Covid-19 came back to scare financial markets at the start of the new week, after Beijing looked likely to join Shanghai in lockdown, prompting concerns about the Chinese economy.
The FTSE 100 index was down 121.59 points, or 1.6%, at 7,400.09 early Monday. The mid-cap FTSE 250 index was down 257.16 points, or 1.2%, at 20,624.64. The AIM All-Share index was down 8.33 points, or 0.8%, at 1,040.69.
The Cboe UK 100 index was down 1.7% at 736.98. The Cboe 250 was down 1.2% at 18,250.52, and the Cboe Small Companies closed down 0.7% at 15,204.88.
In China on Monday, the Shanghai Composite plunged 5.1%, while the Hang Seng index in Hong Kong was 3.5% lower in late trade.
The Nikkei 225 index in Tokyo closed down 1.9%. The stock market in Sydney was closed on Monday to mark Anzac Day.
In Frankfurt, the DAX 40 was down 0.9% in early trade.
‘Despite markets breathing a sigh of relief in the wake of the French election result, global risk sentiment continues to remain cautious. Across the Far East, equities have continued to tumble following on from declines across Europe and the US on Friday. Concerns over the health of the global economy remain high, particularly for the world's second largest economy, China, which continues to face a worsening Covid situation,’ analysts at Lloyds Bank commented.
Fears of a hard Covid-19 lockdown sparked panic buying in Beijing on Monday, as long queues for compulsory mass testing formed in a large central district of the Chinese capital.
China is already trying to contain a wave of infections in its largest city, Shanghai, which has been almost entirely locked down for weeks and reported 51 new Covid-19 deaths on Monday.
Shanghai has struggled to provide fresh food to those confined at home, while patients have reported trouble accessing non-Covid medical care. The rising cases in Beijing, the nation's capital, triggered fears of a similar lockdown.
Back in Europe, the CAC 40 in Paris opened 1.5% lower. The euro similarly was struggling, falling to $1.0733 early Monday, from $1.0778 at the time of the European equities close on Friday.
Neither French stock prices nor the European single currency were seeing any benefit from a decisive presidential election win in France for Emmanuel Macron.
Macron's win triggered waves of relief among allies that the nuclear-armed nation will not abruptly shift course in the midst of the war in Ukraine from EU and NATO efforts to punish and contain Russia's expansionist military attacks.
The second five-year term for the 44-year-old centrist spared France and Europe from the upheaval of having populist Marine Le Pen at the helm. The presidential run-off challenger quickly conceded defeat, but achieved her best-ever electoral showing.
Macron won with 59% of the vote to Le Pen's 42% ? significantly closer than when they first faced off in 2017.
It was a market friendly result, Berenberg analyst Holger Schmieding commented.
‘Breathe a deep sigh of relief. France, Ukraine and Europe as a whole have apparently been spared the Le Pen nightmare,’ Schmieding commented.
However, an market benefit on Monday was scuppered by the Covid-19 situation in China.
Oil prices weakened amid fears of reduced energy demand stemming from the lockdowns in China. A barrel of Brent oil was quoted at $102.38 early Monday, down from $106.44 late Friday.
London-listed miners also suffered in early trade. Glencore lost 6.5%, while Anglo American shares were down 6.2%.
Aside from the China worries, Anglo American also received a blow as a regulator in Chile decided against recommending an extension at a mine.
Anglo American has been in engaged in an environmental assessment process at the Los Bronces integrated copper project in Chile since 2019.
The miner was eyeing a mine life extension at the asset by expanding the Los Bronces open pit to include ‘higher grade ore from a new underground section of the mine’.
However, the Environmental Assessment Service of Chile, or SEA, rejected a permitting application for the Los Bronces extension.
‘The SEA has confirmed that LBIP satisfies all relevant environmental regulation, but bases its adverse recommendation on an alleged lack of information during the evaluation process to fully remove any doubts about a potential risk to public health. The SEA's recommendation is despite the strong support for the project offered to date by 23 of the 25 technical services bodies and government ministries that form part of the assessment process,’ Anglo American said.
A firm decision on the extension will come next week, Anglo American added.
Elsewhere, gains for blue-chip stocks in London were few and far between. Disinfectant maker Reckitt Benckiser topped the FTSE 100, rising 1.2%.
Tullow Oil was among the worst FTSE 250 performers, down 5.2%, tracking Brent prices lower.
Russian gold producer Polymetal rose 4.9%. It backed annual guidance and said revenue rose in its first quarter, despite sanctions heaping ‘tremendous pressure’ on the company.
First quarter gold equivalent output fell 5.6% yearly to 372,000 ounces from 394,000 ounces.
However, Polymetal backed 2022 output guidance of 1.7 million gold equivalent ounces.
Revenue for the recent quarter rose 3.9% year-on-year to $616 million from $593 million.
‘Devastating war in Ukraine and immense sanctions put tremendous pressure on Polymetal in Q1. The company continues to operate safely and profitably and is fully focused on ensuring business continuity and long-term viability. It is with these objectives in mind that the board was forced to postpone dividend decision and rationalize investment plans,’ Chief Executive Vitaly Nesis said.
‘The board and management continue to actively explore options to adjust company asset ownership structure to preserve shareholder value and address the needs of other stakeholders.’
Shares in McColl's Retail plunged 52%. The convenience store chain said it saw ‘softer’ trading over Easter and warned on the outcome of financing solution talks.
Back in March, it said it was in talks with lenders to find a ‘longer-term agreement’ for the balance of its existing lending facility.
‘A potential financing solution is under active discussion with its key commercial partner and lenders which would resolve the short term funding issues and create a stable platform for the business going forward,’ McColl's said on Monday.
However, it cautioned: ‘It should be noted that even if such a successful outcome is achieved it is increasingly likely to result in little or no value being attributed to the group's ordinary shares.’
McColl's warned it expects its annual adjusted earnings before interest, tax, depreciation and amortisation to be no higher than the £20 million achieved in the year ended November 28, 2021. The financial 2021 figure is given on a pre-IFRS 16 basis.
McColl's added the release of its financial 2021 results are expected to be delayed until financing talks reach a resolution. The results could be reported later than the end of May, a current deadline under listing rules.
Since late-February, trading has been ‘mixed’, McColl's said.
‘While a recovery in trading performance had continued during the first half of March, the business has since experienced softer trading through the Easter period, impacted by reduced consumer spending and continued supply chain disruption across the industry. The group is working closely with its wholesale supplier to mitigate product availability issues,’ the retailer explained.
The pound weakened to $1.2742 early Monday in London from $1.2848 at the time of the London equities close on Friday. Against the yen, the dollar faded to JP¥128.07 from JP¥128.87.
Sterling traded around its worst level since September 2020.
Gold fell to $1,920.79 an ounce early Monday in London, down from $1,929.57 late Friday.
The economic events calendar on Monday has eurozone construction output at 1000 BST.
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