The FTSE 100 followed Asia lower as the shockwaves from China’s tech clampdown were felt in the Square Mile.
Scottish Mortgage Trust (LON:SMT), one of Britain’s biggest investors in innovative giants such as Tencent and Alibaba, was caught in the fall-out from Beijing’s assault as its shares fell 2%.
Market watchers expect it to be a bumpy ride all the way through to the Federal Reserves interest rate call after hours on Wednesday, which may provide guidance on the potential tapering of monetary support.
None of the above had much bearing on Reckitt Benckiser’s (LON:RB.), whose wounds were purely self-inflicted. Shares in the consumer products giant tumbled 10% after it said it had been hit hard by rising commodity costs.
“In terms of the immediate outlook, the company is also anticipating a difficult third quarter against tough comparatives, with some improvement in the final quarter,” said Richard Hunter, head of markets at Interactive Investor.
On the up early on was speciality chemicals group Croda (LON:CRDA), which advanced 2.2% after its annual profits beat forecasts.
6.50 am: Back foot start predicted
The FTSE 100 is poised to slide further on Tuesday but could be set back on its feet later as results season starts to get into gear.
Spread-betters have tipped London’s main equity benchmark for a 12.5-point fall, following a start to the week when it only just finished in the red at 7,025.43.
() and Reckitt Benckiser PLC are among the blue chip reporters due today, though the mid-cap index is where more optimism resides, having come close to regaining its all-time highs above 23,000 yesterday and with () and newcomer () among the results on show shortly.
Overnight, US stocks were in cautiously optimistic mode as big tech earnings started to come in, though ()’s strong set of results came after the closing bell, including net income topping US$1bn for the first time and earnings per share tripling.
The S&P 500 and Dow Jones both rose 0.2%, while the Nasdaq Composite only just managed to finish in positive territory as investors await earnings reports from big guns Apple Inc, Microsoft Corp and () this evening.
“There is no doubt that the uncertainty surrounding the Fed’s next move, as well as disruptions caused by rising coronavirus cases and events in Asia, are forcing investors to cash out their profits before going on vacation this summer,” said market analyst Naeem Aslam at AvaTrade.
“However, investors should not be overly concerned because the Fed is expected to maintain its dovish stance in the coming months, and stock traders should closely monitor the performance of technology stocks this week in light of Tesla’s strong earnings yesterday.”
Gold eased back below the $1800.00 an ounce mark.
As analyst Jeffrey Halley at Oanda said: “Residual fears that the FOMC may mention the taper world is mainly responsible for the selling pressure, and gold is unlikely to rally significantly until the FOMC decision and statement.”
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mixed on Tuesday as regulatory fears surrounding China’s technology and private education sector hit stocks in the region.
The Shanghai Composite in China slipped 0.40% and Hong Kong’s Hang Seng index slumped 2.05%
In Japan, the Nikkei 225 lifted 0.35% while South Korea’s Kospi rose 0.24%.
Shares in Australia gained, with the S&P/ASX 200 trading 0.41% higher.