Miners and Banks Lead FTSE Lower

MONDAY MARKET UPDATE: Shares in Kazakhmys, Rio Tinto, Lloyds and HSBC all take a hit

Alanna Petroff 4 March, 2013 | 6:07PM
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The benchmark FTSE 100 index and the mid-cap FTSE 250 index were in the red on Monday, weighed down by large-cap miners and banks. The FTSE 100 fell by 33 points, or 0.5%, to close at 6,346. The FTSE 250 declined by 76 points, or 0.6%, to close at 13,675.

"London shares have struggled to make headway all day, having been put on the back foot by the Chinese government’s decision to introduce new measures to take some heat out of the property market. Risk-on stocks such as miners have been hit by this, on fears of reduced demand from the supposedly-insatiable Chinese market," said Chris Beauchamp, market analyst at IG. 

Shares in miner Kazakhmys (KAZ) suffered the sharpest fall of the day on the FTSE 100, while Rio Tinto (RIO) and EVRAZ (EVR) also traded lower.

Shares in large banks, specifically Lloyds Banking Group (LLOY) and HSBC Holdings (HSBA), also took a tumble. This follows HSBC reporting full-year results for 2012 that missed expectations.

"HSBC’s 2012 reported earnings of $15.3 billion were marred by a $5.2 billion non-cash charge against its own debt," said Morningstar's banking analyst Erin Davis. "While underlying profit before tax was up 18% year-over-year, the bank’s 2012 cost-to-income ratio of 66% shows that management has a lot of work ahead if it is to achieve its cost efficiency target of 48%-52%."

Uncertainty over US Sequester

Global investors were also feeling downbeat since the US 'sequester' was put in place. Uncertainty over its repercussions pushed global stocks lower. 

On Friday, US President Barack Obama signed an order that brought into effect widespread budgetary cuts, also known as the "sequester", after the White House and Congressional leaders failed to reach a consensus over an alternative budget deal. The cuts will slash $85 billion from the nation's budget in the first year, and they are expected to slow down the economy and hit millions of Americans.

This article includes writing from Morningstar's Gazala Parveen.

To see the top winners and losers on the FTSE 100 each day, check out Morningstar's Heat Map.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
EVRAZ PLC80.89 GBX0.00
HSBC Holdings PLC636.10 GBX-1.32Rating
Lloyds Banking Group PLC50.32 GBX-1.33Rating
Rio Tinto PLC Registered Shares5,340.00 GBX-0.58Rating

About Author

Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.

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