Rising interest rates in the US and UK, weakening export growth in China, and the continued conflict in Ukraine were sapping enthusiasm for equities around the world on Monday.
The FTSE 100 index was down 135.72 points, or 1.8%, at 7,252.22 midday Monday. The mid-cap FTSE 250 index was down 471.54 points, or 2.4%, at 19,348.60. The AIM All-Share index was down 19.52 points, or 2.0%, at 957.90.
The Cboe UK 100 index was down 2.0% at 722.85. The Cboe 250 was down 2.3% at 17,113.13 and the Cboe Small Companies down 0.8% at 14,717.15
In mainland Europe, the CAC 40 stock index in Paris was down 1.7%, while the DAX 40 in Frankfurt was 1.4% lower.
‘The optimism that followed the US Federal Reserve meeting last Wednesday feels a long way off on Monday as the FTSE 100 dropped to its lowest levels since mid-March,’ AJ Bell investment director Russ Mould said.
‘The continuing impact of Beijing’s zero-Covid policy in China and concerns about the Fed’s next moves are helping to pile the pressure on markets. The impact of Chinese restrictions was reflected in export growth hitting two-year lows in April - in effect back where we were near the start of the pandemic.’
China’s export growth slowed in April, customs data showed, as a Covid resurgence shuttered factories, sparked transport curbs and caused congestion at key ports.
Export growth plunged to 3.9% on-year last month, the Customs Administration said. While this was above analysts’ expectations of 2.7% growth according to a Bloomberg poll, it marked the lowest rate since June 2020.
Import growth was flat in April, an improvement from a 0.1% contraction in March, as Chinese consumers remain hesitant under a welter of restrictions across the country.
Millions of people in Beijing stayed home on Monday as China’s capital tries to fend off a Covid-19 outbreak with creeping restrictions on movement. Beijing residents fear they may soon find themselves in the grip of the same draconian measures that have trapped most of Shanghai’s 25 million people at home for several weeks.
In Beijing, subway stations and offices were empty during rush hour Monday morning across Chaoyang - the city’s most populous district - after officials stepped up a work-from-home order on Sunday over rising Covid cases.
Brent oil was quoted at $109.07 a barrel Monday midday, sharply lower from $112.74 late Friday.
Gold stood at $1,859.40 an ounce, lower against $1,886.77 on Friday.
London’s big listed miners were feeling the heat from the disappointing China data. In the FTSE 100, Glencore was down 6.0%, Antofagasta 4.9%, Rio Tinto 4.7% and Anglo American 4.5%. Ferrexpo was down 8.9% in the FTSE 250.
Also in the FTSE 100, Rightmove shed 5.7%. Chief Executive Peter Brooks-Johnson announced he will step down as head of the online property portal.
He will remain in the role through to the announcement of the company’s full-year results in February 2023. Brooks-Johnson has been with the company for 16 years, being appointed as chief operating officer in 2013 then CEO in 2017, but said he is leaving to ‘seek a new challenge’.
Rightmove said it has started a ‘comprehensive process’ to find his replacement.
‘The company continues to make good progress with the implementation of its strategy, and trading in the year to date has been as expected. The board’s expectations for the full year remain unchanged,’ it reassured.
In London’s junior market, Ideagen surged 47% higher after it agreed to a £1.06 billion takeover offer from funds run by London-based private equity firm Hg Pooled Management.
Under the agreement, the Hg Pooled funds will acquire Ideagen for 350 pence per share, reflecting a 44% premium to the company’s closing price of 243p on Friday last week and valuing its equity at £1.06 billion.
Ideagen expects the acquisition to be completed by July.
Ideagen said it unanimously recommends the offer from Hg Pooled, but remains in talks with private equity firm Astorg, which has been granted access to due diligence.
AIM-listed Tungsten Corp also was higher following an M&A update.
It rose 11% after withdrawing its recommendation of a US buyout and backed instead a £61.5 million offer from Gothenburg, Sweden-based Pagero Group.
Pagero has offered 48 per share to acquire the AIM-listed electronic invoicing and purchase order platform. The bid price is a 5.8% premium to Tungsten’s closing price on Friday and 66% above the closing price on December 13, just before it entered an offer period.
The offer price is 14% higher than a 42p per share bid tabled by Irvine, California-based Kofax. That bid, which valued Tungsten at £53.7 million, was initially recommended by the firm. However, Tungsten on Monday said it has withdrawn its backing for the Kofax offer.
Instead, it has agreed to Pagero’s £61.5 million bid. Pagero has the support of 36% of Tungsten shareholders.
New York was called to open with further losses on Monday, following the turgid European session.
AvaTrade’s Naeem Aslam said: ‘Traders are worried that prospects of an economic slowdown are only increasing, and this could spur another bout of risk aversion among investors and traders.’
The Dow Jones Industrial Average was called down 1.6%, the S&P 500 down 1.9%, and the Nasdaq Composite down 2.3%, based on futures trading. Last week, the Dow was flat, the S&P 500 shed 0.2% and the tech-heavy Nasdaq lost 1.5%.
The dollar was mostly higher.
The pound was quoted at $1.2269 early Monday, down from $1.2355 at the London equities close Friday. The euro was priced at $1.0541, lower against $1.0576. Against the yen, the dollar was trading at JP¥131.10, down from JP¥130.34.
‘The euro remains steady near $1.0550, but we continue to target the January 2017 [low] near $1.0340,’ said Brown Brothers Harriman.
‘USD/JPY traded today at a new cycle high near 131.35, and we continue to target the January 2002 high near 135.15. Sterling traded today at a new cycle low $1.2260 as it nears a break below the June 2020 low near $1.2250, which would set up a test of the May 2020 low near $1.2075.’
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