A red start to the week ahead of UK GDP data
UK shares opened the week on negative terrain as the concerns that hit the market last week continued to weigh
The FTSE 100 index dropped 42.7 points or 0.8% to 5,260.3, while the FTSE 250 index shed 32.1 points or 0.3% to 9,293.1. Other European indices suffered similar losses but Wall Street had ticked up by the UK close, helped by excitement ahead of Apple’s quarterly earnings, which are expected to be accompanied by the unveiling of a new tablet product.
On the economic front, investors await tomorrow’s UK GDP reading which is expected to confirm the economy clambered out of recession in the final quarter of 2009. Read our preview of the week for more on this and other data due.
In the US, existing home sales figures disappointed, falling 16.7% in December to 5.45 million units versus the expected 5.9 million. However, the National Association of Business Economics offered some encouragement with new survey results showing US companies expect a slow pick-up in hiring in the first half of 2010.
Here in the UK, select financials and commodities combined to drag the blue-chip index lower as Prime Minister Brown made further comments in support of an international levy on banks and commodities continued to see fund withdrawals in favour of the US dollar.
Listed fund manager Man Group was the worst off among blue-chips, dropping 2.9% in the weak market, while private equity firm 3i Group fell back 1.7% and interdealer broker ICAP lost 0.7%. Banks themselves outperformed, however, as investors bought back into the sector following the previous week’s substantial falls. Royal Bank of Scotland, Barclays and Standard Chartered led the sector higher with gains of between 1.2% and 2.0%.
Similarly, insurance firms also attracted bargain-hunters: Legal & General, RSA Insurance and Admiral were among those featuring on the leaderboard, rising 1.2%-3.7% apiece.
Returning to the casualties, miners tracked commodity prices lower as investors continued to worry about the impact of Chinese attempts to dampen economic growth. Diversified mining majors BHP Billiton and Rio Tinto were also sold off after EU regulators launched an antitrust investigation in the two companies’ proposes iron ore venture. BHP slipped 1.0%, while Rio shed 2.2%. Other metal extractors such as Eurasian Natural Resources and Xstrata were also under the cosh, down 2.3% and 2.0%, respectively.
It was a similar story with oil & gas producers, which took their lead from the price of crude—down below $75 per barrel. Index heavyweights Royal Dutch Shell and BP dropped a respective 1.2% and 1.1%.
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