24th Aug 2015 07:27
LONDON (Alliance News) - London stock indices traded significantly lower at the open Monday, following a heavy sell off in Asia and as concerns about the state of China's economy continued to spook investors globally.
In Asia Monday, the Nikkei in Tokyo ended down 4.6%, the Hang Seng was down 5.0%, and the Shanghai Composite was off 8.5%. Mounting evidence that China is going through a rough economic patch has hit the global commodities and equities markets.
Brent and US crude oil futures hit fresh six-and-a-half year lows in Asian deals, and copper fell more than 2%, while gold hovers near its highest level in almost seven weeks.
Sentiment remains fragile despite China's State Council publishing the finalized rules to allow pension funds managed by local governments to invest in domestic stock markets. This was the latest form of stimulation by China as it attempts to slow the meltdown in its stock market, but Commerzbank said the reaction to the weaknesses in China had not yet been profound enough.
"What was the market expecting? That everything would be alright after a few far-reaching interventions on the part of the Chinese government and central bank and that the difficulties in China would evaporate into thin air? The reaction to the collapse on the stock market and the changes to China's exchange rate regime had been far too relaxed so far. And now the market is paying the price," said analysts at Commerzbank.
The FTSE 100 traded down 2.6% at 6,029.69 at the open, the FTSE 250 was down 2.8% at 16,402.65, and the AIM All-Share was down 2.1% at 717.19.
European stocks also were heavily hit, with the French CAC 40 down 3.0% and the German DAX 30 down 3.4%.
There were no gainers in the FTSE 100 at the open, with mining stocks leading the decliners. Glencore, down 6.7%, Anglo American, down 6.2%, and BHP Billiton, down 5.2%, were all amongst the worst blue-chip performers.
Separately, Anglo American said it has reached a deal to sell its interest in two copper mines to a consortium for up to USD500 million.
Bunzle traded down 3.9%, even though the distribution and outsourcing company said its pretax profit rose in the first half on the back of better revenue and said it has made four more acquisitions. It said its pretax profit for the six months to the end of June was up to GBP147.1 million from GBP132.3 million a year earlier, an 11% rise, on the back of a 7% rise in revenue to GBP3.14 billion from GBP2.94 billion.
In the FTSE 250, Amlin was down 3.9%. The specialty insurer and reinsurer reported that profit in the first half was hit by a change to its accounting for the seasonality of catastrophe reinsurance earned premium, with the effects to unwind in the remainder of 2015. Chief Executive Charles Philipps also told journalists that Amlin is not for sale.
In a very light economic calendar, there is the Chicago Fed National Activity Index at 1330 BST, before Federal Reserve Bank of Atlanta President Dennis Lockhart speaks at 2055 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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