FTSE 100 laid low by miners after Chinese devaluation| MENAFN.COM

Saturday, 22 January 2022 06:38 GMT

FTSE 100 laid low by miners after Chinese devaluation


(MENAFN- ProactiveInvestors)LONDON CLOSE London's blue-chips were mostly deep in the red after China's currency devaluation. The FTSE 100 Index shed 72 points or 1.06% at 6665 after the Chinese government allowed its currency to fall to three-year lows against the dollar this morning with an overall 2% decline in value. It represented a 'one-off depreciation' designed to combat the news from the start of the week that exports had faced their biggest fall in four months. The move sent shock waves through global markets as dealers pondered its possible impact on prospects for a US interest rate rise. Bearing the brunt of the pain were commodity plays such as Vedanta Glencore BHP Billiton Anglo American and Antofagasta but fashion chain Burberry (LON:BRBY) which counts China as a major market also took a fall shedding 4.4%. At least there was some cheer in Europe where Athens made progress in talks to secure its third bailout ahead of a ratification vote on Wednesday and potential approval by Eurozone finance ministers at the end of the week. On the corporate front bookmaker Ladbrokes (LON:LAD) slipped 2p to 108p as it reported lower profits but vowed to press ahead with changes including its planned merger with Gala Coral. Retailer Card Factory (LON:CARD) fell 8.9p to 358p despite an upbeat trading update. Support services group Serco (LON:SRP) declined 1.5p to 124p after reporting a better-than-expected first half. Just Retirement Group (LON:JRG) backtracked 5.5% to 187.8p as it announced plans to merge with Partnership Assurance in a £668.5mln deal. Also in the insurance and pensions sector the Prudential (LON:PRU) climbed 70p to 1577p making it the Footsie's top performer on news of higher profits despite controversial changes in UK pension rules. Also on the rise was Oracle Coalfields (LON:ORCP) as its coal price petition for the Thar thermal power project in Pakistan was admitted. The shares shot up 18.9% to 1.58p. Sector peer Hargreaves Services (LON:HSP) heated up 11% to 355.75p to 364.75p as the coal supplier and transport group outlined plans to move into renewable power and biomass to guard against falling coal prices. PCG Entertainments (LON:PCGE) returned from suspension at 4.375p after it finally completed a 'transformational' acquisition. The AIM firm this morning announced it was acquiring the profitable software distributor Center Point Development in a share-based deal starting at just under $10mln. PCG's shares were suspended at 5.25p way back in mid-February. North River Resources (LON:NRRP) was another faller as it said it is unlikely to survive if investors fail to back a US$4mln finance package from major shareholder Greenstone. Shares plunged 14.6% to 0.24p. US OPEN Wall Street stocks plunged on Tuesday as finally some positives from Greece was outweighed by big worries over the potential impact of China's currency devaluation. The benchmark Dow Jones was down 188 points to 17433 while the Nasdaq eased 28 to 5073. The S&P500 lost 17 at 2088. In London the FTSE100 was also adrift around 54 points after traders digested news the government of powerhouse China which has recently seen volatility in markets to say the least had allowed its currency to fall to three-year lows against the dollar this morning. The move sent shock waves through global markets as dealers pondered its possible impact on prospects for a US interest rate rise. Craig Erlam at foreign exchange dealer OANDA said it could have a significant impact on whether the Federal Reserve decides to increase interest rates this year. On Wall Street the story was Google however with news coming overnight that the global tech giant Google (NASDAQ:GOOGL)  was to become 'Alphabet' after a radical shake-up at the company. The move is designed to identify the core operations within Google including Chrome and Android from the more left-field products such as its drones arm and investment branches. The new group will be a collection of companies with Google the largest. Of the two new reporting companies one will hold its core search and Web advertising business and the other its newer ventures such as driverless cars and Internet-connected thermostats made by its Nest business.  Google shares raced up 6.43% to US$674.46 in pre-market and are now up 5.39% to around US$700. There was some cause for cheer in Europe as Athens made progress in talks to secure its third bailout ahead of a ratification vote on Wednesday and potential approval at the end of the week. Also putting a dampener on sentiment was US business productivity which showed a rebound in the  second quarter but still suggested a weak underlying trend suggesting inflation could pick up more quickly than anticipated. The big gainer was Terex Corp (NYSE:TEX) which shot up over 19% as it agreed a merger with a Finnish competitor Konecranes. The combined cranes and materials-handling supplier will have a greater global reach and sales of more than a whopping US$10bn. Also rising was Symentra up 6.91% to US$31.56 as Japan's Sumitomo Life Insurance agreed to buy it in a deal valued at about US$3.8 billion. Tribune Publishing (NYSE:TPUB) owner of the LA Times dropped over 27% as it revealed profit had dropped in the latest quarter impacted by lower revenues from advertising print and delivery. That said the