The mood in global equities was soured by fears for Chinese economic growth, while a stronger pound also did little for the international earner-heavy FTSE 100 in London.
Sterling remained above the $1.28 mark on Monday, with investors expecting the Bank of England to enact a 25 basis point rate hike later this week.
The FTSE 100 index opened down 21.77 points, 0.3% at 7,620.95. The FTSE 250 was down 72.37 points, 0.4%, at 18,958.52, and the AIM All-Share was down 1.33 points, 0.2%, at 791.26.
The Cboe UK 100 was down 0.3% at 760.24, the Cboe UK 250 was down 0.3% at 16,563.48, and the Cboe Small Companies was down 0.1% at 13,935.74.
The pound held on to recent gains ahead of the Bank of England’s interest rate decision on Thursday, with the bank expected to enact a 25 basis point hike. There will be UK inflation data on Wednesday.
Sterling was quoted at $1.2821 early Monday, higher than $1.2819 at the London equities close on Friday.
The euro traded at $1.0931 early Monday, higher than $1.0926 late Friday. Against the yen, the dollar was quoted at JP¥141.68, up a touch versus JP¥141.59.
There will also be interest rate decisions from the People’s Bank of China on Tuesday, and the Swiss National Bank on Thursday.
Financial markets in New York are closed on Monday for the Juneteenth holiday, which is likely to suppress trading volumes across the globe.
In the US on Friday, Wall Street ended in the red, with the Dow Jones Industrial Average down 0.3%, the S&P 500 down 0.4% and the Nasdaq Composite down 0.7%
Asian equities were mostly weaker, amid lower growth forecasts for China. Goldman Sachs cut its forecasts for Chinese economic growth to 6% from 5.4% previously.
The Nikkei 225 index in Tokyo closed down 1.0%. In China, the Shanghai Composite closed down 0.5%, while the Hang Seng index in Hong Kong was down 1.1%. The S&P/ASX 200 in Sydney closed up 0.6%.
‘The China GDP downgrades have darkened the outlook in a week many had high hopes,’ said SPI Asset Management’s Stephen Innes.
London’s mining stocks fell on the weaker outlook for demand from China, with Antogafasta and Anglo American both down 1.9%.
‘For now, the darker economic outlook has pushed backed optimism around the PBoC stimulus and hopes for a thawing in frosty China-US relations,’ Innes continued.
US Secretary of State Antony Blinken met with his Chinese counterpart Qin Gang at the start of his two-day trip to Beijing, a visit aimed at rebuilding the cratering relationship between the world’s two largest economies.
A series of meetings with high-ranking government representatives are planned before Blinken - the most senior US official to visit China in years - leaves on Monday.
Chinese President Xi Jinping will meet with Blinken shortly - a sign the two sides are working to smooth out severely strained ties.
The heightening of tension between the US and China has taken its toll on business confidence in recent months. The Financial Times reports that AstraZeneca is mulling a spin-off of its Chinese business and listing it in Hong Kong, to better insulate the unit from the geopolitical friction between China and the US and its allies.
Citing sources familiar with the talks, the FT said the separation might not take place, or a Shanghai listing is also possible.
Astra fell 0.8% in early trade on Monday in London.
Meanwhile, in Frankfurt, pharmaceutical and laboratory equipment supplier Sartorius dropped 15%.
Late Friday, it had warned that it expects revenue for 2023 to be below expectations, mainly due to the longer-lasting reduction of biopharma customer inventories due to Covid-19, as well as low investment activity.
In European equities on Monday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.4%.
UK house prices suffered a marginal fall this month, the first June decline since 2017, according to a Rightmove tracker.
Average new seller asking prices fell by just £82 in June to £372,812 from £372,894. Prices had risen 1.8% in May from April. Though fractional, June’s outturn was the first monthly drop in asking prices this year, and was the first June fall in house prices since 2017.
Housebuilder Taylor Wimpey shed 1.0%, but fellow housebuilder Persimmon rose 0.6%.
Elsewhere in the FTSE 100, Entain was among the top performers, up 1.4%. Redburn raised the gambling company’s stock to ’buy’.
Coca-Cola HBC fell 2.7%, as it announced it will acquire Brown-Forman Finland, which owns the Finlandia vodka brand, from Brown-Forman’s Dutch subsidiary. It will pay $220 million, and expects the acquisition to complete in the second half. It is subject to regulatory approvals.
‘Having been associated with the distribution of Finlandia for 17 years in several markets, we are excited by this unique and regionally relevant opportunity that will support the acceleration of our on-premise business across more of our markets,’ said Chief Executive Zoran Bogdanovic.
Among midcaps, Kainos Group fell 2.3%,
The IT services provider announced its CEO of 22 years, Brendan Mooney, will step down by the end of September, with Digital Services Director Russell Sloan replacing him.
Mooney will remain ‘actively engaged’ with the business until next June, to ensure an orderly transition, the company said.
On AIM, Avacta Group rose 8.3%.
The life sciences firm denied media reports of plans for an imminent fundraising. ‘The company regularly considers potential funding opportunities, both non-dilutive and dilutive, to ensure its business operations remain well financed and the best interests of its stakeholders are maintained,’ it explained.
Avacta said whilst it ‘[maintains] a dialogue’ with shareholders and current investors, ‘no fundraising is imminent’.
It had cash of £27 million on the balance sheet at the end of May, and expects ‘strong news flow’ in the coming months across the company.
Brent oil was quoted at $75.83 a barrel early in London on Monday, little changed from $75.62 late Friday.
Gold was quoted at $1,954.31 an ounce, down against $1,960.83.
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