FTSE extends August decline as risk appetite fades
The UK’s top index has continued to post losses in the opening session of the week with risk appetite stocks falling from the menu after data from the US and Japan unnerved investors. Global recovery is once again the talking point of the market, hammering bank and commodity stocks.
Rob Hull
shareprices.com - Tuesday, August 31, 2010
At 09:50BST the FTSE 100 index is 0.8 per cent down, shedding 42 points to fall to 5,158.84, after declining as low as 5,129 during the opening hours.
The stocks responsible for these losses are bank and commodity based, thanks to new data releases from major economy giants hampering investor confidence in a global recovery.
Consumer spending in the US grew substantially less than predicted according to the latest report, and Japan’s central bank also announced a new raft of measures its set to implement to maintain the nation’s fragile recovery.
The reports quashed the optimism created in the previous session on the back of the 0.1 per cent gain in GDP in the UK. The blue-chip index had pushed back above the 5,200 bracket, but has dropped again today along with other global markets like Japan’s Nikkei 225 which haemorrhaged 3.6 per cent and the Dow Jones which posted a 1.3 per cent loss.
Heavyweight banking stocks are notably being avoided with Barclays (LON:BARC) seeing the biggest retreats with a loss of 2.8 per cent.
Lloyds Banking Group (LON:LLOY) and Royal Bank of Scotland (LON:RBS) are both declining in the region of 1.9 and 1.3 per cent respectively, and HSBC Holdings (LON:HSBA) is also down 0.6 per cent to conclude a dismal morning for the major groups in the sector.
Energy and mining stocks also helped anchor the FTSE as the outlook for demand received yet another bashing with the releases from the US and Japan, reducing commodity prices as a result.
Eurasian Natural Resources (LON:ENRC), Xstrata (LON:XTA), Lonmin (LON:LMI) and copper miner Kazakhmys (LON:KAZ) headed mining plummets with losses between 2.3 and two per cent.
BG Group (LON:BG), BP (LON:BP) and Tullow Oil (LON:TLW) headed energy stock declines – all posting losses above 1.8 per cent.
However, despite the collective downfall of banks and commodities, it was outsourcing company Serco Group (LON:SRP) that topped the FTSE 100 fallers with a decline in excess of three per cent after it received a downgrade to “neutral” from “buy” ahead of the upcoming UK spending review.
Out of the six stock s that aren’t in decline at the moment, the outstanding stock of the session so far is ARM Holdings (LON:ARM) which heads the way with gains of over four per cent.
The improved share price is due to yet another return of takeover talks for the chip maker, with M&A speculation involving Apple re-emerging again with the technology giants reportedly interested in the microchip firm that provides chips for the iPad and iPhone4.
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