27th Jan 2025 12:04
(Alliance News) - London's FTSE 100 was weaker on Monday, with miners hurting the FTSE 100, while tech stocks are in focus in New York, as competition from China emerges.
The FTSE 100 index traded down 27.06 points, 0.3%, at 8,475.29. The FTSE 250 was down 127.27 points, 0.6%, at 20,390.78, and the AIM All-Share was down 4.30 points, 0.6%, at 710.75.
The Cboe UK 100 was 0.3% lower at 849.43, the Cboe UK 250 also shed 0.3% at 17,841.65, and the Cboe Small Companies was 0.1% lower at 15,964.61.
In Frankfurt, the DAX 40 shed 1.1% in early trade, while the CAC 40 fell 0.8%.
Sterling rose to USD1.2499 early Monday, from USD1.2490 at the time of the London equities close on Friday. The euro inched up to USD1.0513 from USD1.0510. Against the yen, the dollar slumped to JPY153.83 from JPY155.70.
A barrel of Brent fetched USD77.35, flat from Friday. Gold faded to USD2,770.54 an ounce from USD2,774.82.
Ahead of the New York open, developments in the tech sector are the major story. The Dow Jones Industrial Average is called down 0.9%, the S&P 500 down 2.5% and the Nasdaq Composite is called down by a hefty 4.4%.
Among the sharpest falls in pre-market trade came for Broadcom, down 13%, Nvidia, 11% lower and AMD, down 6.2%. On this side of the Atlantic, Scottish Mortgage Investment Trust was down 5.4% at midday in London. It invests in a who's who tech names. Polar Capital Technology Trust and Allianz Technology Trust shed 7.1%.
Chinese firm DeepSeek's artificial intelligence chatbot has soared to the top of the Apple Store's download charts, stunning industry insiders and analysts with its ability to match its US competitors.
The programme has shaken up the tech industry and hit US technology stocks, which have spent vast sums of cash to get ahead in the fast-developing AI sector.
Bannockburn Global Forex analyst Marc Chandler commented: "There have been two significant developments that are rocking US equities and sending US yields sharply lower. First, Chinese-made AI has taken the world by storm. Apparently, DeepSeek is cheaper to build, consumes less energy, and is faster than the other AIs. There seems to be innovations outside of replication. The second is a brouhaha over Colombia's initial refusal to accept US military planes bringing back illegal immigrants. There were tariff and counter-tariff threats before the Colombia appears to have capitulated."
Colombia on Sunday backed down and agreed to accept deported citizens sent on US military aircraft, hours after President Trump threatened painful tariffs to punish the defiance to his mass deportation plans.
Colombia's leftist president, Gustavo Petro, had earlier said he would only take back citizens "with dignity," such as on civilian planes, and had turned back two US military aircraft with repatriated Colombians.
Trump, less than a week back in office, responded furiously and threatened sanctions of 25% that would quickly scale up to 50%.
In London, Anglo American was the worst FTSE 100 performer, down 6.7%. One-time suitor BHP cooled its pursuit for now, the Financial Times reported.
Citing people close to BHP, a takeover of London-based Anglo American would be too expensive for the Melbourne-headquartered miner, following a rise in the share price of Anglo.
Three people close to the situation are said to have noted that following the share price increase, a fresh takeover bid would be too expensive in the near term.
BHP shares were down 0.4% in London.
It was a generally tough day so far for mining shares. Glencore fell 2.9%, while Antofagasta lost 2.6%.
China's manufacturing activity shrank in January for the first time in four months, official data showed Monday, as Beijing battles to sustain the recovery in the world's second-largest economy.
The purchasing managers' index – a key measure of industrial output – came in at 49.1 in January, according to the National Bureau of Statistics, below the 50-point mark that separates growth and contraction.
The reading was down from 50.1 in December, which was its third straight month in positive territory after ending a six-month decline in October.
Good Energy jumped 21%. It said it has accepted a GBP99.4 million takeover from suitor Esyasoft, which sweetened its bid after an approach in October.
The Chippenham, England-based renewable electricity supplier and energy services provider will be acquired by energy transition Esyasoft at 490 pence per share. It gives values Good Energy's issued and to be issued share capital at GBP99.4 million, and implies an enterprise value of GBP67.8 million.
Construction and engineering firm Costain Group expects annual profit in line with market expectations. The firm said it finished 2024 "strongly", hailing pact awards in the water and rail sectors. Shares surged 10%.
Its "high-quality forward work position" stood at GBP5.4 billion at the conclusion of last year, up from GBP3.9 billion 12 months prior.
"This, together with growth on existing frameworks and attractive levels of bidding activity, gives the group increasing confidence in its ability to deliver further growth in operating profits and margins," Costain said.
It puts market expectations for 2024 adjusted operating profit between GBP41.9 million and GBP43.3 million. At best, this would represent an 8.0% rise from GBP40.1 million in 2023.
Interest rate decisions will be in focus as the week progresses. The Bank of Canada and Federal Reserve announce decisions on Wednesday, before the European Central Bank on Thursday. There is also gross domestic product data from the eurozone and US on Thursday.
A host of tech names report earnings this week, also of focus.
"As 'US exceptionalism' faces its sternest test of the year, the equity markets brace for a torrent of earnings reports from companies constituting nearly 40% of the S&P 500's market capitalization. Their outcomes could either amplify the recent bullish surge or instigate a reevaluation of market sentiments," SPI Asset Management analyst Stephen Innes commented.
"In the backdrop of these high stakes, the unwavering beacon of Wall Street remains the robust earnings from Corporate America. Companies outperforming analysts' expectations are not just ticking up but rather leaping in stock valuations post-announcements—a clear signal that recent earnings are not just meeting but exceeding trader confidence. This surge in corporate profitability is especially noteworthy as it persists despite the overhanging uncertainties of Trump's policy directions and the Federal Reserve's monetary strategies, which together weave a complex tapestry of potential market trajectories."
By Eric Cunha, Alliance News news editor
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