China's aggressive zero-Covid strategy was combining with the US Fed's aggressive inflation-bashing plan to send stock markets reeling on Monday.
Worries about widening lockdowns in China undermined already fragile sentiment in financial markets concerned about likely interest hikes.
Market-friendly results from the French presidential election did little to boost equities and the euro.
The FTSE 100 index was down 166.63 points, or 2.2%, at 7,355.05 midday Monday. The mid-cap FTSE 250 index was down 391.37 points, or 1.9%, at 20,490.43. The AIM All-Share index was down 16.73 points, or 1.6%, at 1,032.29.
The Cboe UK 100 index was down 2.2% at 733.05. The Cboe 250 was down 1.9% at 18,115.10, and the Cboe Small Companies was down 0.9% at 15,179.41.
In Frankfurt, the DAX 40 was slumped 1.6%. The CAC 40 in Paris plunged 2.4%, seeing no sign of a boost after the incumbent French president won a new term.
‘The markets have fallen out of bed in a big way on Monday after a big sell-off in Asia amid fears of a Covid lockdown in Beijing,’ AJ Bell analyst Russ Mould commented.
With price pressures being felt across the globe, lockdowns in China could lead to a ‘poisonous mix’ of weak economic growth and rampant inflation, Mould added.
‘The result could be stagflation...a brew few investors would be able to stomach,’ the analyst explained.
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.
The Shanghai Composite ended down 5.1% on Monday
Markets already were coming into the new week on the back food, after Federal Reserve Chair Jerome Powell had but confirmed that unusually aggressive monetary policy tightening lies ahead.
Equities in New York suffered a sell-off on Friday, following Powell's remarks. The Dow Jones Industrial Average and S&P 500 closed down 2.8%, while the Nasdaq Composite lost 2.6%.
The three major benchmarks were called lower on Monday. The Dow and the S&P were pointed down 0.8% and the Nasdaq down 0.7%.
The euro fell to $1.0730 midday London time on Monday from $1.0778 at the time of the European equities close on Friday.
The single currency slumped to an intraday low of $1.0707 earlier on Monday, its weakest level since March 2020, soon after the onset of the pandemic.
Neither French stock prices nor the European single currency were seeing any benefit from a decisive presidential election win in France for Emmanuel Macron.
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 58.5% of the vote to Le Pen's 41.5% ? significantly closer than when they first faced off in 2017.
‘Macron's win was good news for Europe, as voters rejected Le Pen and her anti-EU, anti-NATO position,’ BDSwiss analyst Marshall Gittler commented.
‘Nonetheless, the news didn't do much for EUR. Currencies are being driven by monetary policy divergence. The expected tightening of US policy is what's driving markets.’
The pound fell markedly to $1.2719 midday Monday in London, from $1.2848 at the time of the London equities close on Friday. Against the yen, however, the dollar faded to JP¥128.06 from JP¥128.87.
The pound fell below the $1.28 mark for the first time since September 2020. It last traded below $1.27 back in July 2020.
Not even the weaker pound was able to lift the FTSE 100, which is stacked with international earners.
Defensive stocks sat towards the top of the blue-chip index. Unilever rose 1.3%, while Reckitt Benckiser added 1.4%.
Share price falls elsewhere were largely indiscriminate, though it was miners and Burberry that bore the brunt of selling. The mining and luxury retail sectors have a large exposure to China.
Anglo American fell 7.1%, BHP lost 5.9% and Burberry was down 4.6%. BlackRock World Mining Trust, which invests in listed miners, was down 8.0%.
McColl's shares dived 51%. 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.’
Just Eat Takeaway.com fell 3.9%, after an activist investor hit out at its management.
Cat Rock Capital Management, which has a 6.9% stake, said shareholders at JET's annual general meeting on Wednesday next week should vote against the reappointment of CFO Brent Wissink and ‘legacy members of JET's supervisory board’.
Cat Rock said Just Eat Takeaway needs a new CFO to ‘restore credibility’. Wissink has held the role since 2012, having been CFO of Takeaway.com before the two companies merged.
Last week, Just Eat Takeaway said it is exploring options for Grubhub. This could involve introducing a ‘strategic partner’ in order to sell a stake, or even all of its holding in Grubhub, which JET had bought for $7.3 billion. Back in October, Cat Rock had called upon the company's board to sell off Grubhub completely.
A Just Eat Takeaway spokeswoman told PA in response to the Cat Rock letter on Monday: ‘We believe that Cat Rock's proposal to remove key supervisory and management board members, would be both value destructive and destabilising.’
Oil prices fell on fears of reduced energy demand stemming from the lockdowns in China. A barrel of Brent oil was quoted at $102.09 midday Monday, down from $106.44 late Friday. Gold fell to $1,911.65 an ounce, from $1,929.57 late Friday.
Monday's economic calendar has a quiet conclusion, though focus later in the week will be on a US gross domestic product reading on Thursday and monthly core personal consumption expenditures on Friday. Core PCE is the Fed's preferred inflationary gauge.
Eurozone inflation and GDP data also are reported on Friday, after a Bank of Japan interest rate decision on Thursday.
The US corporate earnings calendar has quarterly results from Coca-Cola on Monday. The rest of the week is dominated by big-tech. Microsoft and Google-owner Alphabet are due to report on Tuesday, Facebook-owner Meta Platforms on Wednesday, and Amazon on Thursday.
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