AIN’S top share index fell to a fresh two-month low yesterday, as news that the Eurozone had fallen back into recession provided an impetus to break out of recent ranges.
The UK blue-chip index was down 44.26 points, or 0.8 per cent, at 5,677.75 at the close, finishing below 5,700 for the first time in two months and marking an end to range-bound trading that had persisted since early September.
The Eurozone slipped back into recession between July and September, contracting 0.1 per cent on top of a 0.2 per cent drop in the second quarter, despite French and German growth proving resilient.
Thomson Reuters data showed a broad-based sell-off, with every sector falling. Energy took 8.5 points off the index, with sentiment hit by growth concerns in Europe and worries over the US’ ability to avoid a ‘fiscal cliff’ of spending cuts and tax hikes, which could jeopardise growth.
However, sectors resilient to the economic cycle also fell, with consumer non-cyclicals taking nine points off the index, despite generally being regarded as a defensive play when the growth outlook falls.
Pennon was the biggest faller on the index, losing 6.2 per cent after it said first-half profit before tax and joint ventures at Viridor would fall 30.5 per cent to £27.8m. Pennon traded over six times its average 90-day volume. Wood Group also fell in heavy volume, losing 5.9 per cent in trading of over five times the average 90-day volume. Traders said the failure of the energy services company to get onto the list of companies added to the MSCI UK index this month was crimping demand for the stock.