London open: FTSE 100 hits six-week low on China fears

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The FTSE 100 was in the red again on Friday, hitting a fresh six-week low as fears about the financial crisis in China worsened overnight.

London’s benchmark index was trading 0.6% lower at 7,266 shortly after the opening bell. The index has not closed below this level since 7 July, following a 3.4% decline on the week. It has now declined on eight of the past ten trading sessions.

Macro fears dampen sentiment

China Evergrande, the heavily indebted property group and once the country's second developer, filed for chapter 15 bankruptcy in New York – allowing it to protest its assets in the US as it works to restructure its debt and renegotiate with its creditors.

The Guangzhou-based group, which is thought to hold over $300bn in debt, defaulted on its repayments back in 2021, prompting a string of defaults at other building companies.

The latest news – just days after Country Garden told investors it could register a loss of $7.6bn in the first half of 2023 as it struggles to make its own bond repayments – will raise concerns about contagion to the wider financial services sector.

Back on home shores, data on Friday revealed that UK retail sales fell 1.2% in the month of July compared with June, official data showed on Friday, further than estimates as wet weather and the cost-of-living crisis hit volumes. Economists had forecast a fall of 0.5%, after a 0.6% increase in June.

Stocks on Wall Street fell on Thursday as 10-year Treasury yields hit a 15-year high on the back of expectations of higher-for-longer interest rates. US markets are expected to be volatile on Friday as stock option contracts with a notional value of $2.2trn will expire, according to Dow Jones.

China fears hit miners, financials

“The FTSE 100 is under pressure for the sixth straight session with China-sensitive stocks like Standard Chartered, Burberry and miners like Antofagasta and Anglo American in the red, pricing in concerns about the Chinese economy,” said Victoria Scholar, head of investment at Interactive Investor.

Just eight stocks were registering gains early on, with defensive names such as insurer Admiral and utility groups BT and Vodafone inching higher.

Great Portland Estates was slightly up after announcing the acquisition of King Sloane Properties, which owns freehold properties in Soho Square, Oxford Street, and Falconberg Mews, from Belgravia & Chelsea Property Services for £70m.

Market Movers

FTSE 100 (UKX) 7,266.12 -0.60%
FTSE 250 (MCX) 18,296.23 -0.33%
techMARK (TASX) 4,212.35 -0.37%

FTSE 100 - Risers

Ocado Group (OCDO) 773.00p 0.73%
Admiral Group (ADM) 2,390.00p 0.63%
Vodafone Group (VOD) 71.23p 0.56%
British American Tobacco (BATS) 2,493.50p 0.26%
SEGRO (SGRO) 713.00p 0.22%
BT Group (BT.A) 113.10p 0.09%
BAE Systems (BA.) 956.60p 0.08%
M&G (MNG) 187.10p 0.03%
Pershing Square Holdings Ltd NPV (PSH) 2,938.00p 0.00%
United Utilities Group (UU.) 919.20p 0.00%