LONDON (Alliance News) - Stock indices in the UK and Europe are firmly lower Friday, as technology stocks lead an equity sell-off for the second time this week amid concern that the sector is overvalued.
By mid-morning Friday the FTSE 100 is down 1.3% at 6,555.47, the FTSE 250 is down 1.7% at 15,881.51, and the AIM All-Share is down 0.9% at 836.95.
The drop in the London market continues a technology stock sell-off that started on Wall Street and continued into the Asian session. The Japanese Nikkei fell 2.4% overnight, putting the index below 14,000 points for the first time in six months, while the US Nasdaq Composite fell 1.6%, the index's heaviest one day loss since 2011.
"The dramatic global sell off looked set to reverse during yesterday?s trading session however this was merely a quick pause to catch its breath before continuing with its sharp declines," said Spreadex financial sales trader Sam Fox.
Worries that technology stocks are trading at unrealistic valuations took hold on the Nasdaq last Friday and has since spread to global markets, as well as into the bio-technology sector.
Lombard Medical Technologies, which is planning to IPO on Nasdaq and cancel its current listing on London's AIM market, has delayed the move due to what it described as "adverse stock market conditions". Its AIM stock is being punished Friday, and is currently down 11.2%.
The FTSE 350 Technology Hardware & Equipment sector index is down 4.3% Friday, led lower by Imagination Technologies, Pace, and ARM Holdings, down 4.7%, 5.7%, and 4.3% respectively. The Electronic & Electrical Equipment index sector is down 2.4%, with the falls led by Xaar, down 3.5%. Biotechnology company BTG is amongst the biggest fallers, down 3.6%.
There's been little in the fairly quiet data calendar to boost sentiment Friday, with overnight data showing Chinese inflation lower than expected, and an early release from Germany confirming CPI growth there is on a downward trend. Slightly-better-than-expected CPI data from Spain showed prices there falling at just 0.1% year-on-year in March, against the 0.2% decline expected by economists.
In the UK, construction output fell by 2.8% in February, after having risen by 2.1% in January, a disappointment compared to the consensus estimate for a fall in output of 1.3.
Construction could be the strongest sector in the UK as the economic recovery broadens thanks toh low interest rates and government subsidies, but "exceptionally wet weather rained on the parade in February," said Berenberg chief UK economist Rob Wood.
The data disappointment sent the pound a little lower against the dollar, currently trading at USD1.6765. The euro has shown little reaction to the morning CPI data, continuing to trade near a one-month high against the dollar, currently USD1.3886.
Still to come Friday, US producer price inflation numbers at 1230 GMT, followed by the Reuters/Michigan consumer sentiment index for April at 1355 GMT. Economists expect the confidence index to improve slightly to 81 in April from 80 in March.
The banks are likely to provide the main afternoon focus, with both JP Morgan and Wells Fargo due to release their first quarter numbers Friday. With valuations under scrutiny more than ever "the results from the US?s biggest banks could well set the tone for the next few weeks for equity markets all over the globe, particularly if they disappoint market expectations," said CMC Markets chief market analyst Michael Hewson.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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