London open: Stocks tumble after US and Asian bloodbath

London stocks dived in early trade on Tuesday, taking their cue from a bloodbath on Wall Street and in Asia as investors fret that rising inflation will force the Fed to hike rates more than initially expected this year.

At 0840 GMT, the FTSE 100 was down 2.2% to 7,176.56, while the pound was flat against the dollar at 1.3964 and down 0.4% versus the euro at 1.1248.

On Monday, the Dow lost 4.6% or 1,175 points to 24,345.75, having fallen nearly 1,600 points intraday, while the S&P 500 ended down 4.1% at 2,648.94. The S&P and the Dow suffered their biggest declines since August 2011, while in Asia, it was a similar picture, with the Nikkei and Hang Seng both down more than 4.5%.

US stocks had enjoyed record highs recently as investors welcomed President Donald Trump’s tax overhaul, but a strong non-farm payrolls report last Friday, which showed the best US wage growth in eight-and-a-half years, prompted fears that the Fed may need to hike rates more than previously anticipated.

Market commentators also suggested that automatic trades could have been behind the sharp move lower seen on Monday.

With major indices now down more than 10% from their recent highs, equity markets are now in correction mode.

James Hughes, chief market analyst at Axi Trader, said: “The question will be asked whether this is a market correction or a something more sinister for the global economy. A 1000+ fall will give people flash backs of 2007-2008, however economically we are not in the same position so I do not think that is a fear. So far, this is just a long awaited stock market correction, one that could have a lot further to go. When an asset flies higher in value so aggressively, the fall is always equally as quick.”

Naeem Aslam at Think Markets said the fact that there has been no panic buying of gold suggests this is “a healthy correction”.

“Under a real panic situation, we would have seen more than $40 move in a single day for the gold price,” he said.

With stocks mired in the red across the board, it didn’t seem to matter too much whether individual company news flow was good or bad.

Oil giant BP was weaker even as it reported a surge in profit to $2.1bn (£1.5bn) in the fourth quarter from $400m a year earlier as the oil company increased production. Underlying replacement cost profit for the three months to the end of December jumped as BP increased production at its upstream business. For the full year profit more than doubled to $6.2bn from $2.6bn.

Hargreaves Lansdown was lower even as it said interim assets under administration rose 9% to £86.1bn and pre-tax profit was up 12%, and lifted its dividend by 17% to 10.1p per share.

Ocado slumped as it posted strong sales growth from a "transformational" year, but also asked investors for extra cash as profits in 2018 will be hit by investment in new facilities.

EasyJet flew lower after it reported an 8.7% jump in January traffic on Tuesday as the load factor ticked up, while Babcock International fell after saying that adjusted earnings for 2018 will be in line with management expectations, but revenue will fall short due to tough trading conditions.

Stagecoach shares crashed after the UK transport minister said on Monday that the government could take over the company’s running of the rail route between London and Edinburgh after it got its numbers wrong when bidding to run the franchise.

Sanne Group retreated as it said it still expects to report underlying earnings per share in line with the board's expectations for the year.

St Modwen Properties was on the back foot after posting a rise in full-year profit and announcing the retirement of chairman Bill Shannon.

Softcat, a provider of IT infrastructure products and services, managed to rack up strong gains after saying results are expected to be “slightly exceed” of previous expectations for the full year.

On the broker note front, LSE was upgraded to ‘overweight’ at JPMorgan, while Direct Line was lifted to ‘overweight’ at Barclays.

Market Movers

FTSE 100 (UKX) 7,176.56 -2.16%
FTSE 250 (MCX) 19,235.29 -2.31%
techMARK (TASX) 3,232.48 -2.28%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 6,590.00p 1.01%
Sky (SKY) 1,050.50p 0.05%
Fresnillo (FRES) 1,305.50p -0.57%
Reckitt Benckiser Group (RB.) 6,466.00p -1.36%
British American Tobacco (BATS) 4,569.50p -1.36%
London Stock Exchange Group (LSE) 3,900.00p -1.39%
GKN (GKN) 403.20p -1.42%
Pearson (PSON) 680.20p -1.42%
Relx plc (REL) 1,473.00p -1.47%
BP (BP.) 474.80p -1.50%

FTSE 100 - Fallers

Scottish Mortgage Inv Trust (SMT) 419.70p -5.51%
NMC Health (NMC) 3,056.00p -4.74%
Mediclinic International (MDC) 562.20p -3.80%
Standard Life Aberdeen (SLA) 403.10p -3.40%
AstraZeneca (AZN) 4,721.00p -3.39%
Smiths Group (SMIN) 1,503.00p -3.34%
Ashtead Group (AHT) 1,968.00p -3.29%
Kingfisher (KGF) 345.90p -3.19%
Persimmon (PSN) 2,395.39p -3.02%
Glencore (GLEN) 375.30p -2.99%

FTSE 250 - Risers

TI Fluid Systems (TIFS) 262.00p 0.77%
Rank Group (RNK) 228.50p 0.44%
Softcat (SCT) 520.00p 0.39%
Aldermore Group (ALD) 311.60p 0.06%
NB Global Floating Rate Income Fund Ltd GBP (NBLS) 94.10p 0.00%
Greencoat UK Wind (UKW) 120.20p 0.00%
Syncona Limited NPV (SYNC) 204.50p 0.00%
HarbourVest Global Private Equity Limited A Shs (HVPE) 1,232.00p 0.00%
Scottish Inv Trust (SCIN) 829.00p 0.00%
Purecircle Limited (DI) (PURE) 421.00p 0.00%

FTSE 250 - Fallers

Stagecoach Group (SGC) 130.00p -10.53%
Polar Capital Technology Trust (PCT) 1,018.00p -6.95%
Ocado Group (OCDO) 459.10p -6.78%
Sirius Minerals (SXX) 21.44p -6.52%
Woodford Patient Capital Trust (WPCT) 72.95p -6.12%
Herald Investment Trust (HRI) 1,054.00p -5.47%
Sanne Group (SNN) 676.00p -5.45%
Man Group (EMG) 197.00p -5.24%
Vectura Group (VEC) 82.35p -5.18%
Vietnam Enterprise Investments (DI) (VEIL) 450.03p -5.06%