London open: Stocks drop after Trump's healthcare defeat
Equity markets in London fell in early trade amid growing doubts about Donald Trump's ability to deliver on his plans for tax cuts and infrastructure spending after Republican leaders withdrew his healthcare bill at the end of last week due to a lack of support.
At 0825 GMT, the FTSE 100 was down 0.8% to 7,275.41, with cyclical stocks such as banks and miners suffering the worst losses.
Meanwhile, the pound was up 0.7% to $1.2562, with the dollar under pressure after the failed passage of the healthcare bill, while the US 10-year yields broke below 2.40%, as the US dollar index returned back to the pre-US election levels.
Oil prices were moving lower, with Brent Crude at just over $50 per barrel and WTI at $47.52, despite an unscheduled OPEC meeting over the weekend, where the cartel of major producers announced that they would stick to their plan to reduce production and said cuts could be extended up to six months.
Most UK and European investors will be looking ahead to Wednesday, when Prime Minister Theresa May is set to trigger Article 50 and kick off formal divorce proceedings with the EU.
Spreadex analyst Connor Campbell said markets were in a "pretty bad mood" after glimpsing the art of Donald Trump’s dealings last week.
"Given that the global indices had been inflated by the President’s various promises, it is no surprise that the reaction to his ‘Trumpcare’ failure has been so vitriolic. Investors likely don’t care one bit about the state of America’s healthcare; they do care, however, about what this defeat means for his ability to push through the more market-relevant vows, namely tax reform and infrastructure spending.
"It certainly doesn’t mean anything good, with Trump seemingly unable to unite the Republican Party as a law-making entity. This huge knock in confidence has immediately made itself felt on the market."
In corporate news, BT was under the cosh after being fined £42m by regulator Ofcom for cutting compensation to rivals for delays in providing high speed broadband.
Old Mutual was a touch weaker after striking a deal to offload almost half of its stake in its asset management business for $446m.
Energy services firm Wood Group gushed lower after saying it has extended its North Sea contract with explorer Premier Oil for a further two years in a deal worth $50m and which will secure more than 150 jobs.
Transport operator FirstGroup rallied after winning the seven-year contract from the UK Department for Transport to operate trains on the South Western rail franchise, with rival Stagecoach among those missing out. Stagecoach shares were in the red.
Greencoat UK Wind nudged up after announcing the acquisition of Langhope Rig Wind Farm from GE unit, GE Energy Financial Services, for a total consideration of £39.8m.
Ryanair shares flew higher after Bank of America Merrill Lynch upgraded the stock to 'neutral' from 'underperform', but British Airways and Iberia parent International Consolidated Airlines slid after a double downgrade to 'underperform'.
Just Eat was on the front foot after an upgrade to 'buy' at UBS, while Lloyds Banking Group retreated after a downgrade by Berenberg.
Gold miners Randgold Resources and Fresnillo were lifted as gold extended gains to $1,259, just shy of the closely monitored $1,260 level, the yellow metal's 200-day moving average.
There are no major UK data releases due on Monday.
Market Movers
FTSE 100 (UKX) 7,275.41 -0.84%
FTSE 250 (MCX) 18,895.26 -0.45%
techMARK (TASX) 3,444.99 -0.43%
FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 7,275.00p 1.61%
Centrica (CNA) 218.40p 0.92%
Fresnillo (FRES) 1,557.00p 0.78%
Mediclinic International (MDC) 767.50p 0.59%
Old Mutual (OML) 222.90p 0.18%
Hikma Pharmaceuticals (HIK) 2,004.00p 0.15%
Severn Trent (SVT) 2,413.00p 0.08%
Mondi (MNDI) 1,930.00p 0.05%
Sky (SKY) 981.00p 0.05%
Associated British Foods (ABF) 2,631.00p 0.04%
FTSE 100 - Fallers
Glencore (GLEN) 307.30p -3.89%
International Consolidated Airlines Group SA (CDI) (IAG) 530.50p -3.46%
Antofagasta (ANTO) 805.00p -3.07%
Babcock International Group (BAB) 889.00p -3.00%
Rio Tinto (RIO) 3,161.00p -2.96%
BHP Billiton (BLT) 1,210.00p -2.81%
Anglo American (AAL) 1,218.50p -2.71%
Lloyds Banking Group (LLOY) 66.34p -2.51%
CRH (CRH) 2,767.00p -1.91%
Barclays (BARC) 223.00p -1.74%
FTSE 250 - Risers
FirstGroup (FGP) 126.70p 2.10%
SSP Group (SSPG) 417.10p 1.83%
ZPG Plc (ZPG) 379.40p 1.83%
Just Eat (JE.) 581.00p 1.31%
Hochschild Mining (HOC) 275.00p 1.07%
AA (AA.) 259.20p 0.97%
F&C Commercial Property Trust Ltd. (FCPT) 143.60p 0.77%
Shawbrook Group (SHAW) 314.90p 0.61%
Centamin (DI) (CEY) 175.60p 0.57%
Inchcape (INCH) 809.50p 0.56%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 447.90p -5.11%
Vedanta Resources (VED) 786.00p -2.90%
Safestore Holdings (SAFE) 362.60p -2.58%
Polypipe Group (PLP) 344.00p -2.41%
Countryside Properties (CSP) 232.90p -2.27%
Hunting (HTG) 550.50p -2.05%
Dignity (DTY) 2,406.00p -1.96%
IP Group (IPO) 155.50p -1.95%
Ferrexpo (FXPO) 164.80p -1.90%
Henderson Group (HGG) 222.40p -1.68%