UK stocks fall as Hurricane Sandy hits the US
The UK stock market started in the red on Monday morning as investors showed caution as Hurricane Sandy hits the east coast of America. Dubbed as the ‘100-year storm’, Hurricane Sandy has prompted the cancellation of equity trading in New York, as the city is hit by 70-mile-an-hour winds and flooding. This is the first unscheduled closure of US stock markets since the September 11th terrorist attacks in 2001.
“It was a judgment decision based on the safety of a lot of market participants, especially as the storm seems to be getting more severe,” NYSE Euronext’s Chief Operating Officer Larry Leibowitz told Bloomberg. The suspension of trading is expected to continue through to Tuesday “pending confirmation”, the news agency said.
Global markets slipped last week despite some better-than-expected economic growth figures in the US and UK, as concerns about corporate profits weighed on sentiment.
“European equity markets are starting the week out on a lower note being pressured by weakness out of Asia where several companies posted disappointing earnings overnight, furthermore the ongoing wrangling about extending the time frame by which Greece has to meet budget and deficit targets is starting to have a drag on markets,” said Markus Huber, the head of German HNW Trading at ETX Capital.
He said that, given that US equity trading has been cancelled due to Hurricane Sandy, markets will likely remain mostly range-bound. “However it wouldn’t come as too much of a surprise if markets might stage a test of the lows seen last week as worries about corporate earnings in the months ahead return and patience is starting to wear thin with market participants what Greece and Spain is concerned, as no solution is in sight for either one of them,” Huber added.
Financial stocks were weighing heavily on the blue-chip index in the opening hour of trade today as risk appetite is scaled back in the absence of trading in New York. Sector peers Hargreaves Lansdown, Royal Bank of Scotland, Barclays, Aviva, Old Mutual, Legal & General, Prudential and Lloyds were among the worst performers early on.
Hargreaves was the heaviest faller after Citigroup downgraded the stock to ‘sell’ and cut its target price from 630p to 620p. In contrast, accountancy software group Sage headed the other way after Citi upped its recommendation on the shares to ‘buy’ and raised its target price from 294p to 345p.
Mining group Anglo American was subdued after saying that subsidiary Amplats has come to an agreement with trade unions in South Africa and hopes to see its 12,000 dismissed employees return to work by tomorrow. Nomura has slashed its forecasts for Anglo this morning, saying that South African operation disruptions, production curtailments and a CEO exit has added to near-term uncertainty for the business.
Publishing group Pearson was out of favour after confirming that publishing firm Random House is to merge with its venerable book seller Penguin. The news came as Pearson released figures that showed in the first nine months of the year Penguin revenues fell 1% compared to the same period in 2011.