UK shares fell sharply on Monday, as a profit warning from online fashion store ASOS reverberated across Europe and reinforced woes about slow sales during the busy holiday season, adding to a pre-Christmas gloom and worries over Brexit.
Opening losses on Wall Street accelerated the fall, leading to the UK blue-chip bourse closing 1.1 percent lower and the domestically focused mid-cap index losing 1.4 percent in the first day of the year's last full week of trading.
FTSE 100, which is down nearly 12 percent this year, is on track for its worst yearly drop since the financial crisis, even as investors brace themselves for a Bank of England's meeting later this week.
“…the FTSE is being impacted by increasing global pessimism. And today, one way that's being manifested is in the consumer sector after ASOS's warnings point to concerns about Brexit and wider economic fears becoming more crystallised," Ken Odeluga, analyst at City Index, told Reuters.
News that AIM-listed ASOS, which targets 20-somethings, cut its full-year targets after a weaker-than-expected November set the tone for the market on Monday, showing how online-only clothing retailers were not immune to a growing crisis in the UK retail sector.
ASOS plunged over 40 percent, recording its worst one-day drop ever and losing roughly 1.3 billion pounds in market value.
It follows weak outlooks from other big UK high street names, including Dixons Carphone and Sports Direct . Last week Sports Direct owner Mike Ashley said trading in November was “unbelievably bad".
Among big fallers on the main index were high street retailers Next and Marks & Spencer, which fell 4.6 percent each and Kingfisher, which was down 4.2 percent. Internet food store Ocado was down 4.4 percent.
ASOS rival Boohoo fell as much as 18 percent at the open, before recouping some losses after it reported record Black Friday sales and ending the day with a 13.7 percent fall.
High street chains were the worst performers on the mid-cap index, with home furnishings retailer Dunelm Group plunging 10.3 percent, JD Sports Fashion dropping 6.6 percent and greeting cards retailer Card Factory losing 6.1 percent.
British households' confidence in their finances hit a six-month low in December – a critical month for retailers – as their earnings from employment rose more slowly while living costs increased, a survey showed.
This points to a dismal end to the year in which household names like Toys R Us and House of Fraser buckled under pressure from online shopping giant Amazon.com, rising labour costs and unseasonably warm weather.
The sell-off also did not spare the small-caps, taking off 16.5 percent from N Brown and 7.1 percent off Debenhams shares.
Shares in Wood Plc, the engineering and oilfield services provider, fell 6 percent to the bottom of the main bourse after mid-cap peer Hunting Plc said it expects project deferrals from producers due to the recent plunge in crude prices. Hunting also fell 5 percent.
Oil prices have tanked over 30 percent from their $86.74 a barrel peak in early October, even as analysts question whether the recent OPEC output cut would do much to stabilise prices.
Also weighing on investor confidence was property data showing that asking prices suffered their biggest fall over a two-month period since 2012.
That pulled down the shares of housebuilders Persimmon , Barratt Developments, Taylor Wimpey, Berkeley, which dropped between 1.4 percent and 4.1 percent.
In single moves, a 3 percent drop made Shire the top drag on FTSE 100 following a downgrade of Takeda by rating agency Moody's, citing that its takeover of Shire will cause the Japanese drugmaker's debt to increase almost six-fold.
Financial heavyweight Barclays dipped 3.6 percent, while Prudential pared some of the initial fall to close the day with a 0.4 percent loss.
Shares in multinational stocks Unilever and British American Tobacco fell 2.1 percent and 1.2 percent, respectively, as the dollar weakened ahead of the Federal Reserve's policy meeting on Wednesday.
GVC shares were down 4.9 percent, easing some of last week's gains, ahead of a parliamentary vote this week on maximum stakes on fixed-odds betting terminals.
Shares in energy provider SSE gave up 3.2 percent after it scrapped a deal with Innogy SE for a tie-up that would have created UK's second biggest retail power provider as the companies failed to agree on revised terms.
Among a handful of blue-chip stocks in positive territory was the world's biggest miner, BHP, with a 2.7 percent gain after it announced a $1.02 per share special dividend, delivering on an earlier promise to hand back all of the proceeds from the sale of its U.S. shale business.
Peers Rio Tinto, Antofagasta, Glencore and Anglo American all rose between 0.8 percent and 2.4 percent.
Shares in the world's oldest travel firm, Thomas Cook , dipped nearly 5 percent after a Sunday Times report https://www.thetimes.co.uk/article/no-deal-brexit-travel-warning-dont-go-on-holiday-after-march-29-jnfmrgsj9 that people will be advised not to book holidays after next March, as per contingency plans being drawn up for a no-deal Brexit. German Peer TUI also fell 2.7 percent.
The report also led to a 4.3 percent fall in budget airline EasyJet.