News: China fears prompted a drop in share price for many major tech firms.
The stock exchange had a rocky start to 2016, as issues in China spread worldwide. The London Stock Exchange (LSE) closed yesterday down 2.6 per cent at 6,093.43, having opened the year at 6,242.32.
Tech and telecoms stock in the UK were unable to buck these market trends, and fell in line with the index. On the FTSE100 index, BT Group were down 2.5 per cent, Vodafone were down 2.3 per cent, while software firm Sage also saw its share price fall from 603.5p a share to 594.5p a share.
Firms do not comment on this kind of stock price movement, and shares in firms like BT do tend to be quite liquid in response to events. The firms indicated that the decline yesterday was more to do with worldwide market trends then anything company or sector specific. One of the only stocks in the sector to end the day slightly up was TalkTalk, whose price was hit in the wake of the hacking scandal
Elsewhere in Europe, O2 owner Telefonica saw its shares tumble 3%, to €9.93 a share. Germany’s Dax market was down 4.3 per cent.
George O’Connor, technology analyst at Panmure Gordon, told CBR "The weakness was pretty much across the board
"We’ve got an absense of news flow, which in fairness to tech, doesn’t help."
O’Conner believes that the upcoming CES should help repair sentiment, and that there is "not change in the fundamentals."
In the US, where the Dow Jones had its worst start to the year since 2008, firms such as Google parent Alphabet and Facebook fell two per cent, with Netflix dropping four per cent.
Online retail giant Amazon closed the day down six per cent. Apple fell too, but recovered by the end of the days trading. IBM closed down 1.21 per cent, while Cisco was down 2.74%, and Intel fell 1.34% in the US.
Michael O’Rourke, chief market strategist at Jones Trading, told Wired:"The fact is it’s the first day, and it’s hard to predict the future. But, throughout the past few years, if you think about how each year started compared to this one, the prospects for this year are less optimistic than most."
Much of this fall was in reaction to dramatic events in China, where trading was halted in both the Shanghai and Shenzhen stock exchanges under new so called "circuit breaker" rules in the country that are designed to reduce volatility. The market there fell seven per cent on the back of worrying manufacturing numbers that were published at the end of last year.
Fears over the escalating diplomatic standoff between Iran and Saudi Arabia after the Saudi government executed 47 people also exacerbated market fears, with prices in commodities such as oil and gold rising.