Stocks are back under pressure after figures from China’s economy highlighted the impact of ongoing zero-Covid lockdown policies.
Export growth fell sharply in April and data on China’s new-home sales for early May showed the sector is still struggling to recover.
Asian and European markets came under pressure and the flight from risk included Bitcoin as the crypto’s price dropped to $33,400.
FTSE 100 Live Monday
China economic worries fuel shares sell-off
Bitcoin down 50% from all-time high
Morrisons poised to win McColl’s battle
West End landlords in £3.5bn merger talks
FTSE firmly in the red
15:50 , Oscar Williams-Grut
The weak open on Wall Street has put the FTSE 100 on course to close firmly in the red today.
The bluechip index is currently down 135 points, or 1.8%, at 7252. The FTSE 100 is now down over 5% since a peak at the start of April amid mounting concerns about soaring inflation and weak growth.
Losses are broad-based: just 11 stocks are registering gains as I type, and many of them barely.
That’s all from us on the blog today, join us again tomorrow.
US markets open lower on rising bond yields
14:45 , Rhiannon Curry
The US markets have opened, with all the indices trading lower as rising bond yields continue to pressure stocks, and traders vote against the Federal Reserve’s plan to bring inflation under control.
The benchmark 10-year Treasury yield topped 3.18% earlier today, after going above 3% last week for the first time since late 2018.
The Dow Jones opened 214 points lower on Monday at 32,685.17, and has continued to slip in the first few minutes of trading.
The S&P 500 opened 42 points lower at 4,081.27 and has since lost another 24 points.
Meanwhile the Nasdaq opened slightly higher than Friday’s close at 12,246.83, but is currently down 157 points.
In the cryptocurrency markets, Bitcoin briefly slumped below $33,000, a level last seen in July 2021, as investors move away from riskier assets.
Bitcoin now half of November peak
14:44 , Oscar Williams-Grut
Bitcoin’s slide continues: the world’s biggest cryptocurrency is now down more than 5% on the day to trade around $32,811. That slump means bitcoin is down 50% from the all-time high reached last November above $65,000.
The sell-off has coincided with a broader collapse in tech stocks in recent months as rates rise, energy costs soar and economic forecasts around the world are slashed in the wake of the war in Ukraine.
“We’ve seen renewed selling in bitcoin and the wider digital token market as the prospect of increasing interest rates and a deteriorating economic environment continues to weigh on risk assets,” analysts at trading platform Bitfinex write.
“In Europe, equities are sharply lower, following the Nasdaq experiencing its sharpest one-day fall since June 2020. Investors exiting positions may be adding some momentum to the protracted sell off that we’ve witnessed over the past few days.”
To many, the sell-off signal an end to the irrational exuberance that enveloped global markets last year and sent tech stocks soaring to new all-time highs.
“Even after dramatic declines, it is difficult to call a bottom in the high-growth, high-valuation end of the tech sector, especially given that many of these companies relied on stock-based compensation and controversial accounting and reporting techniques,” hedge fund boss Dan Loeb wrote in his recent investor letter.
Hedge fund pushing for Shell break-up increases stake
14:04 , Oscar Williams-Grut
Third Point Investors, a hedge fund run by billionaire Dan Loeb, said in a quarterly investor update that it had “continued to add to our position in Shell” in the first few months of 2022 and held “constructive” talks with the company.
MADE expands product range with acquisition of Trouva
12:53 , Simon Hunt
Furniture business MADE has acquired independent boutique platform Trouva for an undisclosed cash sum in a bid to expand its product range and capitalise on the company’s marketplace technology.
Trouva was launched in 2010 and has partnered with over 700 independent shops across Europe to market homeware and lifestyle products on their behalf via an app. The business does not currently turn a profit.
MADE hopes to expand the company’s Portugal-based tech hub to create a new centre of excellence for the company, to integrate its technology.
MADE CEO Nicola Thompson said: “Trouva’s assortment complements MADE’s design-led homeware and home proposition superbly and is a great strategic fit for MADE.”
Founded in 2010, London-based MADE has over 600 employees and reached sales of £372 million in 2021. The company’s share price has dropped 60% since January amid reports customers are holding back on furniture purchases because of rising inflation.
Share buybacks in the FTSE 100 hit record levels
12:26 , Rhiannon Curry
FTSE 100 members are poised to set a new all-time record for share buybacks this year, helped by BP’s bumper plans to return cash to its investors.
The oil giant’s plans to buy back $2.5 billion of stock in the second quarter of this year, coupled with announcements from Next and Endeavour Mining about their buyback activity, means that FTSE 100 firms are now planning £37 billion of buybacks this year, according to Russ Mould, investment director at AJ Bell.
This will surpass the prior peak of £34.9 billion in 2018.
BP’s plans “catapults the firm into fourth place in terms of this year’s buyback announcements by FTSE 100 members,” Mould added.
