactive Investor.
Just eight stocks were registering gains early on, with defensive names such as insurer Admiral and utility groups BT and Vodafone inching higher.
Great Portland Estates was slightly up after announcing the acquisition of King Sloane Properties, which owns freehold properties in Soho Square, Oxford Street, and Falconberg Mews, from Belgravia & Chelsea Property Services for £70m.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | +1.64% | +12.60 | 780.00 |
| 2 |  |
Phoenix Group Holdings Plc | +0.83% | +4.20 | 512.40 |
| 3 |  |
Bae Systems Plc | +0.71% | +6.80 | 962.60 |
| 4 |  |
British American Tobacco Plc | +0.66% | +16.50 | 2,503.50 |
| 5 |  |
Sse Plc | +0.32% | +5.00 | 1,582.50 |
| 6 |  |
Vodafone Group Plc | +0.10% | +0.07 | 70.90 |
| 7 |  |
National Grid Plc | +0.06% | +0.60 | 947.00 |
| 8 |  |
Direct Line Insurance Group Plc | +0.03% | +0.05 | 162.70 |
| 9 |  |
Morrison (wm) Supermarkets Plc | +0.00% | +0.00 | 286.40 |
| 10 |  |
Evraz Plc | +0.00% | +0.00 | 82.68 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Antofagasta Plc | -3.27% | -46.50 | 1,376.00 |
| 2 |  |
Fresnillo Plc | -2.61% | -13.40 | 499.40 |
| 3 |  |
Prudential Plc | -2.45% | -24.00 | 954.20 |
| 4 |  |
Anglo American Plc | -2.41% | -48.50 | 1,960.00 |
| 5 |  |
Ferguson Plc | -2.38% | -295.00 | 12,080.00 |
| 6 |  |
Burberry Group Plc | -2.29% | -50.00 | 2,135.00 |
| 7 |  |
Carnival Plc | -2.26% | -25.50 | 1,104.00 |
| 8 |  |
Easyjet Plc | -2.11% | -9.10 | 422.60 |
| 9 |  |
Hargreaves Lansdown Plc | -2.06% | -16.00 | 759.80 |
| 10 |  |
Tui Ag | -1.87% | -10.00 | 523.50 |
US close: Stocks turn red on interest rate concerns
Wall Street’s major indices closed in the red on Thursday, after 10-year Treasury yields surged to their highest mark since the global financial crisis of 2008.
The downward momentum came amid expectations that the Federal Reserve could sustain elevated interest rates for an extended period.
At the close, the Dow Jones Industrial Average was down 0.77% at 34,474.83, while the S&P 500 recorded a 0.77% loss to settle at 4,370.36 points.
The tech-focussed Nasdaq Composite saw an even steeper descent, finishing the day 1.17% lower at 13,316.93.
In the currency space, the dollar was last down 0.05% on sterling at 78.41p, while it depreciated 0.13% against the euro to change hands at 91.86 euro cents.
Against the yen, the greenback decreased 0.21%, and was last sitting at JPY 145.45.
“Aside from a small gain for the Dow, global stock markets remain on the back foot,” said IG chief market analyst Chris Beauchamp earlier.
“Bond yields continue to move higher, unsettling investors and diminishing the appeal of equities after their generally positive year so far.
“Signs of fear are everywhere, from a rising Vix to a surging put/call ratio, and for the moment buyers are few and far between.”
Weekly jobless claims show expected decrease
On the economic front, the Department of Labor reported earlier that US weekly jobless claims had dipped in line with market forecasts.
The latest figures indicated that for the week ended 12 August, a total of 239,000 individuals initiated unemployment insurance benefit claims.
That was a decline from the previous week’s adjusted figure of 250,000, which was initially reported as 248,000.
Experts had expected the fresh print to be around 240,000.
The four-week moving average – often considered a steadier metric – stood at 234,250, marking an ascent of 2,750 from the updated average of the prior week.
Ongoing claims, which are presented a week in arrears, meanwhile rose marginally, reaching 1.72 million for the week ended 5 August, up from 1.68 million in the prior week.
Walmart, Hawaiian Electric slip; Ball Corp and Cisco Systems ascend
In equities, Walmart dipped 2.24% despite the retail behemoth reporting a 6.3% jump in second-quarter same-store sales.
The rise surpassed analysts’ projection for a 4% hike.
Hawaiian Electric Industries tumbled 15.34% as it faced mounting criticism in the wake of the recent Maui wildfires, with many laying the blame at the company’s doorstep for purported mismanagement during the crisis.
On the upside, Ball Corporation advanced 1.63% on the announcement of its aerospace division’s sale to BAE Systems.
The deal’s worth was pegged at a substantial $5.55bn.
Cisco Systems climbed 3.34% after it announced fourth-quarter results after the market close on Wednesday, with earnings surpassing predictions set by industry analysts.
Friday newspaper round-up: Covid jab, Channel migrants, Trump, bond markets, cash
Covid jab manufacturers are preparing to make booster shots available for the public to buy after health officials gave the green light to private sales for the first time. Some pharmacists and private clinics say they are interested in offering Covid vaccination for sale on the high street to the tens of millions of people no longer eligible on the NHS. – The Times
France is intercepting fewer Channel migrants than last year despite a £480 million funding deal with Britain to help stop crossings, The Telegraph can reveal. Official figures show that just 13,759 – or 45.2 percent – of migrants have been stopped by French beach patrols since January, down from 17,032 (45.8 per cent) over the same period last year. There have been fewer overall attempted crossings this year, partly because of bad weather. – Telegraph
Law enforcement officials in Georgia say they are investigating threats targeting members of the grand jury that indicted former President Donald Trump and 18 of his allies, after private information about jurors was published online. On Thursday, the Fulton county sheriff’s office announced that it was “aware that personal information of members of the Fulton county grand jury is being shared on various platforms”. – Guardian
The cost of UK government borrowing rose to the highest level since the financial crisis yesterday when fears that interest rates would stay higher for longer triggered a sell-off on international bond markets. Yields on US and UK bonds, which reflect government borrowing costs, hit a 15-year high after predictions that stubborn inflation could mean interest rates will rise again. – The Times
Rich Middle Eastern gamblers are being put off spending in the UK by Rishi Sunak’s tourist tax, the chief executive of one of Britain’s biggest casino chains has said. John O’Reilly, chief executive at Rank Group, which owns Grosvenor Casinos, blamed weak sales at his London casinos on the end of VAT-free shopping in Britain. – Telegraph
High street banks will have to ensure customers can find access to cash within three miles of their local communities, and those falling below the minimum service level will face a fine, the government has confirmed. After the closure of thousands of local branches in recent years, and the switch to digital payment methods, ministers are looking to banks to help protect vulnerable groups and elderly customers by maintaining present levels of cash access across the UK. – Guardian
