Prudential (PRU.L) was the standout winner on another day of anxiety for financial markets, with shares and industrial commodities sold off while investors took refuge in ‘safe havens’ like gold and the Japanese yen.
Worries about the state of China’s economy – and subsequently demand for goods around the world – continued to unsettle investors after the weekend’s reports showing exports sank 18% in February.
Investors remain uncertain about events in Ukraine. Russia has tightened its control over Crimea as intentional leaders continue in their attempts to convince president Vladimir Putin to pull back from the region. The latest press reports say Russian leaders are refusing all negotiations with Ukraine.
‘Fears of a slowdown in China, which were exacerbated over the weekend, with those weak trade numbers, emerging market growth concerns, as well as the prospect of no imminent solution to what is going on in the Ukraine is perhaps prompting a more risk-averse scenario amongst some investors,’ explained Michael Hewson of CMC Markets.
All major European share markets followed indices in Asia lower. In London, Britain’s FTSE 100 fell nearly 1% to 6,629, heading for its fourth consecutive day lower. That loss was matched by the Euro Stoxx 50.
The MSCI Emerging Markets index fell 1.2% and is now down 10.7% over the past year.
Amid declines in commodity prices, Copper traded in London fell 4%,
Instead money went into perceived safe havens. Amongst them gold rose 0.5% to $1,355 per ounce and the Japanese yen was 0.3% higher at 102.72 against the US dollar.
The UK’s blue chip index, which is now down around 1% so far this year, also faced the extra burden from a long list of shares trading ‘ex-dividend’ on Wednesday morning, with British American Tobacco (BATS.L), Standard Chartered (STAN.L) and Hammerson (HMSO.L) among the biggest fallers as they were trading without their dividend appeal.
G4S (GFS.L) had no such excuse: the scandal-hit security firm slumped by 3.9% to 235p after it announced a £170 million pre-tax loss for 2013, hit by a £386 million charge in an ‘extremely challenging year’. Cantor Fitzgerald analyst Caroline de La Soujeole said the results were ‘messy’ and investors would be disappointed that the group’s issues with the UK government remained unresolved.
Among mid-caps, Ocado slipped 2.7% to 556p despite reporting 18% sales growth in its first quarter. Investors have high expectations after the company’s 314% share price rise in the past 12 months. ‘We continue to see huge long-term potential and remain positive,’ said Numis analyst Andrew Wade.
Prudential was one of only a handful of FTSE 100 stocks that managed gains. It traded 3.5% up at £14.09 after reporting a 17% rise in IFRS operating profit to £2.9 billion and a 15% increase in the dividend.
Analysts were thrilled with the results. ‘The group goes from strength to strength’, said Eamonn Flanagan of Shore Capital as he reiterated his ‘buy’ recommendation.
There was some new blood in London to lift animal spirits. Both Poundland and Pets at Home set listing prices – of 300p per share for a £750 million valuation, and 245p giving a market cap of £1.2 billion respectively – as they become the latest retailers to join the London listing bonanza.