company did still lift its full-year guidance. Symantec (NASDAQ:SYMC) the Norton anti-virus maker saw share ease over 2% as it revealed it was to sell its data storage business Veritas for $8 billion in cash to a group including Carlyle Group LP (NASDAQ:CG) and Singapore's sovereign wealth fund GIC. MID-SESSION MARKET WRAP Top-flight shares fell further into the red on Tuesday as traders digested the potential scale of the impact of China's currency devaluation. The FTSE 100 Index was 46 points adrift at 6690 in early afternoon trading with indices in Paris and Frankfurt also on the slide. The Chinese government allowed its currency to fall to three-year lows against the dollar this morning with an overall 2% decline in value. It represented a 'one-off depreciation' designed to combat the news from the start of the week that exports had faced their biggest fall in four months. But the move sent shock waves through global markets as dealers pondered its possible impact on prospects for a US interest rate rise. Craig Erlam at foreign exchange dealer OANDA said it could have a significant impact on whether the Federal Reserve decides to increase interest rates this year. He said: ' A rate hike this year already appeared to be on a knife edge this could be enough to tip it over into next.' China's decision to devalue the yuan was taking its toll on commodities as a whole. BHP Billiton (LON:BLT) fell 39p to 1170p Rio Tinto (LON:RIO) dropped 53.5p to 2581.5p and Antofagasta (LON:ANTO) reversed 9p to 585p. But there was cheer in Europe where Athens made progress in talks to secure its third bailout ahead of a ratification vote on Wednesday and potential approval by Eurozone finance ministers at the end of the week. In UK economic news house purchase lending rose 22% in June against May but declined slightly against the same month a year ago according to the Council of Mortgage Lenders. On the corporate front bookmaker Ladbrokes (LON:LAD) slipped 0.8p to 109.2p as it reported lower profits but vowed to press ahead with changes including its planned merger with Gala Coral. Retailer Card Factory (LON:CARD) fell 8.8p to 358.1p despite an upbeat trading update. Support services group Serco (LON:SRP) reversed 1.4p to 124.1p after reporting a better-than-expected first half. Just Retirement Group (LON:JRG) backtracked 4.7p to 194p as it announced plans to merge with Partnership Assurance in a £668.5mln deal. Also in the insurance and pensions sector the Prudential (LON:PRU) climbed 32.5p to 1539p on news of higher profits despite controversial changes in UK pension rules. Coal supplier and transport group Hargreaves Services (LON:HSP) heated up 44.25p to 364.75p as it outlined plans to move into renewable power and biomass to guard against falling coal prices. In small caps North River Resources (LON:NRRP) said it is unlikely to survive if investors fail to back a US$4mln finance package from major shareholder Greenstone. Shares plummeted 22% to 0.22p. Conversely Stratex International (LON:STI) was one of the biggest risers up 6% to 2.2p. The company said mineralisation has been confirmed at the Dalafin gold project in Senegal. Elsewhere Eurasia Mining (LON:EUA) started drilling at its Monchetundra platinum deposit in Russia its second project in the country. It too was higher gaining 6.25% to 0.85p. MOST FOLLOWED Google dominated the morning as people pondered why it had decided to change its name to Alphabet. The answer apparently is that Google will remain the core of the group while more ephemeral investments such as drones and headsets will be cut loose to succeed or fail without damaging the main business. In essence Alphabet will be become a very powerful conglomerate run by the current head honchos while the day-to-day business of maintaining the supremacy of its search engine now passes to new chief executive Sandar Pichai. It may now even mean the long touted rumour that Google will buy Twitter comes to pass although it would be Alphabet now doing the deal presumably. Co-op Bank was also causing some head scratching as having found it guilty of misleading investors the Financial Conduct Authority said on Tuesday that it had waived the 'substantial' fine it would normally have imposed. It seems the FCA decided the Co-op can't afford to pay a fine and needs the money to re-build. 'In this case the FCA and the PRA considered the fact that Co-op Bank is engaged in a plan to ensure that it meets its individual capital guidance on a sustainable basis and has adequate capital to withstand a severe stress' sparking a wave of comment given the scale of fines imposed on other banks. China featured as the Peoples' Bank sparked a run on the yuan as it unveiled a 1.9% devaluation of the currency against the dollar. It was seemingly confirmation of the concern in China over its lagging economy and sapped the life out of mining stocks in particular. The move overshadowed progress on a new bail-out for Greece with a deal in principle said to have been agreed with its main creditors over a package worth €85bn. Neil Woodford is possibly the nearest the UK has at the moment to Warren Buffett in the legendary investor stakes. His new investment trust Patient Capital (LON:WPCT) raked in a meaty £800mln earlier in the year but the fans are still not satisfied. The company said it was planning to issue more shares to meet the demand alongside its first set of interim results. The trust specialises in early stage