Shares across the UK and mainland Europe have followed last night’s US sell-off after the US Federal Reserve Bank (the ‘Fed’) raised interest rates for the fourth time this year.
Jerome Powell, the Fed chairman, said the bank would continue to raise rates next year as the US economy and the job market continued to grow strongly.
UK stocks followed the losses on Wall Street with the FTSE 100 index down 1.4% to 6,672.
In early trade just two FTSE stocks are up, Shire (SHP) and British American Tobacco (BATS). The weakest sectors are energy, general retail, life insurance and metals and mining.
In company news, pharmaceutical giant AstraZeneca (AZN) reported positive late-stage trial results for its ovarian cancer drug Lynparza and its anaemia treatment Roxadustat.
AstraZeneca has lost patents on several of its older drugs in the last five years so the fact that its new treatments are producing positive test results should be well received. However, its shares fall 1.2% in line with market to £58.96.
Convenience food maker Greencore (GNC), which supplies sandwiches and salads to firms such as Marks & Spencer (MKS), pleased investors with the announcement it is returning £509m of capital through a share buyback at 195p.
The price is a 17% premium to last night’s close and shares respond positively adding 4.5% to 173p.
There is also good news from transport firm Stagecoach (SGC) on the sale of its North American unit to a private equity investor for $271m (£215m).
The unit generated $619m of turnover in the 12 months to October but operating profits were just $22m and Stagecoach has taken the view that while the US economy is strong and demand for assets is high this is the time to sell.
On a less happy note FTSE 250 construction firm Kier Group (KIE) reveals that less than half of the shares in its £264m rights issue were taken up by investors.
Just over 24m shares or 38% of the 64m shares on offer were placed with shareholders, so the banks and brokers who under-wrote the rights issue have had to take the other 40m shares on their books in the hope of offloading them at a later date.
Kier still gets its money but this lack of support from the market does nothing to rebuild its credibility and the shares drop 10% to 347p.
Kier is one of the most-shorted stocks in the UK due to its high debt level and its use of ‘supply chain finance’ which was part of the reason for Carillion’s collapse.
Also losing ground is UAE-based healthcare provider NMC Health (NMC) with shares hitting a new 12-month low down 5% to £26.40 despite an absence of news.
Another drag on the market today is the number of stocks going ex-dividend, including Alliance Pharma (APH:AIM), Berkeley (BKG), Burberry (BRBY), Countryside Properties (CSP), Games Workshop (GAW), Mitie (MTO), Polar Capital (POLR:AIM), Topps Tiles (TPT) and United Utilities (UU.).
