Markets in London took a hit on Monday morning in a global sell-off, as investors digested poor economic data which has sparked recession fears.
In the FTSE 250, John Wood saw shares sink, after Dubai-based suitor Sidara walked away from a takeover offer amid geopolitical risks.
The FTSE 100 index opened down 159.05 points, 2.0%, at 8,015.66. The FTSE 250 was down 604.16 points, 2.9%, at 20,222.19, and the AIM All-Share was down 16.05 points, 2.1%, at 755.22.
The Cboe UK 100 was down 1.9% at 799.14, the Cboe UK 250 was down 2.7% at 17,761.39, and the Cboe Small Companies was down 0.9% at 16,843.48.
In European equities on Monday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both down 2.6%.
‘There are simply too many fires to extinguish, making a Monday recovery rally but a pipe dream—particularly with the resurgence of US recession fears and the looming specter of a hard landing chilling global investors to the bone,’ SPI Asset Management’s Stephen Innes.
Markets were in turmoil on Monday morning, starting the week on a bad note. This has been driven by the Nikkei 225’s biggest one-day drop since 1987.
In Asia on Monday, the Nikkei 225 index in Tokyo was down 12%, giving back its year-to-date gains.
In China, the Shanghai Composite was down 1.5%, while the Hang Seng index in Hong Kong was down 1.7%. The S&P/ASX 200 in Sydney closed down 3.7%
Sentiment across the globe was hurt by some soft US economic data, which was released last week, and heightened recession fears.
Friday’s weak non-farm payrolls figures added to the concerns sparked by weak manufacturing data on Thursday.
Figures from the US Bureau of Labor Statistics showed nonfarm payrolls rose by 114,000 in July, well below the average monthly gain of 215,000 over the prior 12 months. FXStreet consensus had forecast nonfarm payrolls to increase by 175,000.
In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average down 1.5%, the S&P 500 down 1.8% and the Nasdaq Composite down 2.4%.
On Monday, they are called to open down 1.5%, 2.5% and 4.3%, respectively.
Also hurting sentiment is the worsening situation in the Middle East, with tensions rising.
A senior official said the US is ready for ‘every possibility’ amid fears of war between Iran and Israel, while telling the Israelis it is ‘urgent’ to reach a ceasefire deal in Gaza.
Following the Pentagon’s announcement that it has beefed up the US military presence in the Middle East, White House Deputy National Security Adviser Jon Finer said ‘we are preparing for every possibility.’
The news comes after Iran and its regional allies vowed retaliation for the killings of a Hamas leader in Tehran and a Hezbollah commander in Beirut, fueling fears of a broader Middle East conflict.
The Nikkei was particularly hurt on Monday morning, as the yen surged.
Against the yen, the dollar was trading at JP¥143.45, down compared to JP¥146.53.
The pound was quoted at $1.2810 early on Monday in London, higher compared to $1.2803 at the equities close on Friday. The euro stood at $1.0960, higher against $1.0919.
In the FTSE 100, there was just a handful of companies in the green early Monday.
On the other hand, the index was pulled down, with Scottish Mortgage Investment Trust, Pershing Square Holdings and, Melrose Industries sinking to the bottom. They were down 7.8%, 7.3%, and 5.3%, respectively.
In the FTSE 250, John Wood plummeted 37%, after suitor Sidara rules out making formal takeover offer.
The Aberdeen, Scotland-based engineering services company explained that the decision is ‘in light of rising geopolitical risks and financial market uncertainty at this time.’
In June, John Wood had received a fourth possible takeover proposal from Sidara last week worth 230 pence per share. Sidara had steadily increased its bid proposal after making an initial approach worth 205p per share which John Wood disclosed in early May.
Clarkson lost 14%.
The London-based provider of shipping services reported that in the first half of 2024 revenue fell 3.4% to £310.1 million from £321.1 million a year earlier. Pretax profit fell to £50.1 million from £52.2 million.
Clarkson upped its interim dividend to 32p from 30p.
Looking ahead, Clarkson said its expectations for the year unchanged with continued confidence in the outlook.
Chief Executive Andi Case said: ‘The profile and further development of the forward order book, level of new business being transacted and pipeline for the second half, means that we have confidence that we will be second half weighted and deliver full year results in line with the board’s expectations.’
Elsewhere, Guild Esports shares more than doubled.
The esports business said it has signed a letter of intent with DCB Sports, under which DCB will buy 100% of the assets of Guild Esports. DCB Sports is a California-based investment management company specialising in emerging sports teams and novel leagues.
‘Should the transaction complete, DCB Sports will assume and run the Guild brand, backstop future working capital requirements for the private business, provide ongoing capital sufficient to allow it to operate on a stable financial platform and further develop its existing partnerships with studios and creatives both domestically and abroad,’ it explained.
Brent oil was quoted at $76.31 a barrel early in London on Monday, down from $76.88 late Friday.
Gold was quoted at $2,434.70 an ounce, higher against $2,425.65.
Still to come on Monday’s economic calendar, there is a slew of PMI data from the eurozone, the UK and the US.
At 1000 GMT, there is some producer price inflation data from the eurozone to digest.
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