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Wednesday, May 25, 2022

FTSE sets first-week low as mining and tech shares sink

By Atul Prakash

LONDON (Reuters) – FTSE 100 dropped to its lowest level in more than a week on Wednesday after a poorly received earnings report from Apple hit tech stocks and weaker metals prices and an update from BHP Billiton dragged down miners.

The UK mining index slid 4.6 percent to a six-year low and recorded its biggest one-day percentage drop since January as metals fell sharply. Diversified global miner Anglo American fell 5.6 percent to a 13-year low.

“Basic resources stocks are being hammered by weak metals prices as there are question marks over metals demand from top consumer China. Discouraging company updates have also soured sentiment,” Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said.

BHP Billiton slumped 5.7 percent after flagging a hit to its full-year underlying profit of up to $ 650 million, linked to writedowns in its copper business.

Gold producers also came under pressure, with Fresnillo dropping 2.6 percent as gold prices hit a five-year trough, in renewed selling after their dramatic slide early this week.

Britain’s blue-chip FTSE 100 index closed 1.5 percent weaker at 6,667.34 points after falling to 6,653.39, the lowest level in more than a week.

Chip designer ARM Holdings sank 6.6 percent, the biggest decliner in the FTSE 100 index. Although it reported a pretax profit that was only slightly below expectations, it was knocked back after Apple’s results late on Tuesday.

Apple, which uses ARM’s processor designs in its iPads, iPhones and watches, missed expectations with its forecast for revenue, adding to concerns that the smartphone market is weakening.

Across Europe, technology stocks shed nearly $ 6 billion of market value.

Equipment rental company Ashtead fell 3.5 percent after a double-downgrade from Bank of America/Merrill Lynch to “underperform”, traders said.

Among risers, easyJet surged 4.9 percent after it said higher demand for beach holidays helped support revenues, but added that there was still uncertainty from the unstable economic and political situations in Greece and the Middle East.

“While management points to a still uncertain macro environment, traders are focusing on the positives of increased FY guidance via lower fuel costs, revenues per seat holding up better than expected and passenger numbers and load factors still climbing,” Mike van Dulken, head of research at Accendo Markets, said.

(Reporting by Alistair Smout; Editing by Robin Pomeroy)

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