UK stocks fell sharply in early trading on a combination of weak commodity prices, which hammered mining stocks, and growing worries that the delta variant and its impact on businesses could knock the global recovery off course.
Sentiment wasn’t helped by a late sell-off in US markets on the latest Fed minutes which did nothing to dispel fears that the central bank’s easy money policy could come to end sooner than expected.
At one stage the S&P 500 index was down 1.8% before stabilising to close 1% lower, with energy and basic resources hardest hit.
In Asia, shares in the world’s largest car maker Toyota Motor fell 4% after press reports it could cut vehicle production by 40% next month due to covid-related delays in component supplies on top of a continued shortage of computer chips.
By 8.30am the FTSE 100 index was down 124 points or 1.75% to 7,045 points with oil and gas and miners more than offsetting the handful of gainers.
COMPANY NEWS
Copper and gold producer Antofagasta (ANTO) reported strong trading for the first half with sales up 68% to $3.6 billion and EBITDA up 133% to $2.4 billion thanks to record copper prices and high levels of demand.
However, a continued drought in Chile meant the company lowered its full year copper output target, while keeping its cost guidance. Combined with an overnight fall in metals prices, this was enough to send shares down 3% to £14.23.
FTSE 250 landscaping products maker Marshalls (MSLH) posted a sharp increase in sales and earnings for the six months to June compared with last year and said it was raising its guidance for this year and next year, sending shares up 2% to 775p.
‘Trading continues to improve, and recent order intake has been good. Encouraged by the continuing strength in demand and the positive trading environment, the board is confident of making further progress and is accordingly raising its expectations for 2021 and 2022’, said chief executive Martyn Coffey.
Shares in OSB (OSB) topped the FTSE 250, rising 4.5% to 513p after the bank reported a 62% increase in first half pre-tax profits to a record £253 million thanks to the release of bad loan provisions and lower funding costs.
The underlying net loan book grew by 6% to £20.3 billion with £2.5 billion of new lending in the first half, while in contrast to the rest of the industry the bank raised its net interest margin to 2.68% from 2.5% in the same period last year.
White-label household goods and cleaning products firm McBride (MCB) delivered a major downgrade to its earnings outlook just seven weeks into the current financial year.
The firm is now forecasting pre-tax profits for the year to next June between 55% and 65% lower than last year due to supply chain disruption and an inability to pass on higher raw material and transport costs to its customers. Shares slumped 12% to 75p.
Iron foundry and machining group Castings (CGS) reported a slowdown in orders from commercial truck-makers, which comprise 70% of its customer base, due to supply chain issues.
The firm said sales were ‘particularly impacted in the last two weeks of June’ and order delays had continued into the second quarter. It said it was maintaining high production levels in order to build inventory ahead of an anticipated increase in demand. Shares fell 6.7% to 362p.
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