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London close: Evergrande-dented mood keeps stocks in the red

By Josh White

Date: Thursday 21 Oct 2021

London close: Evergrande-dented mood keeps stocks in the red

(Sharecast News) - London stocks closed in negative territory on Thursday, amid concerns about floundering Chinese property giant Evergrande, after it failed to complete a $2.6bn asset sale.
The FTSE 100 ended the session down 0.45% at 7,190.30, and the FTSE 250 was 0.22% weaker at 22,917.05.

Sterling was weaker as well, last trading down 0.09% on the dollar at $1.3811, and losing 0.03% against the euro to €1.1863.

"European stock markets are down this afternoon as renewed fears about the heavily indebted Chinese property group Evergrande have dented sentiment," said Equiti Capital market analyst David Madden.

"The firm has come under huge strain recently, so much so, that trading in its shares was halted in late September, and it recommenced today.

"In a way, the concerns surrounding Evergrande, sort of represent the wider property market in China, as it is overstretched."

Madden said a number of traders feared that if Evergrande was to go into meltdown, it could trigger a "brutal" property crash in China, which would ripple out globally.

"Equities in Europe and the US have enjoyed rallies recently, so the news that Evergrande shares fell 12% overnight set the tone today.

"It could be said that Evergrande would only look to start trading again if it is strong enough to withstand the pressure of the markets, so perhaps the firm will muddle on."

On the macro front, data released earlier by the Office for National Statistics showed public borrowing fell by almost half in the first six months of the financial year as it continued to recover from the impact of the Covid-19 pandemic.

Public sector borrowing fell to £108.1bn, down by £101.2bn on the April-to-September period in 2020, but around three times its level before the pandemic.

Government borrowing fell to £21.8bn in September, a drop of around £7bn compared with September 2020, and lower than economists had forecast.

It was also sharply lower than the £151.1bn the Office for Budget Responsibility had expected.

The data showed public sector net debt totalled £2.22trn, or 95.5% of gross domestic product.

Separately, a survey from the Confederation of British Industry showed manufacturing output grew steadily in October but supply pressures continued to rise.

The net score for output was 15% in the three months to October, broadly in line with 16% a month earlier and well ahead of the 3% long-run average.

Output increased in 11 of 17 sub sectors led by chemicals, aerospace, and food drink and tobacco.

The survey of 263 manufacturers found firms expected output growth to pick up substantially in the next quarter.

Growth of new orders was expected to rise after slowing domestic orders affected October's performance.

In equity markets, miners were under pressure again as metals prices fell, with Anglo American down 2.66%, Rio Tinto off 4.84%, BHP losing 3.72%, and Glencore 2.49% lower.

Barclays was down 0.78% despite reporting a record £6.9bn of profit for the first nine months of 2021 as the securities business performed strongly, and the retail bank released bad debt provisions made earlier in the pandemic.

Lancashire dropped 7.31% after it said it expected net ultimate losses of between $165m and $185m from natural catastrophes including Hurricane Ida and European storms Bernd, Volker and Xero.

Meanwhile, greeting cards retailer Moonpig slumped 3.16% after shareholders placed 30m shares, or a stake of around 8.8%, in the company.

On the upside, consumer goods giant Unilever added 1.17% after it reported higher-than-expected third-quarter underlying sales growth, driven by higher prices and strong demand in the US, India, China and Turkey.

Relx gained 1.58% after the company upgraded its full-year outlook for underlying growth rates in revenue and adjusted operating profit, as well as constant currency growth in adjusted earnings per share.

Engineer Renishaw rocketed 11.1% after reporting a jump in annual profit and saying it had been "a positive year of recovery".

Market Movers

FTSE 100 (UKX) 7,190.30 -0.45%
FTSE 250 (MCX) 22,917.05 -0.22%
techMARK (TASX) 4,585.60 0.36%

FTSE 100 - Risers

Halma (HLMA) 2,956.00p 2.00%
Reckitt Benckiser Group (RKT) 5,531.00p 1.99%
Legal & General Group (LGEN) 279.90p 1.86%
Hikma Pharmaceuticals (HIK) 2,468.00p 1.78%
Croda International (CRDA) 9,022.00p 1.71%
International Consolidated Airlines Group SA (CDI) (IAG) 160.16p 1.69%
London Stock Exchange Group (LSEG) 8,078.00p 1.63%
Relx plc (REL) 2,256.00p 1.58%
3i Group (III) 1,317.00p 1.50%
Intermediate Capital Group (ICP) 2,148.00p 1.37%

FTSE 100 - Fallers

Rio Tinto (RIO) 4,656.50p -4.84%
BHP Group (BHP) 1,928.40p -3.72%
Barratt Developments (BDEV) 650.80p -3.07%
Evraz (EVR) 623.00p -2.81%
Anglo American (AAL) 2,759.00p -2.66%
Glencore (GLEN) 368.55p -2.49%
Smiths Group (SMIN) 1,424.50p -2.24%
Antofagasta (ANTO) 1,431.50p -2.15%
Rentokil Initial (RTO) 589.60p -2.12%
Taylor Wimpey (TW.) 152.25p -1.96%

FTSE 250 - Risers

Renishaw (RSW) 5,185.00p 11.10%
Syncona Limited NPV (SYNC) 190.00p 4.74%
Darktrace (DARK) 949.50p 4.22%
Capital & Counties Properties (CAPC) 165.30p 3.64%
Vivo Energy (VVO) 106.60p 3.50%
Draper Esprit (GROW) 993.00p 3.44%
Shaftesbury (SHB) 623.50p 3.40%
Aston Martin Lagonda Global Holdings (AML) 1,764.50p 3.29%
Wizz Air Holdings (WIZZ) 4,451.00p 3.19%
Cineworld Group (CINE) 64.34p 3.11%

FTSE 250 - Fallers

Lancashire Holdings Limited (LRE) 513.00p -7.31%
Trainline (TRN) 322.20p -4.56%
Ferrexpo (FXPO) 303.60p -4.15%
Redrow (RDW) 636.00p -4.13%
Bellway (BWY) 3,213.00p -3.65%
Energean (ENOG) 877.00p -3.30%
Apax Global Alpha Limited (APAX) 210.00p -3.23%
Moonpig Group (MOON) 337.60p -3.16%
BlackRock World Mining Trust (BRWM) 555.00p -3.14%
National Express Group (NEX) 217.00p -2.95%

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