LONDON, Oct 4 — London’s FTSE 100 recovered slightly today, getting support from oil majors Shell and BP even as the index heads for its worst week in 20 months over fears of an economic slowdown and risk of recession.
Blue-chips were up 0.4 per cent at 0755 GMT after four straight sessions in the red that wiped off nearly five per cent from the index. The FTSE 250 midcap bourse climbed 0.2 per cent.
LSE topped the FTSE 100 leader-board with a two per cent rise after a Reuters report that some of its investors had asked Hong Kong Exchanges and Clearing to sweeten the takeover bid.
A parade of shockingly weak readings on services and manufacturing sectors from multiple major economies has left little doubt that the US-China trade war has constricted global growth.
The silver lining for investors was growing hopes that central banks will step in with further stimulus. The Federal Reserve — the world’s biggest central bank — has already cut interest rates twice this year.
Adding to anxiety at home, updates this week have not dispelled no-deal Brexit worries, while a survey that showed an unexpectedly sharp downturn in the dominant services sector last month signalled the economy has slipped into a recession.
Yields on UK 10-year gilts were below those on two-year bonds for the second consecutive session. Inversion of the yield curve is conventionally taken as a precursor to recession.
“There’s precious little positivity around UK stocks - Brexit uncertainty, profit warnings aplenty, CEO purges, weak UK data and a slowing macro picture for the heavy weights exposed to global growth adds up to a pretty disappointing near term outlook for the FTSE,” Markets.com analyst Neil Wilson said.
“That’s far too pessimistic, one feels, but it could explain why the selling has been so abrupt.”
The FTSE index of 100 most valued UK companies, which was nearly 150 points below its 200-day moving average by 0748 GMT, has lagged other major markets this year, underlining the additional turmoil Brexit has brought on.
In corporate news, BP became the latest blue-chip company to name a new top boss as it said upstream business head Bernard Looney would succeed CEO Bob Dudley, sending its shares up one per cent.
Tobacco giant Imperial Brands and retailer Tesco also announced CEO departures this week.
Insurers were left reeling, slipping to their lowest level since February, after Britain’s markets watchdog said it may have to ban or restrict some pricing practices in the car and home insurance market. — Reuters
