(Alliance News) - The FTSE 100 on Monday had its worst session since November as selling pressure intensified ahead of this week's US Federal Reserve meeting.
The FTSE 100 index dived 196.98 points, or 2.6%, to 7,297.15. The FTSE 250 slumped 810.74 points or 3.6%, at 21,452.50, and the AIM All-Share shed 54.05 points, or 4.8%, at 1,078.03.
The Cboe UK 100 ended up 2.4% at 726.00, the Cboe UK 250 closed down 3.7% at 19,240.18, and the Cboe Small Companies ended down 3.1% at 15,150.93.
In European equities on Monday, the CAC 40 in Paris ended down 4.0% and the DAX 40 in Frankfurt fell 3.8%.
"There had been some hope that the new week might see a more optimistic view prevail, but the catalogue of earnings this week, along with a key Fed meeting, have combined to keep investors firmly in risk-off move," said Chris Beauchamp, chief market analyst at IG.
Further knocking sentiment, tensions have continued to mount over Ukraine. Ukraine on Monday said it was "premature" of the US to evacuate the families of its diplomatic staff in Kyiv due to fears of a looming Russian invasion.
The West says Russia has been massing tens of thousands of troops on its border with Ukraine, along with an arsenal of tanks, fighting vehicles, artillery and missiles. The Kremlin insists its forces are not there to invade.
On Monday, Britain said it will also be moving "some" of its embassy staff out of Ukraine, while the EU said it will not be following Washington's decision.
IG's Beauchamp said the mood is likely to remain shaky until Wednesday's Fed decision.
"While many investors will be hoping that a rebound can develop quickly, the longer this pullback goes on, the more damage is done to sentiment...What we can expect this week is more volatility, and until the FOMC meeting is out of the way, and the Fed's current stance becomes clearer, it seems likely that more losses are in store," he said.
In New York, the Dow Jones was down 2.0% in Monday morning trade, the S&P 500 down 2.6% and the tech-heavy Nasdaq Composite down 3.0%.
As US tech stocks continued to receive a battering, Scottish Mortgage Investment Trust - which holds investments in firms such as electric car maker Tesla and semiconductor producer Nvidia - ended as one of the worst performers in London's FTSE 100 on Monday, down 8.6%. Shares in Tesla and Nvidia were down 7.4% and 7.5% respectively in New York morning trade.
Compounding Monday's woe were some underwhelming PMI surveys.
US business activity slowed to a year-and-a-half low at the start of 2022 due to the Omicron wave, data from IHS Markit showed. The IHS Markit flash US composite purchasing managers' index posted 50.8 in January, tumbling from 57.0 in December. Any reading over the no-change mark of 50.0 indicates growth, signalling growth in January was not far off stagnating.
IHS Markit said the slowdown was broad-based, with both the manufacturing and service sectors dented by the Omicron wave, which exacerbated ongoing supply and labour issues.
The story was similar over in Europe, with growth in the eurozone and the UK both slowing. The eurozone flash composite PMI slid to 52.4 points in January from 53.3 in December - hitting an 11-month low - while the UK reading also edged down to an 11-month low of 53.4 in January from 53.6 in December.
The UK services PMI reading was 53.3 in January, down slightly from 53.6 in December. The flash print remained above the 50.0 neutral mark but missed the market forecast, cited by FXStreet, of 55.0. January's reading was also the lowest in 11 months. The UK manufacturing PMI slipped to 56.9 points in January from 57.9 in December.
The pound tumbled to USD1.3451 at the London equities close Monday from USD1.3550 at the close on Friday.
The euro stood at USD1.1312 at the European equities close Monday, down against USD1.1343 at the same time on Friday.
Against the yen, the dollar was trading at JPY113.88, up compared to JPY113.75 late Friday.
Brent oil was quoted at USD85.51 a barrel at the London equities close Monday, slumping from USD87.74 late Friday. Gold was quoted at USD1,833.82 an ounce at the London equities close, flat against USD1,833.20 at the close on Friday.
Back in London, Pearson finished at the bottom of the blue-chips, down 9.1% after UBS lopped the educational publisher to Sell from Neutral. The Swiss bank is wary over a drop in US enrolments.
"The growth in digital depends on a recovery in enrolments. There is downside risk if the US labour market remains tight, student loan interest rates continue to rise, and the federal government does not enact support for tuition fees," UBS said.
There were broad-based losses throughout the FTSE 100, with housebuilders Barratt Developments and Berkeley Group Holdings, down 8.9% and 6.4% respectively, knocked by downgrades from Jefferies, while Monday's risk-off mood hit miners such as Antofagasta, down 6.5%, and Anglo American, down 6.1%.
Dodging Monday's gloom was Unilever, rallying 7.3% after the Financial Times reported Trian Partners has built a stake in the consumer goods giant.
Citing people familiar with the matter, the newspaper said Nelson Peltz's activist hedge fund had taken an unspecified position in the Unilever shares, adding to the challenges facing Chief Executive Officer Alan Jope. The FT said people with knowledge of the stakebuilding did not provide details on its size or when precisely it began.
Last week, Unilever said it would not increase its offer for Glaxo's Consumer Healthcare unit above GBP50 billion following three failed bids.
At the bottom of the mid-cap FTSE 250 index was cybersecurity firm Darktrace, down 15%, while Molten Ventures fell 12%.
Elsewhere in London, De La Rue shares tumbled 23% after the security printed products maker warned that annual profit will miss market expectations due to significant pressure from the extended Covid-19 pandemic.
For the financial year ending March 26, De La Rue expects adjusted operating profit to come between GBP36 million and GBP40 million, flat on GBP38.1 million in the prior year but below market expectations of GBP45 million to GBP47 million.
Amigo slumped 42% after the guarantor loans provider warned of insolvency if a new business scheme and equity raise are not approved.
The firm warned the new business scheme will mean it needs to issue at least 19 new shares for every existing one, leaving existing shareholders in the firm with no more than 5% of Amigo's share capital, as part of a capital raise.
"Should creditors vote for the new business scheme and the court subsequently approve it, these provisions provide additional protection for creditors and address certain of the concerns raised by the court above the previous scheme. They are necessary for Amigo to survive and avoid insolvency," said Chief Executive Gary Jennison.
Tuesday's corporate calendar has trading updates from Daily Mail & General Trust and TI Fluid Systems.
The economic calendar has Ifo's German business climate index at 0900 GMT and US consumer confidence at 1500 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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