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London open: Stocks in the red amid global growth woes, Brexit uncertainty
London stocks fell in early trade on Monday, taking their cue from heavy losses in Asia amid worries about global growth, while uncertainty about Brexit was also contributing to jitters.
At 0830 GMT, the FTSE 100 was down 0.5% at 7,178.88, while the pound was off 0.1% against the dollar and the euro at 1.3194 and 1.1673, respectively.
Investors will be keeping a close eye on any Brexit-related headlines as Theresa May prepares to give an update on her strategy at a cabinet meeting later in the morning after ministers denied reports over the weekend that a number of them were plotting to oust her from the top job.
Spreadex analyst Connor Campbell said sterling was “admirably steady”, avoiding a major wobble despite the headlines being filled with speculation over the short-term viability of Theresa May’s premiership.
“It may be a case of the overwhelming uncertainty as to which way the Brexit winds will blow this week holding the pound relatively in place until a modicum of clarity emerges out of the chaos,” he said.
Meanwhile, CMC Markets analyst Michael Hewson said: “While there is some relief that the so-called cliff edge of 29 March has been delayed for two weeks, we still have the problem of what type of consensus deal MPs can rally around. We could get a better idea of where the land lies when MPs hold a host of indicative votes, starting today with the chance that the Prime Minister’s withdrawal deal may get a third go.”
More broadly, worries about global growth were weighing on sentiment. Neil Wilson, chief market analyst at Markets.com, said investors should be prepared for a tough week as we close out March and the first quarter.
“Global stocks have taken a battering in the last couple of sessions as bond yields have sunk across the board. The slide in yields last week was a red flag for equities; the bond market loudly proclaiming that it’s not confident about the growth outlook.”
In UK equity markets, equipment rental firm Ashtead and plumbing products maker Ferguson – which both have a big presence in the US – were under the cosh amid worries about an economic slowdown Stateside.
AstraZeneca was a touch weaker despite receiving the first regulatory approval for its Forxiga treatment for type-1 diabetes, which was given by the European Commission.
Wood Group slumped after it agreed the sale of its Terra Nova Technologies division – a conveying and material handling systems solutions business – to Murray & Roberts subsidiary Cementation Americas for $38m. The stock was hit by a downgrade to ‘underperform’ from ‘hold’ at Jefferies.
Doorstep lender Provident Financial was in the red as it once again urged its shareholders to reject a £1.3bn hostile bid from smaller rival Non-Standard Finance, and announced the appointment of a new managing director of Vanquis Bank.
Elsewhere, Debenhams saw its shares slump after Sports Direct slammed the department store chain for rejecting a bid for its Danish business, Magasin du Nord, which it said was in excess of fair value and would address its liquidity problems.
Going the other way, satellite telecommunications group Inmarsat surged after agreeing to be bought by a group of private equity firms and pensions funds led by Apax in a $3.4bn deal.
Medical products and technologies company ConvaTec rallied as it has appointed Karim Bitar – the chief executive of animal genetics group Genus – as its new CEO with effect from 30 September.
