London open: Miners pace decline as 2019 kicks off in the red
London stocks kicked off the new year with sharp losses on Wednesday as miners slumped following the release of disappointing Chinese manufacturing data.
At 0830 GMT, the 100 was down 1.8% at 6,604.36, with only three shares in positive territory. The pound was down 0.1% against the dollar at 1.2731 and flat versus the euro at 1.1112.
China’s private Caixin/Markit manufacturing purchasing managers’ index released earlier showed a drop to 49.7 in December from 50.2 in November. This marked the lowest reading since May 2017 and the first contraction in 19 months and missed expectations of 50.1. The figures confirmed a trend seen in the official PMI released on Monday, which slipped to 49.4 in December - its weakest level since early 2016.
"This is not a good indicator as we eye tariffs biting even harder in 2019 than they did last year,” said Neil Wilson, chief market analyst at Markets.com.
"On the whole, there is little to cheer about, unless you’re viewing this as a chance to snap up some bargains. Following the worst year in a decade for global equities, it’s little surprise to see a tentative start to 2019 and this does create opportunities, but investors should be prepared for more volatility ahead."
The weak Chinese data overshadowed news overnight that US President Trump was reaching out to Congress to help end the partial government shutdown. Trump has reportedly invited congressional leaders to a White House briefing on border security on Wednesday.
Miners suffered heavy losses on the back of the Chinese data, with BHP, Glencore, Rio Tinto, Antofagasta and Anglo American all in the red.
Energy shares were also under the cosh, with BP, Shell, Premier Oil and Tullow Oil all lower as oil prices fell amid worries about oversupply.
The risk-off environment was weighing on oil, said market analyst Craig Erlam at Oanda, with Brent and WTI crude down 2% to $52.59 and $44.51 a barrel respectively.
"Both are around 40% off their highs of only three months ago and continue to look vulnerable, albeit to a lesser extent than they have in recent months," Erlam said. "Slower global growth is clearly a strong headwind for oil but I wonder whether the doom and gloom is a little overdone and with OPEC+ seemingly committed to bringing balance back into the market, the bottom may not be far away."
Smith & Nephew shares slid as JPMorgan cut the stock the to ‘neutral’ from ‘overweight’ and chopped the target price to 1,477p from 1,487p following outperformance.
Elsewhere, Playtech lost ground after saying it would pay an extra €28m in tax to Israel after an audit covering the 10 years to 2017. The company said it had reached a deal with the Israeli tax authorities over transfer pricing adjustments with no penalties imposed as a result of the audit.
Egyptian gold miner Centamin retreated as it postponed the replacement of executive chairman Josef El-Raghy, who will now remain in the role as a non-executive director until 2020 as the company has not yet identified a suitable replacement.
International PPL slipped as it appointed Michael Gerrard as chairman of the board of directors.
Energean Oil and Gas rallied after saying it had signed a $900m, 19-year gas sales deal with IPM Beer Tuvia Ltd.
Next was higher ahead of its trading update on Thursday.
Market Movers
FTSE 100 (UKX) 6,604.36 -1.84%
FTSE 250 (MCX) 17,269.98 -1.33%
FTSE 100 - Risers
Imperial Brands (IMB) 2,429.50p 2.21%
Next (NXT) 4,027.00p 0.90%
British American Tobacco (BATS) 2,500.50p 0.02%
GVC Holdings (GVC) 672.50p -0.22%
Unilever (ULVR) 4,095.00p -0.33%
Morrison (Wm) Supermarkets (MRW) 212.30p -0.45%
Smiths Group (SMIN) 1,356.00p -0.59%
Associated British Foods (ABF) 2,031.00p -0.59%
Reckitt Benckiser Group (RB.) 5,976.00p -0.62%
Sainsbury (J) (SBRY) 263.00p -0.75%
FTSE 100 - Fallers
BHP Group (BHP) 1,584.40p -4.07%
Standard Chartered (STAN) 587.00p -3.66%
Smith & Nephew (SN.) 1,413.00p -3.48%
Melrose Industries (MRO) 158.25p -3.42%
Antofagasta (ANTO) 756.80p -3.37%
Evraz (EVR) 464.40p -3.35%
Prudential (PRU) 1,356.50p -3.25%
Glencore (GLEN) 282.56p -3.02%
Barclays (BARC) 146.00p -3.00%
Royal Bank of Scotland Group (RBS) 210.20p -3.00%
FTSE 250 - Risers
Energean Oil & Gas (ENOG) 665.90p 5.98%
FDM Group (Holdings) (FDM) 759.00p 2.15%
PZ Cussons (PZC) 215.80p 1.41%
F&C Commercial Property Trust Ltd. (FCPT) 126.20p 1.28%
Acacia Mining (ACA) 185.55p 1.23%
Caledonia Investments (CLDN) 2,857.75p 1.16%
Greencore Group (GNC) 179.95p 0.98%
Syncona Limited NPV (SYNC) 270.00p 0.93%
Barr (A.G.) (BAG) 796.00p 0.89%
Vivo Energy (VVO) 126.08p 0.86%
FTSE 250 - Fallers
Premier Oil (PMO) 62.75p -5.71%
Indivior (INDV) 107.05p -4.72%
Tullow Oil (TLW) 171.40p -4.30%
888 Holdings (888) 168.30p -3.83%
Investec (INVP) 424.30p -3.81%
Cineworld Group (CINE) 253.80p -3.57%
Funding Circle Holdings (FCH) 333.15p -3.43%
Capita (CPI) 108.55p -3.30%
Galliford Try (GFRD) 604.00p -3.05%
Renishaw (RSW) 4,112.00p -3.02%