A warning by JPMorgan boss Jamie Dimon that the US is headed for recession added to rising pile of reasons to sell shares on Tuesday, while closer to home, the Bank of England was forced to widen its intervention in a volatile UK government bond market.
The FTSE 100 index was down 67.05 points, or 1.0%, to 6,892.26 midday Tuesday. The FTSE 250 lost 159.05 points, or 0.9%, to 16,966.24 and the AIM All-Share shed 6.51 points, 0.8%, at 793.12.
The Cboe UK 100 was down 1.1% at 688.51 and the Cboe UK 250 down 0.9% at 14,542.28. The Cboe Small Companies traded flat at 12,624.41.
In European on Tuesday afternoon, the CAC 40 in Paris was down 0.7%, while the DAX 40 in Frankfurt was down 0.9%.
JPMorgan Chase Chair & Chief Executive Officer Dimon told news network CNBC on Monday that while the US economy was holding up for now, it faced several headwinds including surging inflation, Fed tightening and the Ukraine war. ‘These are very, very serious things, which I think are likely to push the US and the world - I mean, Europe is already in recession - and they're likely to put the US in some kind of recession six to nine months from now,’ he said.
On Wall Street, the S&P 500 index was called down 0.8% on Tuesday. The Dow Jones Industrial Average was called down 0.7%, while the Nasdaq Composite was called 0.8% lower.
JPMorgan shares were down 0.7% in pre-market trade.
The US third-quarter earnings season kicks off this week, and JPMorgan joins PepsiCo, BlackRock and Wells Fargo in issuing figures.
The pound traded at $1.1062 around midday Tuesday, up from $1.1038 late Monday and recovering after falling below the $1.10 mark.
The Bank of England once again intervened in a bid to calm volatile bond markets, which it said are now a ‘material risk’ to the UK's ‘financial stability’.
The BoE said it has widened the scope of its bond-buying programme, due to end this week, to include purchases of index-linked gilts.
The central bank said the measure is a ‘further backstop’ as it bids to restore orderly market conditions.
‘Fire sales’ of UK government bonds, or gilts, are a ‘material risk to UK financial stability’, Threadneedle Street warned.
Investor confidence in UK government finances took a hit late last month following Chancellor Kwasi Kwarteg's mini-budget announcement. UK borrowing costs jumped as investors were spooked by the unfunded tax cuts announced by Kwarteng.
The UK chancellor was in focus again after the Institute for Fiscal Studies said the government will have to find spending cuts of more than £60 billion if he is to meet his target to get the public finances back under control.
The euro stood at $0.9713 on Tuesday afternoon, up slightly from $0.9700 late Monday. Against the yen, the dollar was trading at JP¥145.66, soft from JP¥145.72.
In London, Ferrexpo shares slumped 8.7%. Production at its operations have been ‘temporarily suspended’ as the iron ore pellets producer in Ukraine continues to find itself caught up in the war started by Russia.
Following Russian air strikes in Ukraine on Monday, Ferrexpo said state-owned electrical infrastructure close to its operations have been damaged.
Ferrexpo did say however that it has enough stockpiles to meet expected sales volumes, though it noted this is ‘subject to logistics corridors remaining available to the group’. None of its workforce were injured as a result of the attacks.
Ukraine was bombarded again on Tuesday. The Lviv region in western Ukraine was hit by strikes that targeted the region's energy facilities, local officials said.
Vladimir Putin on Monday threatened more ‘severe’ attacks against Ukraine, following an explosion over the weekend that damaged a key bridge linking Russia to the Moscow-annexed Crimean peninsula.
Back among London shares, RPS fell 6.8%. A suitor decided against making a sweetened bid, ruling out the prospect of a prolonged bidding war for the professional services firm.
WSP Global said its roughly £591 million, or 206 pence per share, offer for the company is final.
RPS in September recommended a £636 million takeover offer from consultancy and engineering services firm Tetra Tech. Tetra's offer is for 222p per RPS share.
WSP on Tuesday said its offer is now final, and RPS called meetings for November 3 to approve the Tetra Tech deal.
Edenville Energy jumped 32%. It said production and sales at its Rukwa coal project in Tanzania have resumed. Repairs and upgrades to a wash plant have been made, addressing ‘historically poor performance’.
What's more, it is also eyeing lifting pricing which would exceed a previous outlined range of $35 to $50 per tonne of washed coal at mine gate.
‘The recommencement of production at Rukwa has coincided with a dramatic uplift in global thermal coal prices, which have risen from $125 per tonne a year ago to $450 per tonne in 2022, with Tanzanian coal now also being exported to Europe,’ Edenville said.
Brent oil was quoted at $94.14 a barrel midday Tuesday UK time, falling from $96.99 at the London equities close on Monday.
Recession fears hit the price of Brent, dragging London-listed oil producers lower too. Harbour Energy was among the worst performers in the FTSE 100, down 3.6%
Gold traded at $1,665.10 an ounce midday Tuesday, down from $1,668.45.
Still to come on Tuesday are a cluster of speeches from monetary policymakers, with European Central Bank board member Philip Lane at 1345 BST, before the Fed's Patrick Harker and Loretta Mester at 1630 BST and 1700 BST, respectively.
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