FTSE 100 (INDEXFTSE: UKX) & FTSE 250 (INDEXFTSE: MCX) Fall Amidst Rout In Global Equities
The FTSE 100 (INDEXFTSE: UKX) & FTSE 250 (INDEXFTSE: MCX) fell today as financial stocks and housebuilder shares plummeted once again.
The banking sector has been hit particularly hard by a deteriorating outlook for the global economy, not just because of exposures within the loan book, but also because of the implications for margins of a lower for longer interest rate environment.
This is while UK house-builders fell sharply again today as investors continue to question whether or not the market has now seen its peak.
Such considerations appear particularly pertinent in light of the inquiry that was announced by the Labour Party late last week, which could suggest that housing supply and house prices may soon return as an issue to parliament’s horizon.
However, despite the doom and gloom elsewhere, Monday’s session saw some very strong performances from London’s precious metals producers, as the lower US dollar continues to aide commodity prices, while some miners are also beginning to benefit from the effects of cost cuts and restructures.
Randgold Resources Ltd shocks investors with full year result
Randgold Resources surprised investors today when it unveiled a much better than expected performance during the fourth quarter, prompting a sharp rise in the share price.
Production was up, costs were down and cash-flow improved. Although operating profits fell by just over 20% due to the deterioration in the gold price during the quarter.
In the broking world, HSBC downgraded Astrazeneca shares from a Buy to a Hold, while Jefferie downgraded shares in security contractor G4S to Underperform. This is while RBC Capital Markets reiterated its Outperform ratings for Home Retail Group and WH Smiths shares.
Economic News
The economic data calendar for much of the UK and the US was empty today, while in Europe, the results from the most recent Sentix Investor Confidence survey were the only release of note.
However, this didn’t stop investors from panicking over the potential for rates to remain lower for longer given the current global economic environment, as was evidenced by today’s rout in UK bank stocks.
Looking ahead to the remainder of the week, the UK will see manufacturing production figures released on Wednesday, shortly before Janet Yellen begins her semi-annual testimony on US monetary policy before the Senate House Financial Services Committee in Washington.
On Friday, preliminary German GDP figures will provide insight into the likely pace of growth in Europe’s largest economy during the fourth quarter of 2015, while retail sales data for January will be released in the US during the afternoon.
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