(Reuters) – The UK’s main stock indexes kicked off the week on a downbeat note, led by losses in utilities as fears of U.S. recession mounted after weak economic data sparked a global sell-off.
The blue-chip FTSE 100 index fell 2.0% to its lowest since April 22 and clocked its worst day in over a year. The mid-cap FTSE 250 index was off 2.8% after falling to its lowest level in more than three months.
Friday’s data showed a sharp slowdown in U.S. job growth, raising fears of a deterioration in the American labour market and a potential recession, prompting bets for a half-point interest rate cut in September by the Federal Reserve to prevent a slowdown.
“U.S. macro data has been surprising to the downside for quite some time, and the labour market data on Friday was kind of a wake-up call where suddenly a lot of investors realized that the U.S. economy is slowing down,” said Joachim Klement, research analyst at Panmure Liberum.
All sub-sectoral indexes in London ended in the red.
Water utilities were the worst hit with a 4.0% decline, after Barclays said it was no longer positive on the sector and downgraded ratings on companies like Severn Trent and Pennon.
Worries of a U.S. recession also hit the oil markets, with energy shares finishing lower at 3.2%. [O/R]
Precious metal miners closed 3.3% lower as gold prices fell on wider market sell-off. [GOL/]
Meanwhile, a survey showed that domestic services companies reported an influx of new orders and the biggest rise in employment for over a year during July.
Separately, the Institute for Supply Management (ISM) report showed that services sector activity in the U.S. rebounded from a four-year low in July, which could help assuage fears of a recession.
John Wood Group fell over 35.0% to the bottom of the FTSE 250 after Dubai’s Sidara said it was walking away from its plan to buy the British oilfield services and engineering firm.
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(This story has been refiled to restore the dropped number ‘100’ in the headline)
(Reporting by Purvi Agarwal and Roshan Abraham in Bengaluru; Editing by Nivedita Bhattacharjee and Jonathan Oatis)
