28th Sep 2015 11:05
LONDON (Alliance News) - London share prices were lower Monday midday, dragged down by mining stocks, while US stock futures pointed down as investors confidence was again underminded by weak economic data from China.
The FTSE 100 index was down 1.7% at 6,005.43 points, the FTSE 250 was off 0.7% at 16,685.68, and the AIM All-Share was 0.5% lower at 729.52. In Europe, the French CAC 40 index was down 1.8% and the German DAX 30 was down 1.3%.
Shares in New York were called for a lower open. The Dow Jones Industrial Average and the S&P 500 both were seen down 0.6% and the Nasdaq 100 was pointed down 0.7%.
Wall Street ended mixed on Friday. The Dow closed up 0.7%, the S&P 500 down 0.1% and the Nasdaq Composite down 1.0%.
With a lack of economic data releases scheduled in Europe on Monday, investor focus is on a US-heavy economic calendar. There are US personal income, consumption and expenditure data at 1330 BST, pending home sales at 1500 BST, and the Dallas Fed manufacturing business index at 1530 BST.
There also are speeches by Federal Reserve Bank of Chicago President Charles Evans at 1830 BST and Federal Reserve Bank of San Francisco President John Williams at 2200 BST.
Appetite for risk was hit Monday by weak data from China. The Asian giant's industrial profits declined in August as product prices continued to decrease, the National Bureau of Statistics reported. Industrial profits fell 8.8% in August from a year ago, following a 2.9% drop in July. Falling product prices, as well as lower return on investment, weighed on industrial profits.
During January to August, industrial profits decreased 1.9% from the corresponding period of last year. Profits from coal mining plunged 64.9% from last year and oil and gas extraction industry profits decreased sharply by 67.3%. The decline in automotive industry came in at 4.5%.
"This disappointing level of industrial profits in China added to a general mood of uncertainty and a lack of confidence of the bulls that drifted over from an uninspiring close on Wall Street on Friday and mixed trading in Asian markets today," said Accendo Markets analyst Richard Perry.
Perry said the weak Chinese data "will add even more anticipation to what could be a crucial risk-defining release" of the Caixin manufacturing and services Purchasing Manager's Index readings expected from China on Thursday.
On Monday, Hong Kong was closed due to the Chinese Mid-Autumn Festival celebration on Sunday, while the Shanghai Composite index ended down 0.3%. The Japanese Nikkei 225 ended down 1.3%.
Japan's Leading Economic Index declined slightly less than estimated in July, final data from the Cabinet Office showed. The leading index dropped to a four-month low of 105.0 in July from 106.7 in June. The initial estimate for July was 104.9. It signals the trend in future economic activity.
London-listed mining stocks were on the back foot, hit by the weak data from China, with Anglo American down 7.5%, Rio Tinto down 4.7%, BHP Billiton down 4.6% and Antofagasta down 4.2%.
As a result, the FTSE 350 Mining Sector Index was down heavily, off 7.2%, the worst performing sector index, touching lows it hasn't seen since 2008.
"The [FTSE 100] index continues to stand or fall by the performance of its miners, which makes the outlook for the rest of the FTSE’s year quite grim if China fails to turn around soon," said IG senior market analyst Chris Beauchamp.
Glencore was the worst blue-chip performer, with its shares plunging 23%. AIM-listed Horizonte Minerals said it has agreed to buy Glencore's Araguaia nickel project in Brazil to enlarge its existing nearby project. Horizonte will pay USD2.0 million once the deal is completed, which will be satisfied through the issuance of 2.0 million shares, and the total acquisition cost is USD8.0 million.
Shares in Glencore were at a new all-time low, well below the 100 pence psychological line, at 74.78p. Horitonze Minerals was up 3.6% at 1.605p.
Outside the mining sector but also in the red was Vodafone Group, down 4.0%. The telecommunications and mobile operator said its talks with US cable company Liberty Global have been terminated.
Vodafone had confirmed talks with Liberty Global in early June over a potential exchange of some assets between the two. Earlier this month Bloomberg reported that Liberty Global's owner John Malone indicated that a deal between his company and Vodafone looked unlikely, saying that there had not yet been a structure proposed for a deal that he would take to his shareholders.
However, Deutsche Bank said it believes that, due to the similarities between the two businesses, conversations could be resumed again at some point.
"We take this that all talks, including any on a full merger, are over, but note that the two companies have overlapping interests in a number of markets and talks could be re-started at a later date," said analysts at the bank.
In the green, SABMiller was the biggest gainer, up 2.7%, after The Sunday Times reported that Belgian-American brewer Anheuser-Busch InBev could bid GBP70 billion for the Anglo-South African beer company.
Over recent days the world's two biggest brewers have begun "friendly" talks, the newspaper said. The discussions continued into Saturday, with AB InBev expected to make a firm opening offer within days.
Societe Generale upgraded SABMiller to Buy from Hold, saying it is convinced that AB InBev "is serious and will bid for SABMiller, and that SABMiller will sucumb".
In the FTSE 250, Home Retail Group was up 1.6% after Cantor Fitzgerald upgraded the owner of catalogue retailer Argos and DIY and garden centre company Homebase to Buy from Hold.
Poundland Group also was helped by a broker upgrade, up 1.6%, after Nomura lifted the discount retailer to Neutral from Reduce.
Meanwhile, on AIM, Teathers Financial was up 16%. The AIM-listed investing company said it has launched its crowd equity application. Teathers said "The Teathers App" will allow private investors to invest in listed companies using the mobile app. It has been launched in tandem with broker Shard Capital Partners and has been released via the iTunes, Google Play and Android platforms.
eServGlobal was down 27%. The payments company issued a warning on its full-year results due to contract delays and said its cash is set to be squeezed further by a planned capital raising by its HomeSend joint venture, leading it to outline early plans to raise new funding. eServGlobal said that there is an increased risk that its revenue and earnings before interest, taxation, depreciation and amortisation will be below market expectations for the full year to the end of October.
By Daniel Ruiz; [email protected]
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