A bruising session on global stock markets left London’s investors with a headache on Monday as a drop was led by gambling companies and miners.
The FTSE 100 ended the day down 2.3%, a fall of 171.36 points to 7,216.58, after a rough session of trading as US and European shares traded down partly in anticipation of new inflation figures from several countries.
Danni Hewson, an analyst at AJ Bell, said: “Talk of recession is rife as markets really begin to price in a series of interest rate rises as central banks remain under pressure to help people out of the cost-of-living crisis they’ve found themselves slap bang in the middle of.”
CMC Markets analyst Michael Hewson said that the natural resources sector had been badly hit by new trade data from China which showed a collapse in imports to the country.
The stubborn pursuit by Chinese authorities of a zero-Covid policy is raising concerns that it will have a chilling effect on the Chinese economy in the months ahead
CMC Markets analyst Michael Hewson
“The stubborn pursuit by Chinese authorities of a zero-Covid policy is raising concerns that it will have a chilling effect on the Chinese economy in the months ahead, and with Beijing and Shanghai tightening curbs on residents of those cities, we appear to be seeing a realisation that supply chain issues may still have some way to go as far as downside risk is concerned, with dire consequences for growth prospects,” he said.
Miners Antofagasta, Glencore and Anglo American were among the worst hit stocks on a poor day for the FTSE. Energy giant BP also fared badly.
But among the bloodbath there were also some winners as some of the UK’s biggest shops gained ground, although perhaps partly because they have suffered recently.
Ms Hewson said: “UK retailers took a big hit last week and there seems to have been a flurry of bargain hunters rushing through the aisles of London’s markets today.
“Tesco and Sainsbury might well be enjoying a vicarious boost from the bun fight under way for corner shop grocer McColl’s but when you add Kingfisher, B&M, Next and Moonpig into the mix it seems investors in London at least are thinking long term.”
In Europe the German Dax closed down 2.2% while Paris’s Cac 40 dropped 2.4%. Their Wall Street cousin the S&P 500 was down 2.8% around market close in Europe while the Dow Jones lost 1.6%.
On currency markets the pound would buy 1.2323 dollars, a rise of 0.14%, or 1.1686 euros, down 0.03%.
The biggest news of the day was Morrisons’ successful bid to buy failed convenience chain McColl’s out of administration.
The retailer collapsed last week, putting the future of about 16,000 members of staff in peril. But after markets closed on Monday McColl’s, whose shares are suspended, found a buyer in its former rival.
Morrisons said that all McColl’s colleagues would stay with the shops as the change of ownership took place. It will also take over the running of McColl’s two pension schemes.
In other news, investors in Rightmove saw their shares drop by 3.4% after its boss of 16 years announced his departure.
Peter Brooks-Johnson said he would leave in February next year and will help find a new boss to step into his shoes.
The biggest risers on the FTSE 100 were Sainsbury’s, up 5.1p to 233p, Kingfisher, up 5p to 242p, Tesco, up 4.1p to 275.5p, CocaCola HBC, up 19p to 1,567p, and Unilever, up 39p to 336.6p.
The biggest fallers on the FTSE 100 were Entain, down 123p to 1,248.5p, Scottish Mortgage Investment Trust, down 55p to 777p, Antofagasta, down 95p to 1,362p, Glencore, down 29p to 458.55p, and Flutter Entertainment, down 504p to 7,996p.