FTSE 100 falls below 7,400 as investors retreat from resource stocks
- The FTSE 100 drops 127 points
- Resource stocks friendless as China tightens Covid precautions
- Polymetal remains profitable despite sanctions
The FTSE 100 fell below 7,400, after opening sharply lower, largely on weak resource stocks.
The London heavyweight index shed 127 points to 7,394, with just four index constituents – National Grid PLC (LSE:NG.), Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB), B&M European Value Retail SA (LSE:BME) and Avast PLC (LSE:AVST) in positive territory.
The sell-off in resource stocks was sparked by fears over Covid lockdowns in Shanghai, China’s economic hub.
“Oil extends the downtrend after already losing nearly 5% last week on similar concerns; however, the prospect of a potential European Union ban on Russian oil provides a floor in the market and stems more aggressive declines,” according to Victoria Scholar, chief investment officer at Interactive Investor.
“Chinese stocks suffered heavy losses, with the Shenzhen Composite losing more than 5% while the yuan hit its lowest level in a year after Beijing reported an increase in Covid cases over the weekend while Mainland China is grappling with its worst outbreak since the pandemic began. at the start of 2020. Meanwhile, China’s economic hub Shanghai grew 3.1% in the first quarter, slowing sharply year-on-year as the city remains under an extended lockdown. Authorities have erected fences without any warning around residential areas to prevent the movement of people to stop the spread of the virus,” she added.
In the oil sector, BP PLC (LSE:BP.) was down 3.1% while Aveva Group (LSE:AVV) PLC, the industrial software company that usually does well when energy companies do well, was down. by 4.7%. Among metal games, Glencore PLC (LSE:GLEN), Anglo American PLC (LSE:AAL) and Rio Tinto PLC (LSE:RIO) are all down more than 4%.
Polymetal International PLC (LSE:POLY) bucked the trend with a 1.5% gain to 274p after its first quarter production results and updated production forecast.
“The company continues to operate safely and profitably and is fully focused on business continuity and long-term viability,” said Vitaly Nesis, CEO of Polymetal.
Nesis said the company has been hit hard by sanctions against Russian companies.
Elsewhere, AstraZeneca PLC (LSE:AZN) fell 1.0%, slightly outperforming the index, after saying its biologics license application for its immune checkpoint blocker tremelimumab had been accepted for priority review in the United States.
$AZN AstraZeneca declares that tremelimumab has been accepted for priority review in the United States for the Imfinzi combo for the treatment of liver cancer https://t.co/8AU5qodidW #AZN #Katie_Proactive
— Proactive (@proactive_UK) April 25, 2022
6:55 a.m .: New three-digit drop in perspective
Friday’s selling is expected to continue this morning as the Covid situation in China continues to worry investors.
Spread betting odds indicate that the FTSE 100 more or less replicates Friday’s 106-point drop.
On Friday in the United States, the Dow Jones fell 981 points to 33,811 and the S&P 500 fell 122 points to 4,272.
In Japan, the Nikkei 225 is 467 points lighter at 26,638 while in Hong Kong, the Hang Seng is 663 points in the hole at 19,976.
In China, the Shanghai Composite is 122 points weaker at 2,965, its lowest level since 2020, as strict restrictions began to spread in the People’s Republic, with authorities ordering compulsory Covid tests in a district of Beijing.
At least the market got the outcome it wanted – presumably – in the French presidential election, but even in France stocks are set to open lower.
Around the markets
- British pound: US$1.2794, down 0.44 cents
- Gilding: 1.968%
- Gold: US$1,915.70 per ounce, down US$18.60
- Oil: US$102.95 a barrel, down US$3.20
- Bitcoin: $38,960, down $579
Ethereum: US$2,847, down US$95