London’s leading shares traded down for much of Monday’s session, but poorly-received results from Bank of America prompted an industry-wide sell-off of banking stocks that saw the FTSE 100 index drop 2.5% by end of play.
The UK benchmark closed down 101.9 points at 3,990.9 – back below the 4,000-point mark and not what investors wanted to see following a relatively robust performance in recent weeks. The FTSE 250 index fared even worse, dropping 4.0% or 291.1 points to 7,016.7, while Wall Street was putting in a similar performance at last check.
Bank of America actually reported results that were ahead of market expectations, but the bank’s announcement of a hike in troubled loans brought fear back into the sector, sending shares in UK-listed banks such as Barclays and Standard Chartered down 7.9% to 209p and 6.1% to 942.5p, respectively. Other financial issues also suffered, particularly after Friday’s strong gains, with interdealer broker ICAP losing 10.5% to 366.5p and asset manager Man Group sliding 9.8% to 247.25p.
Banks weren’t the only weight on the blue-chip index. The mining and oil industries also applied their own pressure, tracking a weakening in both base metals prices and crude oil prices. Randgold Resources was a stand-out exception, however, jumping 8.4% to 3,060p as the price of gold headed back up towards $900 per troy ounce. Among its fellow metal extractors, Eurasian Natural Resources fell back 12.3% to 508p, Xstrata was 11.1% lower at 524.5p and Lonmin eased 10.3% to 1,239p.
Oil & gas producers Tullow Oil, Petrofac and Cairn Energy each lost between 2% and 4%.
Property stocks saw their fair share of sellers on Monday following a European sector review by JP Morgan in which the broker downgraded its recommendations on both Hammerson and Liberty International, helping take shares in the two groups down a respective 6.9% to 279p and 5.8% to 437.25p.
Fears that ongoing bid hopes targeting Thomas Cook and TUI Travel could fail to materialise weighed on both companies’ shares amid reported issues with the two groups’ potential suitors Arcandor and TUI. Thomas Cook was among the FTSE 100’s main casualties, down 11.4% at 252.75p, while TUI Travel saw 8.5% taken off its market value to close at 253.25p per share.
Outperformers included Tesco and GlaxoSmithKline, both of which are due to report results this week. Tesco added 0.7% to 332.1p and Glaxo slipped just 0.4% to 1,033.5p. Defensives were also in demand in the weak market, with utility provider Centrica taking on 1.5% to 243.5p and tobacco manufacturer British American Tobacco just 0.1% lower at 1,572p.
