FTSE 100 heading for 7000 in the wrong direction, as Anglo American leads mining shares lower

The FTSE 100 hit by Fed tapering talk and virus concerns, while oil hits lowest level since May

  • FTSE 100 down 166 points
  • Ex-divs prove a drag
  • Oil price under pressure

9.34am: Leading shares at day’s low

The decline is getting worse.

The FTSE 100 is now down 166.17 points or 2.32% to 7003,15, a low for the day.

Meanwhile the FTSE 250 has fallen 302 points or 1.27%.

And the downbeat mood is not confined to the UK. Germany’s Dax is down 1.6% while France’s CAC 40 is off 2.55%.

US futures are not looking bright either. After Wednesday’s negative moves, the Dow Jones Industrial Average is indicated down 0.9%, with the S&P 500 and Nasdaq Composite expected to show similar falls.

Neil Wilson at Markets.com said: “You have this cocktail that bad for stocks in the near term at least – Fed taper plus rolling over in economic data after peak growth plus worries about Delta exacting a longer-term drag on economic growth.”

 

8.37am: Commodity companies under pressure

Mining shares are dominating the fallers as commodity prices continue to struggle.

() – which is one of the companies going ex-dividend – has dropped 11.65%, BHP PLC is down 4.04% while () is 3.62% lower.

() has fallen 5% as it warned a drought in Chile would hamper copper production for the rest of the year, and cut its forecasts from 730,000-760,000 tonnes to 710,000 -740,000.

This came after it reported half year profits of US$1.78bn, a huge jump on the US$387.5mln at the same time last year.

With the oil price also under pressure, () is off 4.25%.

Overall the FTSE 100 is off its worst levels but still well in the red, down 121.95 points or 1.7% at 7047.37.

8.20am: Ex-divs among the fallers

The market is not being helped by a large number of stocks – unlucky 13 as it happens – going ex-dividend.

These include (), down 4.61%, (), 4.33% lower and (), which has fallen 3.78%.

On the positive side, Richard Hunter, head of markets at interactive investor, said: “Despite the wall of worry which investors are being forced to climb and another feeble round of opening trades, the main indices are still comfortably in positive territory for the year, with the FTSE100 remaining ahead by 9% and the FTSE250 by 15%.”

8.12am: Leading shares rattled at the open

Markets have certainly been rattled by the growing prospect of the Federal Reserve easing its support for the economy, as evidenced by the minutes of the central bank’s last meeting.

Falls on Wall Street and in Asia are being replicated in Europe, with the FTSE 100 slumping 143.13 points or 2% at the open to 7026.19.

The domestically focused FTSE 250 is also under pressure, down 1.32% or 313.74 points at 23,522.63.

It is not just the Fed which is causing concern, with analysts worried about rising COVID-19 cases around the globe.

Symptomatic of that is the continuing fall in oil prices. They have dropped for the sixth day running, their worst losing streak since February last year.

The spread of the Delta variant has renewed concerns about another slowdown of the economy and thus lower demand for fuel.

This was emphasised by a surprise rise in US gasoline stockpiles, which increased by 696,000 barrels last week, the first rise in more than a month.

Jeffrey Halley, senior market analyst for Asia Pacific at OANDA, said: “The US official crude inventories fell by more than expected, as did distillates, but traders chose to focus on the unexpected rise in gasoline stocks.

“Oil markets usually tend to cherry-pick the data they want to fit their preferred narrative with official crude inventories. The fact that they focused on rising gasoline stocks underlines the growth/recovery fears and emphasises it as the prevailing sentiment in the market.”

So Brent crude is down 1.69% at US$67.08 a barrel, the lowest level since May.

On the wider political front, the fallout from the situation in Afghanistan is unpredictable, and markets as we know hate uncertainty.

6.45am: Leading shares under the cosh

The FTSE 100 is set to start Thursday on the backfoot as equity markets dampened sentiments following Federal Reserve policy meeting minutes which confirm the direction of travel, towards a tapering of stimulus.

London’s blue-chip benchmark is seen close to 60 points lower with CFD firm IG Markets making a price of 7,084 to 7,087 with just over an hour to go until the open.

Central bank asset purchasing is seemingly set to wind down, though a guessing game remains in regards to market expectations for the timing with most commentators predicting either Q4 2021 or Q1 2022 depending on the relative strength of key economic indicators in the United States.

“Last nights Fed minutes didn’t add anything significant to the sum of overall knowledge about the central banks future intentions with respect to monetary policy that wasn’t already known beforehand,” said Michael Hewson, analyst at CMC Markets.

The analyst added: “The minutes certainly don’t alter the expectation that a taper is on its way, its accepted wisdom now that discussions on a taper are likely to start soon, with a slowdown in purchases starting sometime in Q4, despite concerns about some weakness in the more recent data, particularly retail sales and consumer confidence.”

On Wall Street, American equity benchmarks were all lit in red.

The Dow Jones dropped 382 points or 1.08% to close at 34,960 whilst the S&P 500, similarly, ditched 1.07% to finish Wednesday’s session at 4,400.

The Nasdaq lost 130 points or 0.89% to 14,525 and the small-cap centred Russell 2,000 index moved 0.84% lower to 2,158.

In Asia, Japan’s Nikkei moved down 0.67% to 27,400 while Hong Kong’s Hang Seng gave up 1.4% to 25,505 and the Shanghai Composite nudged 0.24% lower to 3,477.

Around the markets

The pound: US$1.3715, down 0.3%

Gold: US$1,778 per ounce, down 0.51%

Silver: US$23.26 per ounce, down 1.05%

Brent crude: US$67.40 per barrel, down 2.3%

WTI crude: US$64.45 per barrel, down 3.2%

Bitcoin: US$44,474, down 1.96%

Ethereum: US$3,012, down 1.93%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were lower on Thursday as Australian mining shares declined following an overnight fall in iron ore prices.

Rio Tinto shares slipped 5.95% while () declined 6.78% and BHP dipped 6.38%.

Australia’s S&P/ASX 200 fell, with the index trading 0.33% lower.

The Shanghai Composite in China slipped 0.2% and Hong Kong’s Hang Seng index slumped 1.41% as regulatory concerns continued to weigh on investor sentiment.

In Japan, the Nikkei 225 fell 0.73% while South Korea’s Kospi declined 1.30%.

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