The FTSE 100 slid as investors fretted about fresh escalations of the Ukraine crisis and a slew of gloomy economic data.
The FTSE 100 fell 25 points, or 0.4%, as investors digested a warning from the Organisation for Economic Co-operation and Development that global growth would be lower this year than had been anticipated. The OECD has lowered its growth forecast from 3.6% to 3.4%. However, it upped its prediction for UK growth from 2.4% to 3.2%.
The deteriorating situation in the Ukraine also weighed on investor sentiment, as a day of intense fighting in the east of the country threatened to spark a civil war. French president François Hollande has warned that ‘chaos and the risk of civil war’ were looming while German foreign minister Frank-Walter Steinmeier claimed ‘we are not far from a military confrontation’.
Purchasing manager’s index (PMI) figures for China's services sector disappointed investors overnight, leading to fears the country will miss its 7.5% gross domestic product growth forecast this year. PMI services and composite figures for Japan also weighed on sentiment, as April’s reading showed a sharp drop from growth to contraction. A surprise drop in German factory orders and a further fall in UK shop prices added to the downbeat mood.
‘Investors are struggling to remain bullish with many markets already around highs, plenty of headwinds, the OECD cutting global growth expectations and a disappointing night for macro-economic readings,’ said Mike van Dulken, head of research at Accendo Markets.
Experian (EXPN.L) shed 65p, or 5.7%, to £10.70, after the business data supplier warned the upcoming football World Cup would hit business in Brazil as it unveiled its results for the 12 months to the end of March. Weaker revenues in the first three months of the year also led the group to report performance slightly lagging investors’ expectations.
Morrisons (MRW.L) which has been forced to apologise after projecting an image of a baguette onto the Angel of the North in Gateshead in an over-zealous marketing drive, fell 10.5p, or 5.2%, to 191.5p after the supermarket chain went ex-dividend.
Legal & General (LGEN.L) bucked the gloomy trend, however, adding 5.9p, or 2.8%, to reach 219.4p as it brushed aside fears over the impact of the Budget’s blow to annuity sales with a strong set of results for the first three months of the year.
‘Legal & General’s first quarter trading statement offers a robust rebuttal to those who feared for the group’s future following the Budget changes to the annuity market, the 0.75% price cap on auto-enrolment default funds and the Financial Conduct Authority review of legacy business,’ said Eamonn Flanagan, analyst at Shore Capital. ‘Not only are the numbers reported by Legal & General pretty punchy – operational cash generated up 6%, net cash generation up 21%, total new business up 67% […] - the tone is resilient, upbeat and optimistic.’