London midday: Stocks stay down as miners take a hit

London stocks were off earlier lows but still in the red by midday on Monday, with miners under the cosh after China reimposed Covid curbs.

The FTSE 100 was down 0.6% at 7,155.91, amid expectations of more aggressive rate hikes by the US Federal Reserve after last week’s better-than-expected payrolls report, and as investors looked ahead to the start of the second-quarter US earnings season.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The uncertain outlook is keeping stock markets volatile as worries wax and wane about scorching inflation and a global slowdown while Covid fears rear up again. Nerves are also frayed given that earnings season is also kicking off this week and US multinationals will be giving updates about how slowing consumer and businesses sentiment and rising costs may be affecting the bottom line.

"Signs that the Covid horror story is still not quite over are rattling nerves. China has re-imposed strict rules with 30 million people back in lockdown in six cities and region, including parts of Shanghai.”

"The central worry affecting stock markets right now is that as central banks around the world take more aggressive steps to dampen down inflation, it will cause demand to fall rapidly pushing economies into reverse.

"A recession warning light is blinking with the two-year bond yields, commanding higher yields than ten-year bonds, given that this inversion is often seen as a sign that recession could be looming."

In equity markets, miners were under pressure, with Anglo American, Antofagasta, Glencore and Rio Tinto all lower.

Streeter said: "Worries are ratcheting up about the global downturn hitting demand for commodities. Iron ore prices have fallen to levels not seen since December, as stockpiles of steel build up following a slump in the Chinese property sector, while companies tread water impatient for Beijing’s promised infrastructure boost to materialise."

BA and Iberia parent IAG was down amid ongoing travel chaos, with budget airlines Wizz and easyJet also on the back foot.

Wizz said on Monday that it was cutting its summer capacity by 5% due to staff shortages, as it reported a €285m operating loss for the first quarter. However, the airline also said it was expecting a "material" operational profit in the second quarter as revenue and pricing momentum continue to improve.

Danni Hewson, investment analyst at AJ Bell, said: "Despite its best efforts to aggressively grow its position in the low-cost airline market, Wizz Air’s latest trading update doesn’t paint a picture of a company flying high.

"While aircraft capacity is up compared with the period just before the pandemic, the percentage of bums on available seats has fallen.

"Wizz Air’s ticket fares were down in the quarter and there has been a big jump in fuel costs. All in all, the airline was loss-making in its first quarter, meaning the considerable effort put into making it a winner in the industry hasn’t actually generated any extra money in its pocket."

Other travel-related shares fell, with Carnival, Tui and SPP all weaker.

Market Movers

FTSE 100 (UKX) 7,155.91 -0.56%
FTSE 250 (MCX) 18,850.97 -0.33%
techMARK (TASX) 4,336.93 -0.13%

FTSE 100 - Risers

Melrose Industries (MRO) 158.75p 1.89%
Aveva Group (AVV) 2,380.00p 0.93%
Coca-Cola HBC AG (CDI) (CCH) 1,863.50p 0.92%
Compass Group (CPG) 1,776.00p 0.91%
Airtel Africa (AAF) 149.00p 0.88%
Next (NXT) 6,328.00p 0.73%
Harbour Energy (HBR) 327.50p 0.55%
Reckitt Benckiser Group (RKT) 6,272.00p 0.42%
Standard Chartered (STAN) 581.00p 0.28%
BAE Systems (BA.) 812.00p 0.27%

FTSE 100 - Fallers

Anglo American (AAL) 2,701.00p -4.37%
Antofagasta (ANTO) 1,074.50p -3.46%
Endeavour Mining (EDV) 1,627.00p -3.04%
International Consolidated Airlines Group SA (CDI) (IAG) 107.20p -2.65%
Smurfit Kappa Group (CDI) (SKG) 2,714.00p -2.58%
WPP (WPP) 784.00p -2.07%
Fresnillo (FRES) 669.20p -2.05%
Abrdn (ABDN) 160.40p -2.02%
Informa (INF) 535.20p -1.47%
Shell (SHEL) 2,014.00p -1.44%

FTSE 250 - Risers

CMC Markets (CMCX) 290.50p 3.75%
Computacenter (CCC) 2,488.00p 2.89%
Darktrace (DARK) 323.50p 2.70%
Games Workshop Group (GAW) 7,210.00p 2.41%
Trainline (TRN) 360.70p 2.38%
JTC (JTC) 638.00p 2.24%
Mitie Group (MTO) 60.50p 2.20%
Wetherspoon (J.D.) (JDW) 630.00p 2.19%
Future (FUTR) 1,887.00p 1.73%
BH Macro Ltd. GBP Shares (BHMG) 4,625.00p 1.65%

FTSE 250 - Fallers

888 Holdings (DI) (888) 151.10p -5.09%
Chrysalis Investments Limited NPV (CHRY) 98.40p -5.02%
Wizz Air Holdings (WIZZ) 1,790.50p -3.66%
Ferrexpo (FXPO) 116.10p -3.57%
Genuit Group (GEN) 378.50p -2.95%
Helios Towers (HTWS) 124.40p -2.81%
SSP Group (SSPG) 231.40p -2.77%
ITV (ITV) 66.22p -2.47%
Bridgepoint Group (Reg S) (BPT) 213.20p -2.47%
Carnival (CCL) 673.20p -2.43%