European markets opened with heavy losses on Monday. Global markets have fallen out of bed after an August slumber. There has been such astonishingly low movement in stock markets that it could only end with a jolt.
By mid-morning, the FTSE 100 was down -1.5%. A poorly-received update from Primark-owner Associated British foods saw investors send its shares to the bottom of the UK equity benchmark. The rally in treasury yields has pushed up the US dollar and hit commodity prices which are generally not favoured in risk-off environments anyway. Copper briefly hit its lowest price level since June. As such, basic resource is the worst performing sector.
Shares of Associated British Foods (LON:ABF) fell by as much as 7% after the firm reported falling bond yields had put its pension in to deficit and said like-for-like sales would drop -2% at Primark. The declines come despite the surge in sugar prices, which bolsters its sugar business and a drop in the pound, which helps the sales at Primark stores abroad.
The ongoing fallout from the reported indiscretions at the top of Lloyds (LON:LLOY) is seeing its shares come under pressure again. Several top shareholders are calling on the bank to put in place a succession plan for Antonio Horta Osorio.
US stocks look set for a lower start with the Dow Jones set continue Friday’s rout with a triple digit drop. Investors are likely in a state of unease in the run-up to the hastily-arranged speech from the Fed’s Lael Brainard. The risk is that Ms Brainerd goes from dove to hawk and signals a rate hike on the last day before the Fed begins its pre-meeting quiet period.
Shares of Hewlett Packard will be in focus again after it announced it will acquire the Samsung (LON:0593xq) printer business for $1.05bn. The acquisition comes after its recent disposal of assets to the UK’s Micro Focus as part of CEO Meg Whitman’s massive reorganisation of the business.
USA pre-opening levels
S&P 500: 15 points lower at 2,112
Dow Jones: 137 points lower at 17,948
Nasdaq 100: 42 points lower at 4,639
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