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Commodity stocks drag FTSE 100 lower as slowdown concerns bite


© Reuters. FILE PHOTO: A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008. REUTERS/Toby Melville

By Devik Jain

(Reuters) -London’s FTSE 100 slid 2% on Monday, dragged down by commodity and financial stocks, as concerns over global economic slowdown clouded investors’ risk appetite ahead of a barrage of corporate earnings reports due this week.

The blue-chip index, which fell 2% to touch an over five-week low, is set for its worst day since March 4.

The domestically focused midcap FTSE 250 index declined 1.7% to hit its lowest level since March 16.

Oil majors BP (LON:BP) and Shell (LON:RDSa) were down 4.7% and 3.8%, respectively, while the industrial mining sub-index lost 6.1%, tracking lower crude and metal prices as prospects of prolonged COVID-19 lockdowns in China stoked demand fears. [O/R][MET/L]

Broadly, Asian stocks had their worst session in 1-1/2 months as concerns about rapid and aggressive U.S. rate hikes and slowing growth momentum rattled sentiment. [GLOB/MKTS]

Banks dropped 1.8%, with Asia-focused lenders HSBC Holdings (LON:HSBA) and Standard Chartered (LON:STAN) slipping ahead of their results due this week.

“Having spent most of the last few weeks trying to put to one side concerns about events in eastern Europe, a slowdown in China, and the increasing risks of what inflation might do to company earnings, as well as consumer incomes, the final straw appears to be a concern about the prospect of a policy mistake by central banks, and a possible recession by the end of the year,” Michael Hewson, chief market analyst at CMC Markets UK said in a note.

Bank of England Governor Andrew Bailey said on Friday the central bank could deal with the fast rise in inflation without damaging the economy, but the path was a narrow one.

McColl’s Retail Group slumped 55.5% as the British convenience store chain forecast tepid annual core profit after a weaker-than-expected Easter performance, dented by lower consumer spending and supply chain disruptions.

Bucking the sombre mood, shares of Polymetal climbed 5.1% after the Russian gold and silver producer said its first-quarter revenue grew by 4% year-on-year to $616 million due to higher gold prices.

Commodity stocks drag FTSE 100 lower as slowdown concerns bite

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