- 'Risk is officially off', says analyst
- Corporate earnings and growth worries sink stocks
- Miners drop, while ARM and Experian gain
A sell-off on Wall Street and concerns about the Eurozone saw markets across Europe take a hammering on Tuesday, with mining stocks dragging the Footsie lower in London.
"Risk is officially off in the markets at the moment as problems on both sides of the Atlantic prompt a move into safe havens," said analyst Craig Erlam from Alpari.
Worries about Spain have increased over the last few days after a decent outcome at the regional elections for Prime Minister Mariano Rajoy is thought to have reduced the pressure on him to request a bailout. Ratings agency Moody's downgraded five Spanish regions to 'junk' today due to the "deterioration in their liquidity positions."
Spain's central bank said that economic growth worsened to 1.7% in the third quarter, compared with the 1.3% GDP fall the quarter before. Alpari's Erlam said: "If we learned one thing from this debt crisis it is that strict austerity leads to a fall in growth. With Spain continuing on the austerity program we can expect further drops in the coming quarters."
Meanwhile over the US, corporate earnings disappointed today with several companies scaling back profit guidance for the full year: United Technologies, 3M, DuPont and Xerox were among the blue chips spreading the gloom. Markets were also nervous ahead of a two-day policy meeting from the Federal Open Market Committee (FOMC).
"The prominent theme emerging from the 3Q earnings so far, particularly for industrials, materials and resource sectors, is that the slowdown in the global economy, notably China, is eating away at the bottom line for major corporates in developed countries," said market strategist Ishaq Siddiqi from ETX Capital.
"The deep declines in economic activity in Europe and the US which eventually led to a round of stimulus measures by the ECB and the Fed in the 3Q, tied up with halt in emerging market growth is finally being realised by markets, but through corporate earnings, not economic data," he said.
FTSE 100: Miners tank; ARM and Experian gain
Kazakhmys, ENRC, Antofagasta, Anglo American and Rio Tinto were all trading firmly lower this afternoon as markets were hit by global economic concerns. There was also some caution ahead of tomorrow's Chinese manufacturing survey which was weighing on cyclical stocks.
Luxury brand Burberry, a company sensitive to swings in the Chinese economy, was also out of favour, dampened further AIM-listed handbag and accessories group Mulberry which plunged after saying that full-year results would be below expectations. The company said that wholesale revenues fell in the first half due to tough comparatives and a "more challenging external environment in Asia".
Chip designer ARM Holdings and information services firm Experian were the only stocks on the FTSE 100 to finish in positive territory today. ARM surged after beating sales and profit forecasts in the third quarter and giving a confident outlook for the rest of the year. Meanwhile, Experian jumped after increasing its stake in Serasa, Brazil's leading personal credit checker, from 70% to 99.6%.
Building materials group CRH was a heavy faller after HSBC downgraded its rating on the stock to 'neutral'. Consumer products firm Unilever was also lower after Oriel Securities cut its recommendation to 'hold', while sector peer Reckitt Benckiser fell ahead of its third-quarter trading update tomorrow.
Banking group Lloyds was under the weather after Credit Suisse reiterated its 'neutral' rating for the lender ahead of its third-quarter results on November 1st. The broker said that "given recent strength the stock should give back some of the gains".
FTSE 250: Chemring sinks after CEO exit
Shares in defence group Chemring dropped after its CEO David Price resigned with immediate effect. He will be replaced by Mark Papworth, a former Wood Group executive. Speculation in the market is that Price's exit signals that US private equity firm Carlyle's takeover bid could be collapsing. "It would appear odd to appoint a new CEO with the belief the group is going to be taken over within a matter of weeks," said Guy Brown from Oriel Securities.
Wireless technology firm CSR jumped after revenues were up in the third quarter as it said it had successfully completed a deal with Samsung, paving the way for a big investor pay out.
Morgan Crucible, the British maker of ceramics used in wind-turbine blades, was making gains on speculation that it has become a potential takeover target.
Catalogue and home shopping firm N Brown rose after UBS raised its target price for the stock from 285p to 340p and reiterated its 'buy' rating after last week's first-half results beat the broker's forecasts.
FTSE 100 - Risers
ARM Holdings (ARM) 640.00p +7.65%
Experian (EXPN) 1,087.00p +3.82%
FTSE 100 - Fallers
Kazakhmys (KAZ) 721.50p -4.63%
Weir Group (WEIR) 1,705.00p -4.11%
Eurasian Natural Resources Corp. (ENRC) 332.70p -3.79%
Polymetal International (POLY) 1,109.00p -3.65%
Admiral Group (ADM) 1,106.00p -3.57%
Antofagasta (ANTO) 1,265.00p -3.36%
Burberry Group (BRBY) 1,134.00p -3.24%
IMI (IMI) 902.00p -3.22%
Tullow Oil (TLW) 1,412.00p -3.15%
International Consolidated Airlines Group SA (CDI) (IAG) 154.80p -3.07%
FTSE 250 - Risers
Ruspetro (RPO) 107.50p +2.38%
Brown (N.) Group (BWNG) 324.40p +2.01%
Savills (SVS) 410.00p +1.81%
Euromoney Institutional Investor (ERM) 780.50p +1.30%
Brewin Dolphin Holdings (BRW) 179.00p +1.30%
Telecom Plus (TEP) 864.00p +1.29%
Rathbone Brothers (RAT) 1,307.00p +1.24%
Betfair Group (BET) 743.50p +0.95%
Shanks Group (SKS) 80.75p +0.94%
Berendsen (BRSN) 570.00p +0.89%
FTSE 250 - Fallers
Chemring Group (CHG) 314.90p -9.07%
Kenmare Resources (KMR) 39.50p -7.67%
Centamin (DI) (CEY) 98.10p -5.67%
SDL (SDL) 551.50p -5.00%
Lonmin (LMI) 486.10p -4.12%
Talvivaara Mining Company (TALV) 130.60p -4.11%
Soco International (SIA) 324.20p -3.94%
Elementis (ELM) 218.70p -3.87%
Michael Page International (MPI) 365.30p -3.77%
Man Group (EMG) 77.95p -3.71%