FTSE down at lunchtime as nervous investors ditch risky stocks
12:00 , Rhiannon Curry
In the markets this lunchtime, the FTSE 100 is down 123 points at 7,264.82 as global uncertainty continues to weigh on the markets.
Rightmove was one of the major losers, dropping almost 6.7% during the morning trading after CEO Peter Brooks-Johnson announced he would leave the company next year.
Other growth-focused stocks Entain and Scottish Mortgage Investment Trust were down by 6% and 4.5% respectively as investors moved away from riskier stocks.
The pound is worth $1.23 and €1.17.
In Europe, the DAX at its weakest since the middle of March, and the French CAC index fell more than 114 points to 6,143.72.
Meanwhile, Bitcoin has lost another 2.9% of its value to trade at around $33,050 to continue its downwards streak.
Marcus Sotiriou, analyst at digital asset broker GlobalBlock, said: “After the Federal Reserve raised rates by 50 basis points last week, Bitcoin rallied suggesting that this was priced in. However, this was nothing more than a relief bounce as Bitcoin has fallen almost 18% in 5 days.
“Investors are clearly concerned about the aggressive monetary policy from the Federal Reserve, as they will also begin quantitative tightening (removal of liquidity from the market) in June.”
Trafigura signs lithium supply deal
11:39 , Oscar Williams-Grut
Singapore-based Trafigura will supply all of the unprocessed lithium “feedstock” to the planned UK refinery, which will then turn it into battery-grade metal. The commodity giant will also invest an undisclosed sum in Green Lithium to help fund construction of the new facility, which will be based in the North of England and cost an estimated £500 million.
Businesses call for emergency budget
11:25 , Simon English
Businesses today called for an immediate emergency budget to deal with soaring costs, including the reversal of the recent National Insurance increase.
“Things have passed my worst expectations,” said Haldane, now head of the Levelling Up Taskforce.
Last week the Bank of England said inflation would top 10% this year and that a recession is a clear risk.
On inflation, Haldane told LBC: “I think it is certainly going to last the duration of the year, and into next or even the year beyond.”
Miners send FTSE 100 lower, Rightmove off 5%
10:32 , Graeme Evans
Mining stocks and cryptocurrencies were among the casualties today as softer China trade figures ensured no let up in the recent flight from risk.
China’s latest economic data heightened fears over its zero-Covid lockdown policies after factory shutdowns and port disruption contributed to exports growth slowing to 3.9% from the 14.7% increase in March.
Commodity prices weakened as a result, causing 4% falls for iron ore-exposed shares in Anglo American and Rio Tinto and Chilean copper miner Antofagasta.
Their performances meant the FTSE 100 lost 0.9% or 67.25 points to 7320.69, with tech companies again in the firing line after last week’s US interest rate rise worries.
There was also no respite for holders of cryptocurrencies after the Bitcoin price fell to a three-month low at less than $34,000.
In London trading, Rightmove shares slumped by 6% to their lowest since June 2020 after the property portal announced that chief executive Peter Brooks-Johnson is to step down in 2023 after 16 years with the company and five as its boss.
Despite reassurance that trading has been as expected, the leadership uncertainty weakened the FTSE 100-listed shares by 29.6p to 529.2p. Other growth-focused stocks Entain and Scottish Mortgage Investment Trust were down by around 5%.
Investors took shelter in food retail, tobacco and utility stocks as shares in Sainsbury’s rose 1%, followed by British American Tobacco and National Grid.
The selling pressure was greater in the FTSE 250 index, where Aston Martin Lagonda slumped 7% on fears over China demand and Baillie Gifford’s US Growth Trust fell 9%. Ferrexpo, the Ukraine-based iron ore pellet producer, also tumbled 9% or 14.3p to 137.9p.
Only 16 stocks were in positive territory as the FTSE 250 weakened more than 2%, or 394.63 points to 19,425.04. They included MoD technology supplier Qinetiq with a gain of 5%, while cyber security specialist NCC edged up 0.4p to 185.4p after forecasting increased revenues momentum into the new financial year.
It also announced Mike Maddison, EY’s head of cyber security, will replace Adam Palser as chief executive. Analysts at Jefferies welcomed the “neat CEO changeover” with a price target of 300p.
Morrisons poised to win McColl’s takeover battle
10:22 , Oscar Williams-Grut
Morrisons looks set to emerge victorious in a takeover tussle for McColl’s, after a battle over the future of the convenience chain over the weekend.
The future of McColl’s was left hanging in the balance after Morrisons and EG Group, backed by the billionaire Issa brother who also own Asda, sought to outbid one another over the weekend to take control of McColl’s as administration looms.
The bid from Morrisons is due to be announced as the preferred bidder for McColl’s, despite an improved offer from EG Group, according to Sky News.
