31st January 2014
UK blue chips suffered a lousy start to 2014 dropping 4% over January as concerns over emerging markets and the eurozone continued to bite writes Philip Scott.
Friday’s end-of-month closing bell marked the worst January in five years for the UK’s benchmark index.
The Footsie finished at 6,510.44, 28.01 points, or 0.43% down on the day and more than 2% off over the week.
On Friday traders were knocked by the news that inflation had dropped back in the eurozone while unemployment figures remained unmoved for the third consecutive month in December.
Data from the EU’s statistics office Eurostat estimates that more than 19m across the member state region were unemployed in the last month of 2013 while consumer prices in the 18 countries fell to 0.7% year-on-year, down from 0.8% in December.
In addition it emerged that China has witnessed its first slowdown in factory output in half a year adding further concerns of a hard landing. This coupled with the US Federal Reserve pulling back QE by another $10bn saw markets drop sharply.
Adrian Lowcock, senior investment manager at fund broker Hargreaves Lansdown says: “Stock markets have taken a hit this week. Concerns about emerging markets, a further reduction of stimulus in the US and now disappointing data from the eurozone are all weighing heavily on markets.
“Investors have scaled back their appetite for risk and at the moment – all news, good or bad, seems to be viewed in a negative light.”
UK energy giant BG Group has been the hardest hit FTSE 100 constituent over the week, plummeting 19% to 1,022p, after turmoil in Egypt and the fracking boom in the US took their toll. The group said that Egypt was using a larger amount of gas for its home market than had been agreed, leaving the group with less to export.
Tullow Oil also endured a week of falls, losing 8% to 790.5p while drinks group Diageo also fell 8% to 1,800.5p after it reported slower emerging markets business.
Within the banking sector Lloyds Banking Group, moved 2% up to 83.3p and Barclays, which announced that some 400 jobs were likely to go because of changes in its corporate banking arm, finished flat at 272.5p as did Royal Bank of Scotland at 340p.
On Thursday the City blamed a so-called “fat finger mistake” for the sharp lift in HSBC’s share price, which saw the market momentarily move into positive territory after the stock jumped some 10% after an alleged trading error. Over the past seven days however the banks shares are off by 3% to 627p while its Asian focused competitor Standard Chartered slumped 5% to 1,240p.
Having a better week of it was current shareholder favourite Royal Mail up 4% at 598p and house builder Persimmon which also added 4% to close at 1,313p.
Anglo American was however the top mover, rising 7% to 1,436p, after the mining group confirmed robust production growth in the final three months of 2013. Fellow miner Antofagasta also enjoyed a week of gains, firming 5% to 850.5p after it reported a record year of copper production.
Next week sees updates from among others GlaxoSmithKline and Compass Group.