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London open: Stocks in the red; miners slump on China Covid woes
London stocks fell in early trade on Monday amid expectations of more aggressive rate hikes by the US Federal Reserve, and as investors looked ahead to the start of the second-quarter US earnings season.
At 0835 BST, the FTSE 100 was down 1% at 7,127.50.
Richard Hunter, head of markets at Interactive Investor, said the better-than-expected payrolls report on Friday indicated underlying resilience in the US economy but also means the Fed will likely hike rates by another 75 basis points at its upcoming meeting.
“Attention now switches to another inflation reading later in the week, and also the beginning of the quarterly earnings season, opened by banks such as JP Morgan and Citigroup on Thursday and Friday. Expectations are low for earnings generally, and outlook comments from companies will receive particular scrutiny,” he said.
“Asian markets were in less sanguine form, with the announcement of fines on the likes of Tencent and Alibaba by China due to those companies failing to comply with anti-monopoly rules on transaction disclosures. The latest spike in Coronavirus cases is also spooking investors, with data due later in the week likely to confirm a sharp contraction in the Chinese economy following a number of lockdowns over the past few months.
“The sombre mood also spilled over to the UK in early exchanges, as investors searched in vain for reasons to be immediately cheerful. With a number of economic and corporate releases due later in the week, ranging from retail sales to GDP, the expectation remains for the tightening of interest rates to continue amid high inflation and an increasingly evident cost of living crisis.”
In equity markets, miners were under the cosh as China reimposed Covid curbs, with Anglo American, Antofagasta, Glencore, and Rio Tinto all lower.
BA and Iberia parent IAG was trading down amid ongoing travel chaos, with budget airlines Wizz and easyJet also on the back foot.
Wizz said on Monday that it was cutting its summer capacity by 5% due to staff shortages, as it reported a €285m operating loss for the first quarter. However, the airline also said it was expecting a “material” operational profit in the second quarter as revenue and pricing momentum continue to improve.
Other travel-related shares also fell, with Carnival, Tui and SPP all weaker.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | +1.48% | +2.30 | 158.10 |
| 2 |  |
Marks And Spencer Group Plc | +1.27% | +1.70 | 136.00 |
| 3 |  |
Coca-cola Hbc Ag | +1.22% | +22.50 | 1,869.00 |
| 4 |  |
Micro Focus International Plc | +1.17% | +3.30 | 286.30 |
| 5 |  |
Next Plc | +0.92% | +58.00 | 6,340.00 |
| 6 |  |
Compass Group Plc | +0.74% | +13.00 | 1,773.00 |
| 7 |  |
Relx Plc | +0.36% | +8.00 | 2,250.00 |
| 8 |  |
Standard Chartered Plc | +0.35% | +2.00 | 581.40 |
| 9 |  |
Dcc Plc | +0.34% | +18.00 | 5,284.00 |
| 10 |  |
Rolls-royce Holdings Plc | +0.31% | +0.27 | 87.40 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Anglo American Plc | -3.24% | -91.50 | 2,733.00 |
| 2 |  |
Antofagasta Plc | -2.83% | -31.50 | 1,081.50 |
| 3 |  |
Carnival Plc | -2.35% | -16.20 | 673.80 |
| 4 |  |
Smurfit Kappa Group Plc | -2.30% | -64.00 | 2,722.00 |
| 5 |  |
Wpp Plc | -1.77% | -14.20 | 786.40 |
| 6 |  |
Bhp Group Limited | -1.68% | -37.00 | 2,168.50 |
| 7 |  |
Fresnillo Plc | -1.67% | -11.40 | 671.80 |
| 8 |  |
Tui Ag | -1.54% | -2.10 | 134.25 |
| 9 |  |
International Consolidated Airlines Group S.a. | -1.51% | -1.66 | 108.46 |
| 10 |  |
Itv Plc | -1.47% | -1.00 | 66.90 |
Monday newspaper round-up: Twitter, Uber, dairy shortages, Purplebricks
Elon Musk could be forced by a US court to complete his $44bn takeover of Twitter, according to legal experts, despite pulling the plug on the transaction. The Tesla chief executive told Twitter on Friday that he is terminating the deal, citing concerns over the number of spam accounts on the social media platform. Twitter’s chairman, Bret Taylor, responded with a tweet stating that the company intended to “pursue legal action to enforce the merger agreement”. – Guardian
Uber lobbied the French President Emmanuel Macron in the hope of writing future laws regulating taxi app services, leaked documents have revealed. Mr Macron is said to have held a meeting with executives from the taxi company that they described as “spectacular” when he was serving as economy minister in 2014, as Uber sought to disrupt the existing market. – Telegraph
Britain is on the edge of dairy shortages as a crippling lack of workers forces farmers to slash production, the country’s biggest milk and butter maker has warned. Arla Foods, the company behind Lurpak butter and Cravendale milk, also predicted that dairy prices will surge even higher with grocery bills already rising at the fastest pace in 13 years. – Telegraph
Rishi Sunak and Grant Shapps, the prime ministerial hopefuls, should share the blame for the delays and cancellations chaos at airports this summer, the boss of one of the country’s leading airline services companies has said. Philipp Joeinig, chief executive of Menzies Aviation, which provides check-in services, baggage handling and refueling for the likes of easyJet, American Airlines and Delta Air Lines worldwide, says that the staff shortages blighting the industry were predictable and preventable. – The Times
An activist investor that has built a 4 per cent stake in Purplebricks has called for the chairman of the online estate agency to resign, citing a plunge in the company’s share price and rapid level of cash burn. Shares in Purplebricks have fallen 85 per cent since it listed on Aim in 2015, after a series of profit warnings and operational blunders, causing market value to shrink to just over £45 million, from £240 million. – The Times
