London midday: Stocks fall amid Sino-US tensions, Fed rate hike fears

London stocks were firmly in the red by midday on Monday as Sino-US tensions and the prospect of further rates hikes from the Federal Reserve dented sentiment.

The FTSE 100 was down 0.9% at 7,830.81, extending earlier losses, having closed at a record high of 7,901.80 on Friday.

Victoria Scholar, head of investment at Interactive Investor, said: "The FTSE 100 is giving back some of Friday’s gains after the US downed an alleged Chinese spying balloon, putting a strain on US-China relations, and raising concerns about geopolitical instability.

"Plus, a strong US jobs report on Friday has indicated that the Federal Reserve may have more work to do on interest rates, pressurising global equity markets.

"The FTSE 100 closed at a record high on Friday driven by expectations of a dovish tilt from the Bank of England, a weaker pound after a very strong US jobs report and its favourable sectoral mix which provided a tailwind to the index over the last year."

On home shores, a survey out earlier showed that activity in the construction sector fell in January at its fastest pace since May 2020 as house building took a hit, but business optimism rebounded.

The S&P Global/CIPS construction purchasing managers’ index declined for the fourth month in a row, to 48.4 from 48.8 in December. Analysts had been expecting a reading of 48.5. A reading above 50.0 signals expansion, while a reading below indicates contraction.

House building was the weakest-performing category, with the index falling to 44.8 in January from 48.0 a month earlier, and the rate of contraction the steepest since May 2020. Lower volumes of residential work were attributed to rising borrowing costs, unfavourable market conditions and greater caution among clients.

Tim Moore, economics director at S&P Global Market Intelligence, said: "A sharp and accelerated decline in house building activity led to the weakest UK construction sector performance for just over two-and-a-half years in January.

"Construction companies once again cited a headwind from lacklustre market conditions, rising interest rates and fewer new project starts in the residential segment. Commercial building also slipped into contraction as the subdued UK economy weighed on business investment."

Still, Moore said there were positive signals for longer-term prospects across the construction sector, with business activity expectations staging a rebound from the low point seen last December.

Investors were also digesting comments from Bank of England rate-setter Catherine Mann, who said at a conference in Budapest that further interest rate hikes were still more likely than not.

In equity markets, Hargreaves Lansdown slumped after rating downgrade by Credit Suisse.

Asia-focused insurer Prudential was also on the back foot, while Virgin Money was hit by downgrade to ‘equalweight’ at Barclays.

Molten metal flow engineering and technology firm Vesuvius slid after saying it had been hit by a cyber attack involving "“unauthorised access" to its systems.

On the upside, online trading platform Plus500 rallied after it secured a licence from the Dubai Financial Services Authority for "the significant and high growth market" of the United Arab Emirates.

Market Movers

FTSE 100 (UKX) 7,830.81 -0.90%
FTSE 250 (MCX) 20,311.00 -1.37%
techMARK (TASX) 4,527.86 -0.43%

FTSE 100 - Risers

GSK (GSK) 1,464.20p 1.71%
Airtel Africa (AAF) 115.00p 1.41%
Haleon (HLN) 333.35p 1.17%
Fresnillo (FRES) 822.20p 0.66%
Vodafone Group (VOD) 91.25p 0.12%
Imperial Brands (IMB) 2,046.00p 0.10%
Unilever (ULVR) 4,173.50p 0.06%
National Grid (NG.) 1,034.50p 0.05%
Relx plc (REL) 2,452.00p -0.08%
Reckitt Benckiser Group (RKT) 5,800.00p -0.10%

FTSE 100 - Fallers

Ocado Group (OCDO) 707.80p -4.17%
Land Securities Group (LAND) 713.80p -3.77%
Prudential (PRU) 1,304.00p -3.69%
Taylor Wimpey (TW.) 119.70p -3.55%
SEGRO (SGRO) 854.40p -3.46%
British Land Company (BLND) 451.30p -3.34%
Scottish Mortgage Inv Trust (SMT) 778.80p -3.28%
Hargreaves Lansdown (HL.) 919.20p -3.20%
Melrose Industries (MRO) 147.60p -2.83%
JD Sports Fashion (JD.) 181.40p -2.81%

FTSE 250 - Risers

Plus500 Ltd (DI) (PLUS) 1,953.00p 3.06%
Serco Group (SRP) 151.60p 1.74%
Drax Group (DRX) 637.00p 1.19%
Dr. Martens (DOCS) 166.50p 1.09%
Mitie Group (MTO) 83.80p 0.84%
Telecom Plus (TEP) 1,926.00p 0.73%
Spire Healthcare Group (SPI) 250.00p 0.60%
Bakkavor Group (BAKK) 114.00p 0.53%
Centamin (DI) (CEY) 105.00p 0.53%
Capital Gearing Trust (CGT) 5,010.00p 0.50%

FTSE 250 - Fallers

ASOS (ASC) 915.00p -4.98%
Moonpig Group (MOON) 125.70p -4.77%
Ferrexpo (FXPO) 153.20p -4.37%
Darktrace (DARK) 233.00p -4.15%
Tritax Big Box Reit (BBOX) 155.90p -4.00%
Aston Martin Lagonda Global Holdings (AML) 168.70p -3.90%
Genuit Group (GEN) 335.50p -3.87%
International Distributions Services (IDS) 228.00p -3.84%
Future (FUTR) 1,682.00p -3.83%
Carnival (CCL) 856.40p -3.78%