London midday: Chinese currency reserves report sparks selling

A renewed drop in crude oil futures and another worrisome report on the pace at which China was burning through its foreign currency reserves weighed on the stockmarket on Monday.

Over the weekend, Saudi Arabia´s oil minister said he had held talks wih his Venezuelan counterpart regarding possible measures to stabilise the oil market.

That initially saw crude oil futures rise by about 1% early on Monday morning.

However, figures out on Sunday showing that China´s foreign currency reserves decreased by almost $100bn in January appeared to rekindle worries about that country´s currency, sparking selling across many asset classes and many regions.

"In my opinion, the report spreads the idea that although the PBoC want to devalue their currency, the central bank only wants to do so at its own speed and this is not a sustainable approach when the economy is still under heavy pressure to liberalize its financial markets," said Jameel Ahman, chief market analyst at FXTM.

As of 11:58GMT, the FTSE 100 was down by 101.44 points to 5,746.68.

In parallel, front month Brent crude futures were off by 1.85% to $33.44 per barrel on the ICE.

The latest update on China´s currency reserves came as investors were waiting on a speech by US Federal Reserve chairwoman Janet Yellen benefore the House Financial Services Committee, on Wednesday.

Yellen´s speech would be scrutinised for any hints of a more dovish stance on interest rates.

December´s interest rate hike by the Fed, alongside projections from US rate-setters calling for up to four interest rate hikes in 2016 were seen as one of the factors that were contributing to capital flowing out from the Asian giant.

Germany´s Sentix institute revealed that investor confidence in Eurozone equities retreated from a reading of +9.6 in January to +6.0 for February - its lowest reading since April 2015.

According to Sentix, the majority of investors now considered the December 2915 interest rate hike by the US Federal Reserve to have been a mistake, even as the situation in commodity and emerging markets weighed on investors´ expectations.

"The common denominator to those negative factors was the strong US dollar. Do we need a new "plaza accord" for a trend change?," Sentix concluded.

Investors flock to havens

On the corporate front, Randgold Resources was in the black after reporting record output for 2015, although profits came in lower. Shares in other precious metals miners such as Centamin and Fresnillo were also on the front-foot as the dollar gave back ground.

FTSE 250-listed Poundland Group was on the front foot after Deutsche Bank upgraded the stock to ‘buy’ from ‘hold’.

BT Group edged a touch lower after it confirmed reports that it is looking for a new group finance director.

John Wood Group was under the cosh after Goldman Sachs downgraded the stock to ‘sell’ from ‘neutral', while Amec Foster Wheeler was also lower after Nomura cut it to ‘neutral’ from ‘buy’.

Aerospace and defence group Rolls-Royce was in the red following press reports over the weekend that it was set to slash its dividend this week.

Imagination Technologies tumbled after the chip designer announced a restructuring and the resignation of its chief executive with immediate effect, as it warned that it now expects to report a loss for the year.

Another Apple supplier, ARM Holdings, was also under pressure on Monday, ahead of its results due out on 10 February.

However, in a note sent to clients Credit Suisse analysts Achal Sultania and John W.Pitzer said recent weakness in the value of sterling versus the US dollar might boost the company´s earnings per share by about 7%.

Market Movers

FTSE 100 (UKX) 5,731.40 -1.99%
FTSE 250 (MCX) 15,737.60 -1.65%
techMARK (TASX) 2,969.06 -2.13%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 5,495.00p 3.68%
Fresnillo (FRES) 804.50p 2.09%
Admiral Group (ADM) 1,709.00p 0.41%
SABMiller (SAB) 4,140.50p 0.13%
Rio Tinto (RIO) 1,816.00p -0.11%
easyJet (EZJ) 1,513.00p -0.53%
Imperial Brands (IMB) 3,481.00p -0.53%
Unilever (ULVR) 2,951.50p -0.54%
Reckitt Benckiser Group (RB.) 6,030.00p -0.63%
British American Tobacco (BATS) 3,702.50p -0.64%

FTSE 100 - Fallers

ARM Holdings (ARM) 925.50p -5.85%
ITV (ITV) 240.80p -5.75%
Worldpay Group (WI) (WPG) 285.00p -5.57%
Berkeley Group Holdings (The) (BKG) 3,213.00p -5.22%
Hargreaves Lansdown (HL.) 1,158.00p -5.08%
London Stock Exchange Group (LSE) 2,202.00p -5.05%
Ashtead Group (AHT) 851.00p -5.02%
Sky (SKY) 985.50p -4.13%
Taylor Wimpey (TW.) 175.40p -4.05%
WPP (WPP) 1,362.00p -3.88%

FTSE 250 - Risers

Allied Minds (ALM) 325.00p 6.28%
Centamin (DI) (CEY) 74.55p 6.20%
Poundland Group (PLND) 151.30p 4.20%
Circassia Pharmaceuticals (CIR) 279.20p 3.60%
Hastings Group Holdings (HSTG) 163.30p 2.25%
Riverstone Energy Limited (RSE) 764.00p 1.87%
CLS Holdings (CLI) 1,496.00p 1.63%
Fidessa Group (FDSA) 1,838.00p 1.49%
esure Group (ESUR) 243.40p 1.37%
Acacia Mining (ACA) 224.40p 1.26%

FTSE 250 - Fallers

Wood Group (John) (WG.) 583.00p -7.53%
Ocado Group (OCDO) 240.20p -7.26%
Tullow Oil (TLW) 173.60p -7.02%
Auto Trader Group (AUTO) 362.30p -6.14%
Amec Foster Wheeler (AMFW) 391.60p -5.98%
Evraz (EVR) 61.40p -5.83%
Ophir Energy (OPHR) 83.80p -5.63%
Rightmove (RMV) 3,472.00p -5.37%
Petrofac Ltd. (PFC) 735.00p -5.22%
Sophos Group (SOPH) 220.10p -5.05%