McColl’s admitted on Friday that it is likely to collapse without any fresh funding. PwC has been lined up to act as administrators.
Shaftesbury and CapCo shares fall on merger talks
10:11 , Rhiannon Curry
Plans to merge the West End’s two biggest landlords in a £3.5 billion deal have received a mixed reception from the City, with analysts supportive but shares falling.
Combining the two companies would bring together almost three million square feet of retail and office space in the West End, uniting Chinatown, much of Soho and Covent Garden under a single ownership.
Analyst Bart Gysens at Morgan Stanley said the deal made sense given the firms’ similar portfolios, capital structure and strategy, A merger would help Capco in particular to offset high costs through owning a bigger number of assets generating rent.
McColl’s lenders weigh bids for the convenience store
08:59 , Rhiannon Curry
The future of McColl’s is hanging in the balance as its lenders weigh up rival bids to take over the convenience chain.
Morrisons and EG Group, backed by the billionaire Issa brother who also own Asda, are battling to outbid one another as admiinistration looms for McColl’s.
The business admitted on Friday that it is likely to collapse without any fresh funding. PwC has been lined up to act as administrators.
Sources close to the company said a notice of administration could be placed with the courts as early as today if the latest bids to take over the company are rejected.
China concerns add to US rate jitters
08:51 , Graeme Evans
Last week’s Wall Street volatility and the two-year low for China export growth have set the tone for another weak session in Europe.
Hargreaves Lansdown analyst Sophie Lund-Yates said: “In the US, the trend has been negative for weeks, but had started to look brighter, before comments from the Bank of England at the end of last week about weak economic growth applied the brakes to momentum.
“Anxiety is stemming from the Fed’s next moves, with uncertainty creeping in about the scale and speed of interest rate hikes.
“All this comes at the same time as China grapples with ongoing lockdowns and the prevailing economic storm these entail. We saw Chinese export growth slow to two-year lows in April.
“That said, there have been tentative hints that China is stepping away from its blanket zero-Covid policy, which may mean an easing of the very tough conditions in the all-important production lines in the country.”
Miners under pressure, Shell higher
08:37 , Graeme Evans
Pressure on commodity prices caused by weak China economic data means mining stocks are enduring a difficult start to the week.
Iron ore-focused Anglo American and Rio Tinto are down by more than 2%, while Chilean copper miner Antofagasta lost about 1%.
Rightmove shares slumped 5% at the top of the FTSE 100 fallers board as it announced that chief executive Peter Brooks-Johnson is to step down after 16 years with the property portal.
The FTSE 100 index was down 5.41 points at 7382.5, aided by support from the energy sector and dollar-earning stocks.
Shell was 1% higher after activist investor Third Point revealed an increased stake, having previously called for a break-up of the oil giant.
Other blue-chip risers included British Airways owner IAG and supermarket chain Sainsbury’s after their shares both rose 2%.
The FTSE 250 index dipped 75.6 points to 19,744.07, although Trainline continued its post-results momentum by adding another 3%.
Talks over West End property merger continue
08:16 , Graeme Evans
Discussions over a London-focused merger deal that will combine ownership of high-profile destinations including Covent Garden, Carnaby, Chinatown and Soho are continuing today.
FTSE 250-listed property firms Shaftesbury and Capital & Counties (Capco) confirmed on Saturday their talks over a tie-up that would create a business worth about £3.5 billion.
Both businesses are focused on the West End of London with a portfolio of about 2.9 million square feet of lettable space spanning retail, hospitality and offices.
Shaftesbury, which is 25.2% owned by Capco, is the larger of the two companies with a market capitalisation of £2.2 billion.
The proposed new chief executive will be CapCo boss Ian Hawksworth, with Shaftesbury’s Jonathan Nicholls continuing in the role of chairman.
After 36 years at Shaftesbury, including 11 years as chief executive, Brian Bickell will retire once the deal completes. Shares in both companies were lower after rising ahead of the weekend.
China export growth slows, FTSE 100 lower
07:43 , Graeme Evans
China trade figures are in focus after Covid-related transportation difficulties and port stoppages caused Beijing to record a sharp fall in export growth for April.
Exports rose by 3.9% last month but this compares with a 14.7% increase in March as factory production also slowed due to curbs around the pandemic.
China’s zero-Covid policies have led to severe restrictions on movement in Shanghai, adding to the supply chain concerns already squeezing the global economy.
Asia-focused shares have endured a difficult start to the week, while European markets are also due to open lower.
CMC Markets expects the FTSE 100 index to fall 30 points to 7358, while the Dax in Frankfurt is forecast to lose 143 points at 13,531.
Following last week’s volatile trading, future markets in New York are pointing to another difficult session as attention turns to US inflation figures on Wednesday.
The pound, meanwhile, remains under pressure after losing 0.7% this morning to stand at below $1.23.