This post was originally published on this site
London stocks slid Monday, tracking losses for global markets as investors began to fret over possible contagion from troubled China Evergrande Property Group, while the heavily weighted metals sector also tumbled as iron ore prices fell.
READ: S&P Global says default by China Evergrande could test government’s capacity to backstop ‘potentially substantial failures‘
The FTSE 100 index
UKX,
slid 2.4% to 6,641.48, while the pound tumbled 0.6% to $1.36670, as the dollar
DXY,
as investors looked ahead to this week’s Bank of England and Federal Open Market Committee meetings.
“Many traders have been paring back their bullish bets on the currency despite expectations of an earlier-than-anticipated rate hike by the BoE. There are worries that Brexit will make the labour shortages and supply constraints much more pronounced in the UK than in most other countries, which, although they will stoke inflation, they could also curtail growth,” said Raffi Boyadjian, lead investment analyst at XM, in a note to clients.
China’s property market and potential contagion remained the bigger concern for markets on Monday, with shares of China Evergrande
3333,
falling 13% in Hong Kong, on fears it will default on interest payments. Wider concerns are focused on the potential for the crisis to drag on China growth.
“This is particularly bad news for miners. Any downturn in China would have significant implications for commodities demand given its status as the world’s largest consumer of many minerals and metals. The situation also has uncomfortable echoes of 2015 when fears about Chinese debt prompted a big and broad-based market correction,” said AJ Bell investment director Russ Mould.
Those worries hit miners, along with another drop in iron ore prices on reports China had imposed some more steel cuts. Mining stocks led the decliners in London with Anglo American
AAL,
Glencore
GLEN,
and Antofagasta
ANTO,
down around 6% each.
Elsewhere, energy crisis worries were in the forefront of traders minds as the UK government held an emergency meeting with companies and consumer groups on Monday to discuss solutions for record gas bills for customers amid a natural gas shortage and worries about potential blackouts this winter.
Kwasi Kwarteng , UK secretary of state for business, energy and industrial strategy, tweeted that the government would “ensure UK consumers have continuity of supply – through a Supplier of Last Resort or a special administrator if needed.” He said he would update parliament later on the discussions. Four small companies have gone under in recent weeks due to spiking natural gas prices and higher electricity bills.
Shares of utility group National Grid
NG,
fell over 1% and shares of energy giant Royal Dutch Shell
RDSA,
RDSA,
fell 1.8%.
A standout gainer on Monday was AstraZeneca
AZN,
AZN,
with shares climbing more than 3% after the pharmaceutical company reported that its cancer treatment Enhertu cut the risk of disease progression or death by 72% in patients with HER2-positive metastatic breast cancer.
Also rising were shares of British Airways and Iberia owner IAG
IAG,
soaring 10% after the FT reported, citing sources, that the administration of President Joe Biden will announce Monday that vaccinated passengers from the U.K. and Europe will be able to travel to the U.S. as of November.
