London close: Stocks slide amid big global selloff

The FTSE 100 fell by 2.04% to close at 8,008.23, while the FTSE 250 suffered an even steeper decline, dropping 2.83% to 20,236.74.

London’s selloff mirrored declines across major global markets, particularly following a significant drop in Japan's Nikkei 225, which plunged more than 12% in its worst single session since Black Monday in 1987.

The global retreat extended to Wall Street, with US indices also tracking downward in early trading.

In currency markets, sterling was last down 0.38% against the dollar, trading at $1.2753, while it weakened 0.88% on the euro to change hands at €1.1632.

“While still firmly in the red, the ‘Magnificent Seven’ tech stocks have managed to rally off the lows,” said IG chief market analyst Chris Beauchamp.

“Having watched these stocks surge of late, it is understandable that many investors will be tempted to go dip buying.

“But an elevated fear index suggests that the selling is not done yet. Investors will be watching for Iran’s response to Israel’s actions, and in turn Israel’s response, which could add a very unpredictable element into the situation.”

Beauchamp added that 2024 had been “a quiet year” for markets in terms of actual volatility, meaning the slump in the US felt “much worse than it actually is” when put into context.

“Already there are a number of commentators calling for emergency US rate cuts, but at the moment this is still a growth scare.

“If the latest job numbers are revised higher next month the picture may start to look very different.

“Besides, the Fed’s job isn’t to rescue investors from volatility.”

UK services growth increases, eurozone economy shows signs of stagnation

In economic news, the UK services sector saw a boost in growth during July, as demand reached its highest level since May 2023, according to a survey released earlier.

The S&P Global services PMI business activity index rose to 52.5, slightly up from June's 52.1 and marginally above the preliminary estimate of 52.4.

That marked the first acceleration in growth since April, with a reading above 50 indicating expansion in the sector.

“With the general election period coming to an end at the start of July, survey data for last month showed the UK service sector enjoyed a modest rebound after a fairly subdued end to the second quarter,” said Joe Hayes, principal economist at S&P Global Market Intelligence.

“The business activity index crept up only slightly, but the new business index jumped by over three points to its highest level in 14 months as firms reported an influx of new clients and contracts.

“July's accelerated expansion in sales activity crucially suggests business and consumer confidence has improved, and albeit only one month into the second half of 2024, the latest survey results bode well for a reasonable GDP growth print in the third quarter.”

On the continent, the eurozone's economy showed signs of stagnation in July, as demand for goods and services weakened.

The HCOB composite PMI output index declined to 50.2, a five-month low, down from 50.9 in June.

The services PMI also decreased to 51.9, marking a four-month low and reflecting a slowdown in activity across the region.

“The eurozone’s economy is growing at a snail's pace in July. Sector-wise, services is not picking up speed like it did earlier in the year, while the industrial slump has continued unabated,” said Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

“Because of this, the HCOB composite output PMI is just hovering above the expansion line. So, while the second half of the year started off pretty weak, the PMIs and the official numbers for economic growth in the second quarter were surprisingly good.

“Given this situation, our 0.7% growth forecast for the year is still conservative.”

Earlier in the global day, data showed China's services sector experiencing a slight uptick in July.

The Caixin/S&P Global purchasing managers’ index increased to 52.1, up from 51.2 in June, marking 19 consecutive months of expansion.

The new orders sub-index also saw a rise, climbing to 53.3 from 52.1 the previous month, indicating stronger demand within the sector.

“Prices at the composite level remained weak, on the sales front in particular, further squeezing the space for company profits,” said Wang Zhe, senior economist at Caixin Insight Group.

Wood Group takes a tumble, defensive stocks manage some gains

On London’s equity markets, John Wood Group tumbled 37.66% after Dubai-based Sidara withdrew its takeover bid.

Wood’s shares plunged after Sidara cited “geopolitical risks and financial market uncertainty” as reasons for not proceeding with a firm offer.

The engineering and consultancy firm had been evaluating a final proposal from Sidara at 230p per share, with a decision deadline initially set for 5 June and later extended to 9 August.

Shipping services firm Clarksons also faced a sharp drop, with shares falling 14.65%.

The decline followed the company's reiteration of its full-year expectations alongside a reported decrease in interim profit and revenue.

Investment trusts with exposure to the US market, such as Scottish Mortgage Investment Trust and Pershing Square Holdings, also suffered losses.

Scottish Mortgage fell 5.56%, while Pershing Square dropped 2.95%.

Lloyds Banking Group saw its shares decline by 3.4% after being downgraded to 'neutral' by Citi.

Meanwhile, Senior's stock decreased by 6.47% despite the company reporting a "robust" set of interim results, although some performance metrics showed mixed results.

On the upside, defensive stocks managed to make slight gains, with Reckitt Benckiser Group rising 0.63% and Haleon edging up 0.17%, bucking the broader downward trend in the market.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,008.23 -2.04%
FTSE 250 (MCX) 20,236.74 -2.83%
techMARK (TASX) 4,697.36 -1.81%

FTSE 100 - Risers

Haleon (HLN) 369.20p 0.38%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 99.72p 0.00%
B&M European Value Retail S.A. (DI) (BME) 454.30p -0.02%
Reckitt Benckiser Group (RKT) 4,145.00p -0.12%
InterContinental Hotels Group (IHG) 7,354.00p -0.16%
Darktrace (DARK) 592.80p -0.24%
Auto Trader Group (AUTO) 783.80p -0.25%
Rio Tinto (RIO) 4,936.50p -0.26%
Whitbread (WTB) 2,799.00p -0.29%
Bunzl (BNZL) 3,156.00p -0.32%

FTSE 100 - Fallers

Melrose Industries (MRO) 450.50p -6.36%
Severn Trent (SVT) 2,510.00p -5.80%
Scottish Mortgage Inv Trust (SMT) 768.00p -5.56%
United Utilities Group (UU.) 1,007.50p -5.29%
Coca-Cola HBC AG (CDI) (CCH) 2,694.00p -4.94%
Centrica (CNA) 121.40p -4.72%
Rolls-Royce Holdings (RR.) 443.80p -4.33%
Fresnillo (FRES) 547.50p -4.01%
Vodafone Group (VOD) 69.40p -3.96%
Intertek Group (ITRK) 4,692.00p -3.93%

FTSE 250 - Risers

Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 283.50p 1.81%
St James's Place (STJ) 693.00p 0.73%
PureTech Health (PRTC) 164.00p 0.61%
Wizz Air Holdings (WIZZ) 1,449.00p 0.07%
Tami Senior Securitisation 2 Ltd Cls A-2 Mb Fxd Rte Nts 31/12/23 (Reg S) (BP00) 0.00p 0.00%
Britvic (BVIC) 1,264.00p -0.32%
WH Smith (SMWH) 1,237.00p -0.32%
Genus (GNS) 1,750.00p -0.35%
Pets at Home Group (PETS) 288.00p -0.35%
TBC Bank Group (TBCG) 2,780.00p -0.36%

FTSE 250 - Fallers

Wood Group (John) (WG.) 128.00p -35.03%
Clarkson (CKN) 3,730.00p -14.65%
IP Group (IPO) 35.95p -9.67%
Senior (SNR) 147.40p -6.47%
PPHE Hotel Group Ltd (PPH) 1,315.00p -6.43%
Harbour Energy (HBR) 276.10p -6.41%
NCC Group (NCC) 145.40p -6.38%
Syncona Limited NPV (SYNC) 117.20p -6.22%
Ithaca Energy (ITH) 119.40p -6.19%
North Atlantic Smaller Companies Inv Trust (NAS) 3,850.00p -6.10%