LONDON MARKET OPEN: Europe falls on French unrest, US tech nerves

(Alliance News) - Stock prices in Europe opened lower on Monday, as traders digested another tech sell-off in New York, while dramatic events in France over the weekend hit shares in Paris, as well as those with exposure to the country.

The FTSE 100 index fell 44.83 points, 0.4%, at 10,837.07. The FTSE 250 in London was 62.40 points lower, 0.3%, at 24,471.50, and the AIM All-Share lost 1.79 points, 0.2%, at 771.33.

The Cboe UK 100 was down 0.4% at 1,075.31, the Cboe UK 250 fell 0.2% at 21,543.36, but the Cboe Small Companies was 0.3% higher at 18,959.63.

In Paris, the CAC 40 slumped 1.1%, while the DAX 40 in Frankfurt fell 0.7%.

Sterling traded at USD1.3318 early Monday, down from USD1.3339 at the time of the London equities close on Friday. Against the euro, it rose to EUR1.1874 from EUR1.1860.

The common currency fell to USD1.1211 from USD1.1248. Versus the yen, the dollar bought JPY158.08, up from JPY157.88.

In New York on Friday, the Dow Jones Industrial Average lost 0.4%, the S&P 500 shed 1.1%, and the Nasdaq Composite plunged 2.1%.

In Tokyo on Monday, the Nikkei 225 was down 0.6%. In China, the Shanghai Composite rose 0.4%. The Hang Seng Index was 0.5% higher. The S&P/ASX 200 in Sydney climbed 0.4%.

Analysts at Deutsche Bank commented: "39 years ago today we woke up to the origins of what would forever be known as Black Monday, where the Dow fell -22.6% on the day. It's rare the anniversary falls on a Monday so it's a more memorable one today. The late US trading session on Friday almost felt people were worried we'd get a repeat today as the S&P fell from flat just before the European close to -1.09% by the US one.

"Clearly the main nervousness last week was around AI-related names, with credit markets starting to show some distress in that sector."

The yield on the US 10-year Treasury was at 5.07% early Monday, narrowing from 5.08% at the time of the London equities close Friday, while the yield on the 30-year Treasury was quoted at 5.41%, slimming from 5.42%.

Dramatic events in France over the weekend could mean traders have one eye on OATs, Obligations assimilables du Tresor, French sovereign debt.

The yield on the French 10-year government bond widened markedly to 4.86% on Monday morning, from 4.79% late on Friday.

French President Emmanuel Macron has expressed the public's "anger" and "shame" over nationwide protests against rising living costs and poor conditions in schools that have resulted in at least 2,400 arrests.

Macron echoed other government officials in blaming much of the violence on far-left activists, accusing them of attacking police and public buildings to foment chaos.

"Those who looted will have to pay back for the damage, and those who sought to bring down the Republic will be held accountable," Macron said in a televised address to the nation.

On the CAC 40, banking and luxury were among the worst hit early Monday. BNP Paribas was down 2.2%, Hermes lost 2.1%, and LVMH gave back 2.0%.

In London, stocks with a French exposure struggled. Investor 3i Group, whose main holding, Action, counts France as its largest market, was down 4.0%, the worst FTSE 100 performer. Kingfisher and B&M were 2.2% and 2.8% lower. Do-it-yourself retailer Kingfisher owns Brico Depot and Castorama, while B&M operates around 150 stores in France.

Barclays fell 2.6%. The Financial Times reported the Bank of England is looking into whether Barclays misrepresented private credit loans, possibly reducing its regulatory capital requirements.

Banking peers remained under pressure, meanwhile. NatWest lost another 2.0%, and Lloyds fell a further 1.3%. The duo had ended in the red on Friday, after reports that UK Chancellor John Healey was poised to tax the banks more heavily in next week's budget.

Elsewhere in London, Mulberry shares rose 7.2%.

The luxury handbag maker said sales have improved in its first half, supported by "strong customer demand across both seasonal and core collections".

In a trading update, it said group sales rose 18% on-year in the six months to September 26.

"The group maintained a disciplined approach to trading, resisting discounting and generating strong full-price sales. Excluding markdown activity, promotional sales represented a 300 basis point lower proportion of sales than the prior year period, supporting gross margin performance," it added.

"Our US business continued to perform well, benefiting from increased customer demand, positive digital performance, including the launch of Bloomingdale's Marketplace, and the expansion of the brand's wholesale presence. Our European business also performed strongly."

Gold was quoted at USD4,186.89 an ounce on Monday morning, rising from USD4,176.55 late Friday afternoon. Brent oil was quoted at USD107.26 a barrel, up from USD106.06. Brent had hit USD110 a barrel on Friday.

"Oil has retreated from a five-month high as traders balance fresh fighting in the Middle East against evidence that regional supply is still moving at close to pre-war levels," SPI Asset Management analyst Stephen Innes commented. "The retreat is welcome after last week’s surge, but the market is still carrying a large geopolitical premium because Hormuz, Russian diesel supply and shipping costs remain unresolved."

By Eric Cunha, Alliance News news editor

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