tech and biotechs. It is a notoriously unpredictable grouping to invest in hence the name. But Woodford said it was the old codgers that held the performance back in the past few months with GlaxoSmithKline and AstraZeneca in in particular picked out for a mild wigging. The bookie always wins – well not today as Ladbrokes (LON:LAD) unveiled lower profits and slashed its dividend as taxes took their toll although trading trends improved. Operating profit in the six months to June 30 plunged 31.5% to £38.9mln in the face of point-of-consumption tax and machine gaming duties. Investors in Namibia explorer North River meanwhile were given a stark choice. Either approve a US$4mln finance package from major shareholder Greenstone or run the risk of the company failing. They had earlier voted against a larger deal also backed by Greenstone but the options now look limited said one broker. MARKET OPEN Blue-chip shares fell on Tuesday as downbeat economic news from China eclipsed positive developments in Greece. The FTSE 100 Index was 35 points adrift at 6701 after an hour of trading with indices in Paris and Frankfurt also in the red. The Chinese government allowed its currency to fall to three-year lows against the dollar this morning with an overall 2% decline in value in a 'one off depreciation' designed to combat the news from the start of the week that exports had seen their biggest fall in four months. China's decision to devalue the yuan was taking its toll on commodities as a whole. BHP Billiton (LON:BLT) fell 1.28p to 1193.5p Rio Tinto (LON:RIO) dropped 29.5p to 2605.5p and Antofagasta (LON:ANTO) reversed 0.4p to 591.5p. But there was cheer in Europe where Athens made progress in talks to secure its third bailout ahead of a ratification vote on Wednesday and potential approval by Eurozone finance ministers at the end of the week. Spreadex analyst Connor Campbell said: "Whilst this would in theory bring with it the end of this ugly and painfully revealing period for Greece and the Eurozone alike for Alexis Tsipras it provides another stick to be beaten with ahead of his reportedly planned autumn elections." In UK economic news house purchase lending rose 22% in June against May but declined slightly against the same month a year ago according to the Council of Mortgage Lenders. Back in London bookmaker Ladbrokes (LON:LAD) edged up 0.1p to 110.1p as it reported lower profits but vowed to press ahead with changes including its planned merger with Gala Coral. Retailer Card Factory (LON:CARD) fell 3.1p to 363.8p despite an upbeat trading update. Support services group Serco (LON:SRP) advanced 4.2p to 129.7p after reporting a better-than-expected first half. Just Retirement Group (LON:JRG) rose 1.5p to 200.2p as it announced plans to merge with Partnership Assurance in a £668.5mln deal. In small caps North River Resources (LON:NRRP) said if it does not receive shareholder approval for a US$4mln finance package from Greenstone it is unlikely it will keep going. Shareholders voted down the last attempt at a US$12mln financing in June due to concerns over the size of the stake that would have ended up with major shareholder Greenstone but appear to have little choice with the latest package. Shares plummeted 35% to 0.18p. Conversely Stratex (LON:STI) was one of the biggest risers today up 8.6% to 8.2p. The company said mineralisation has been confirmed at the Dalafin gold project in Senegal. Elsewhere Eurasia Mining (LON:EUA) started drilling at its Monchetundra platinum deposit in Russia its second project in the country. It too was higher gaining 6.25% to 0.85p. MARKET PREVIEW London's blue-chip stocks are expected to start in negative territory on Tuesday after Chinese volatility undermined the positive momentum built in the US. Wall Street's Dow Jones closed Monday's session some 240 points 1.4% higher - with the S&P 500 and Nasdaq rising 1.3% and 1.16% - before Chinese intervention sparked panic in foreign exchange markets. In what is seen as a reaction to poor export stats the People's Bank of China has changed that way that its currency's 'mid-point' is calculated. The Chinese bank says this makes the calculation more market orientated. The market's concern is that this could see an escalation of a global 'currency war' and equity markets in the regions have also been shaken. 'The yuan devaluation will now raise many questions about whether the Fed can still seriously consider raising rates this year' OANDA analyst Craig Erlam said in a note. 'Any move by the Fed to now raise rates could strengthen the currency by more than previously expected. Whether that will be enough to encourage the Fed to delay such a hike isn't clear but if they were not sure before this certainly won't help matters.' Japan's Nikkei shed 90 points 0.4% to 20720 while Australia's natural resources heavy ASX 200 benchmark was down 0.6% and India's Sensex dropped 0.4%. The Shanghai Composite meanwhile was up 0.35% and Hong Kong's Hang Seng gained 0.5%. Elsewhere Greece has reportedly reached an advanced stage of negotiations with its creditors and as such has taken big steps towards agree new terms for its €86bn bailout. It suggests a deal could be in place comfortably ahead of the August 20 deadline. In Europe the day's diary is light in terms of economic data. Spread betting and CFD group IG Markets is calling the FTSE 100 around 30 points lower at 6701 to 6703.


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