London close: Stocks weighed down by selling in China and commodities
The top flight index outperformed its European peers on the first day of the week but still ended the session with sharp losses following the sharpest drop overnight in Chinese stocks since 2007.
European equities fared even worse as investors moved to take some chips off the table following recent heavy gains.
The FTSE 100 ended the session lower by 74.68 points or 1.13% to 6,505.13. The Dax-30 finished the session down by 2.56% to end at 11,056.40 points while the Cac-40 came off by another 2.57% to finish at 4,927.60 points.
That came ahead of the US central bank's policy announcement on Wednesday and a wave of corporate results in the UK, US and over on the continent due out over the week.
"Any suggestion that the Fed remains on track to raise interest rates in September, the next planned meeting, is likely to stoke quite a reaction in the markets. Investors remain in denial despite the repeated warnings from Yellen that they intend to raise rates this year.
"This makes earnings increasingly important as the current levels, not far from record highs, can only be justified by ultra-loose monetary policy or strong fundamentals. The absence of both could prompt investors to begin looking elsewhere for value. Already a lot of people consider there to me far more value in Europe and weaker earnings in the US will not help that," said Craig Erlam, Senior Market Analyst at Oanda.
The Shanghai Stock Exchange Composite Index closed 8.48% lower at 3,725.558 - its largest single day decline since June 2007. Significantly, on Friday the country's State Council announced a widening in the Yuan's trading band, which could lead a modest depreciation, analysts at Deutsche Bank said.
Pressure was again piled on the commodity space. Front month Brent crude futures retreated 1.62% to $53.75 per barrel out on the ICE. Gold futures for delivery in August on the other hand did manage to end the day higher by 0.92% to $1,096 per ounce on COMEX. Three-month copper futures closed the day off by 0.7% to $5,205 per metric tonne out on the LME.
No less than 168 S&P 500 companies are due to report this week while over in Europe, 192 Stoxx 600 companies were due to update investors.
Troubling news-flow out of Greece
Investors were also keeping an eye on events in the troubled Mediterranean nation amid reports of delays to the arrival of technical staff from its Troika of creditors. Weekend reports that a clique of hard-left members of the ruling Syriza party had at one point planned to raid the euro cash reserve in the country's mint and arrest the central bank Governor led to harsh criticism of the current government.
The country's stock market was set to open on Tuesday. However, the European Central bank called for measures to limit trading and potential losses. That comes as some Eurozone nations continue calling for additional economic reforms from Athens before negotiations on a third bail-out package can begin.
RyanAir falls, Merlin Entertainments crashes
RyanAir posted a 25% jump in first-quarter profit on the back of rising traffic, as it said full-year profit should be towards the upper end of its guidance range. The budget carrier reported profit after tax of €245m in the three months to 30 June, up from €197m in the same period last year, on revenue of €1.65bn from €1.50bn, as traffic grew 16% to 28m. In addition, the company said it was raising its full-year 2016 traffic target by 3m to 103m.
The part-owner of The Economist, Pearson Group said it is negotiating to sell its 50% stake in the publication. Pearson, which last week sold the Financial Times to Japanese company Nikkei, said it was in discussions but “there is no certainty that this process will lead to a transaction.”
Shares Merlin Entertainment plunged after it warned full-year earnings would be about half of what it made last year, following a roller-coaster crash at its Alton Towers theme park in June. The company said in a half-year trading update while mid-year results were on track, the crash which seriously injured four people had impacted trade during the critical summer period. After the incident the company closed its Alton Towers resort and suspended marketing.
Shares in consumer goods company Reckitt Benckiser gained after it raised its like-for-like revenue growth target for the full year, as it posted a jump in first-half pre-tax profit amid broad-based growth across its businesses. Pre-tax profit for the six months ended 30 June came in at £912m from £838m in the same period last year, on net revenue of £4.36bn, up 4% from 2014. Like-for-like revenue growth at constant currencies was 5%, ahead of analysts’ expectations for a gain of around 3.6%.
Insurer Hiscox reported a lift in pre-tax profit for the first half of the year, but warned mother nature could impact its business. The FTSE 250 firm reported pre-tax profits for the first six months up 8.4% to £135.1m from £124.6m, and said it benefited from a lack of major catastrophes.
Food producer Cranswick reported an increase in revenue and underlying sales in the first quarter, as trading was in line expectations. In a short statement released on Monday, the group said revenue in the quarter to the end of June rose 8% year-on-year, as volume grew strongly across the company’s divisions.
Market Movers
techMARK 3,137.21 -0.92%
FTSE 100 6,505.13 -1.14%
FTSE 250 17,267.56 -1.32%
FTSE 100 - Risers
Bunzl (BNZL) 1,791.00p +1.70%
Reckitt Benckiser Group (RB.) 5,993.00p +1.44%
Randgold Resources Ltd. (RRS) 3,794.00p +1.34%
Fresnillo (FRES) 625.50p +1.13%
Centrica (CNA) 273.70p +0.66%
BHP Billiton (BLT) 1,130.50p +0.62%
Shire Plc (SHP) 5,525.00p +0.55%
Standard Chartered (STAN) 970.70p +0.28%
Intertek Group (ITRK) 2,357.00p +0.21%
FTSE 100 - Fallers
Pearson (PSON) 1,161.00p -4.76%
Merlin Entertainments (MERL) 405.00p -4.28%
Sage Group (SGE) 520.50p -3.79%
3i Group (III) 540.50p -3.31%
RSA Insurance Group (RSA) 437.80p -3.16%
Experian (EXPN) 1,149.00p -3.04%
easyJet (EZJ) 1,673.00p -3.01%
Antofagasta (ANTO) 573.00p -2.72%
Relx plc (REL) 1,070.00p -2.64%
London Stock Exchange Group (LSE) 2,537.00p -2.57%
FTSE 250 - Risers
CLS Holdings (CLI) 1,930.00p +4.44%
Wizz Air Holdings (WIZZ) 1,700.00p +3.79%
Petra Diamonds Ltd.(DI) (PDL) 146.20p +3.10%
Bwin.party Digital Entertainment (BPTY) 111.70p +2.85%
Cranswick (CWK) 1,636.00p +2.25%
Riverstone Energy Limited (RSE) 985.00p +2.18%
Centamin (DI) (CEY) 55.00p +1.76%
Homeserve (HSV) 435.80p +1.37%
Tate & Lyle (TATE) 511.00p +1.09%
Crest Nicholson Holdings (CRST) 529.00p +1.05%
FTSE 250 - Fallers
Lonmin (LMI) 54.80p -12.11%
Evraz (EVR) 96.25p -7.89%
Vedanta Resources (VED) 398.90p -7.73%
Fidelity China Special Situations (FCSS) 137.10p -7.11%
Kaz Minerals (KAZ) 158.20p -6.72%
Premier Oil (PMO) 124.40p -5.90%
Tullow Oil (TLW) 233.80p -5.80%
Ladbrokes (LAD) 117.50p -5.32%
Ophir Energy (OPHR) 106.00p -4.50%
Hiscox Limited (CDI) (HSX) 891.50p -4.24%