12th Mar 2014 11:00
LONDON (Alliance News) - Stock indices across the UK and Europe have followed Asia lower Wednesday. Amid a lack of economic data, renewed concern over the health of the Chinese economy and an ongoing stalemate between Ukraine and Russia are weighing on investor sentiment.
By mid-morning Wednesday the FTSE 100 is down 1.0% at 6,619.77, the FTSE 250 is down 0.7% at 16,373.41, and the AIM All-Share is down 0.8% at 889.09.
Major European markets are also lower, with the CAC 40 down 1.2%, and the DAX 30 down 1.0%.
China's first corporate bond default on Friday, followed by the trade deficit announced at the weekend, appear to have sparked off the latest concerns over the health of the world's second biggest economy, sending Asian stocks to a lower close. As a huge consumer of industrial metals, fear of a Chinese slowdown has seen a slump in prices, most notable in copper.
The price of copper has fallen to multi-year lows in recent sessions on both the London Metal Exchange and the Shanghai futures market. "The down-trend in copper prices continues, amid ongoing concern about Chinese growth and nagging worries about the Ukraine," said Societe Generale senior strategist Kit Jukes in a morning note to clients.
The ongoing stand-off over the Crimea region, combined with the heightened Chinese credit risk, also have allowed the price of gold to rise to a near six-month high in early trade of USD1,363.10 per ounce. The price of oil has fallen to the lower end of its recent range, with a barrel of Brent now at USD107.89.
EU industrial production numbers have done little to lift investor sentiment. Production in the eurozone fell by 0.2% in January, after having fallen by 0.4% in December. Economists had expected production to pick up and show a rise of 0.5% over the month. On a yearly basis however, production grew by 2.1%, accelerating from the 1.2% annual growth recorded in December.
The copper price collapse is being felt within UK equities and sees the mining sector down 1.4%. Glencore Xstrata is down 2.3%, BHP Billiton is down 1.5% and Rio Tinto is down 0.8%.
Non-copper miner Kenmare Resources leads the sector lower, however. The Irish titanium producer is down 5.5% after posting a pretax loss of USD42.1 million in 2013, compared with a pretax profit of USD52.8 million the previous year. Kenmare is set for deletion from the FTSE 250 following the recent index review, but for now the stock is weighing on the idex.
Prudential is the stand out blue chip gainer Wednesday, after the insurance group said it has signed a 15-year agreement with Standard Chartered that will see a wide range of its products distributed through the emerging markets-focused bank's branches. Prudential also released full-year results that showed a fall in pre-tax profits but a 17% rise in operating profit. Prudential shares are up 4.0%, while Standard Chartered are one of the biggest fallers in the FTSE 100, down 3.8%.
G4S lead the FTSE 100 lower, with shares down 4.5%, after the troubled outsourcing company said it swung to a loss in 2013 as it booked GBP386 million in charges and restructuring costs related to its problems with UK government contracts.
Two new stocks began conditional trading on the London market Wednesday. Poundland, which priced its IPO at 300p, is up more than 20% at 366.395p. Meanwhile, Pets at Home, which priced at 245p, is fractionally lower at 244p.
With only US MBA mortgage applications at 1100 GMT in the afternoon calendar, the current negative sentiment appears likely to run into the afternoon, with US futures currently indicating a lower open on Wall Street.
In news just announced by the government, the national UK minimum wage has been raised by 19p an hour to GBP6.50.
By Jon Darby; [email protected]; @jondarby100
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PrudentialRio TintoStandard CharteredGFS.LGlencorePets at homePLND.LKenmare ResourcesBHP Group