FTSE 100 slumps to July low amid UK energy crises

Highlights

  • FTSE100 trades at the lowest levels since July 2021 as investors fear a collapse in the UK energy market due to a rise in wholesale gas prices.
  • The global stock markets are also witnessing a sell-off as investors fear loan default by China-based real estate group Evergrande.

FTSE100 trades in the red zone on the first day of the new week, down by 1.61% at 6,853, while the mid-cap focused FTSE250 index trades at 23,326, down by 1.41%. The blue-chip index is trading at the lowest level since July as investors fear a collapse in the UK energy market following reports of smaller gas companies collapse amid struggle to meet the prices promised to customers due to rise in the wholesale gas prices, which rose by over 250% since the start of the year. The UK government is expected to provide emergency loans to companies that are facing financial problems.

Top five FTSE100 gainers

Sainsbury (J) plc (2.80%), AstraZeneca plc (2.67%), Polymetal International plc (1.82%), International Consolidated Airlines Group SA (1.43%), Unilever plc (1.23%).

Top five FTSE100 losers

Prudential plc (-8.51%), Anglo American (-6.83%), Glencore plc (-5.88%), Standard Chartered plc (-5.77%), Flutter Entertainment (-5.65%)

European Markets

Major European market indexes are deep in the negative territory. The German blue-chip DAX index is down by 2.33% at 15,129, while the benchmark index of France, CAC 40, was at 6,423, down by 2.23%. European markets are down along with other global stock markets as investors fear crises in China’s financial systems following fear of interest payment default by the China-based property group Evergrande. The company’s stock was down to 11-year low after concern of company’s inability to repay its liabilities of over USD300 billion. The loan default by the company could impact China’s financial market and hit its economic recovery.

Currency Markets

The pound trades at one month low against the dollar at 1.3680, down by 0.45% following a sell-off in the global stock market and ahead of the Bank of England monetary meeting, while the EUR/ GBP currency pair traded at 0.8562, up by 0.36%. The traders in the currency market are cautious as a number of central banks will be holding their policy meetings this week, including the US Federal Reserve, Bank of Japan, and the Swiss National Bank. 

Commodities

WTI crude oil future contract traded at USD 70.33, down by 2.10%, while the Brent crude oil trades at USD 73.99, down by 1.75%. Crude oil prices were trending downward following a rise in the US dollar due to higher risk aversion. The rise in the US dollar makes crude oil pricier for holders of other currencies as the crude oil price is quoted in the US currency.

Meanwhile, the Gold futures contract traded in the green zone, up by 0.24% at USD 1,755 per ounce.

Asian Markets

Major Asia Pacific indexes closed in the red. Hang Seng index closed at 24,099, down by 3.30%, India’s Nifty 50 closed at 17,396, down by 1.07%, while Australia’s ASX200 closed at 7,248, down by 2.10%. China and Japan’s stock markets remained closed due to public holidays.

 

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