14th Jan 2015 10:59
LONDON (Alliance News) - London stocks are trading sharply lower Wednesday, hurt by renewed worries over the health of the global economy after the World Bank cut its European growth forecasts for the next two years.
The FTSE 100 is 1.2% lower at 6,463.99, with mining companies among the biggest fallers after copper prices sank to a five-year low. The FTSE 250 is down 0.6% at 15,984.97, and the AIM All-Share is down 0.7% at 697.29.
Wall Street closed lower Tuesday, with the DJIA ending down 0.2% at 17,613.68.
"The panicked sell-off seen in the US markets last night has proven to be contagious as Europe has followed suit, and the FTSE is down over 1% in the first couple of hours trading," says Alastair McCaig, market analyst at IG. "The FTSE has suffered more than most with the sell-off of European equity markets, as its greater exposure to copper companies, miners and energy sector stocks continues to hang around its neck like a mill stone."
The World Bank said the global economy is forecast to grow moderately this year, citing stronger growth in the US and Britain but weakness in the eurozone and Japan. "The forecast for Euro Area growth is a sluggish 1.1% in 2015, rising to 1.6% in 2016-17," the World Bank said, cutting its 2015 forecast from 1.8% previously and 2016 from 1.9%.
Brent crude is quoted at around USD46.65 a barrel early Wednesday after touching a new six-year low of USD45.16 during Tuesday's session. US benchmark West Texas Intermediate was quoted at USD45.78.
"While the continued weakness in oil prices is welcome at the consumer level, the current weakness is starting to raise concerns that it could usher in a situation that causes some unwelcome side effects elsewhere in the global economy as oil producers start to feel the pinch of lower prices on their margins," says Michael Hewson at CMC Markets.
European indices moved off their lows after the European Court of Justice gave a positive assessment on the European Central Bank's so-called Outright Monetary Transactions programme, which forms the basis of its government-bond plans. The opinion gives a green light to ECB chief Mario Draghi to launch a government bond-buying programme aimed at spurring economic growth and heading off deflation, possibly as early as next week when the ECB policy-making council meets for the first time this year.
The DAX-30 in Germany and the CAC-40 in Paris are both down 0.4% in mid-morning trade, helped off early lows also by the report of a monthly rise in Eurozone industrial production. Output increased for the third consecutive month in November, rising 0.2% from October when it was up by revised 0.3%.
Wall Street stocks are forecast to fall further in Wednesday's session. Futures indicate the DJIA and S&P 500 will start down 0.3%, and the Nasdaq 100 down 0.2%. Wells Fargo and JP Morgan kick off the US banking sector's reporting season Wednesday, and US December retail sales are due at 1330 GMT.
Commodity-related stocks are among the biggest fallers in London. Glencore is down 8.7%, Anglo American is down 8.3% and Antofagasta is down 7.7%.
Economic news overshadowed results from FTSE 100 fashion house Burberry, which reported third-quarter underlying retail revenue of GBP604 million, up 15%. The designer attributed the rise to double-digit growth in the US and Europe, Middle East, India and Africa and robust performance in mainland China and Korea, though it warned about weaker trading in Hong Kong due to the political protests there. Burberry shares are down 0.5%.
FTSE 250 fashion retailer SuperGroup saw its shares rise 7.4% after reporting a "strong performance" over the peak Christmas trading period, and said it is comfortable with delivering a profit for the year in the region of GBP60 million to GBP65 million.
Barratt Developments is up 0.6% and said it is on track for a significant improvement in its full-year results after reporting a rise in total completions, average selling prices and forward sales in the first half of its fiscal year. The FTSE 100-listed house builder said total completions in the six months to the end of December rose 12.5% to 6,971 from 6,195 a year earlier and average selling prices for its houses rose 8.4% to GBP229,000 from GBP211,200 a year ago.
Japan's Nikkei closed down 1.7% at 16,795.96. The Hang Seng in Hong Kong ended down 0.4% at 24,112.6, and the Shanghai Composite closed down 0.4% at 3,222.437.
By Ian Edmondson; [email protected]
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
BurberryAnglo AmericanSuperGroupBarratt DevelopmentsGlencore