UK and European shares have declined to a three-day low in early trading on Monday. The Euro Stoxx 50 has reached as low as 3422 while the FTSE 100 has dropped as low as 6267, both the lowest since November 18.
A slide in commodities prices has struck at the heart of the FTSE 100. The commodity weakness largely reflects strength in the US Dollar following the announcement of an unscheduled meeting of the Federal Reserve set for 11.30am ET Monday. The meeting is to review advance and discount rates. A hike in any of the rates the Fed has influence over would be one of the strongest indications yet that the Fed plans on raising rates in December.
Commodities of course still have their own supply and demand misbalance. Copper has seen heavy falls on Monday, down as much as 2% in typically less volatile Asian hours. Copper continues to respond to comments from Chilean miners Codelco and Antofagasta (L:ANTO) favouring cost-cuts over reducing output.
It’s a sea of red on the FTSE 100 with Glencore (L:GLEN) and copper-miner Antofagasta top fallers. Only a handful of shares were higher including HSBC after announcing plans to hire a new non-executive director to eventually replace its chairman Douglas Flint.
A top mid-cap riser was Argos-owner Home Retail (L:HOME) on speculation over a possible takeover. The retailers plummeting share price following a profit-warning ahead of Christmas has apparently caught the eye of private equity investors. Argos is struggling to fend off online competition and earnings look like suffering as a result. A private equity sale makes sense because stores would probably get sold off to help pay for debt used in the buyout. The potential for growth could be that remaining stores, if used effectively give Argos an edge over online competition with click-and-collect.
The euro is lower against the dollar but higher against the pound after German and Eurozone manufacturing PMIs came in ahead of expectations.
USA pre-opening levels
S&P 500: 2 points lower at 2,087
Dow Jones: 13 points lower at 17,810
Nasdaq 100: 2 points lower at 4,684
"DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. "