Technology sell-off weighs on Britain's FTSE

[LONDON] British shares fell on Monday as a technology sell-off spread across Europe, while contractor Mitie jumped after forecasting a recovery in its fortunes.

Britain's FTSE 100 dropped 0.3 per cent by 1000 GMT, with investors dumping tech and other cyclical stocks, which feature heavily on the blue-chip index, and heading into defensive sectors.

Software company Micro Focus and accounting platform provider Sage Group were the biggest blue-chip fallers, taken down by a pan-European tech sector set for its worst day since the post-Brexit sell-off a year ago.

Anti-virus provider Sophos, which had been a top gainer after a ransomware virus spread across the world, fell 5.1 per cent on the mid-cap index.

Polar Capital Technology Trust fell 4.4 per cent on the mid-caps, while Allianz's technology investment trust was the worst small-cap faller, down 4.6 per cent.

The declines came after a sharp tech sector sell-off on Wall street on Friday - Apple shares had their worst day in more than a year as Goldman Sachs put out a note urging caution across the sector.

"Overvaluations of technology companies today resemble previous investment manias," said Fergus Shaw, fund manager at Cerno Capital. "The fact that even successful businesses can become caught in a mania is evident in the case of Vodafone when its shares peaked at over £4 in 2000, but are just £2 today."

"During this initial tech boom, Sage shares also hit a high at £8, yet despite the increased profits and dividends since, the share price is now £6.70."

Tech stocks aside, the broad-based dip took down a mixed bag of stocks, reflecting a downbeat day across European benchmarks, with the STOXX 600 down 0.8 per cent.

Brokers' greater caution on cyclicals, advocating a move towards more defensive sectors, was reflected in the FTSE's moves.

Miners Antofagasta, Fresnillo and BHP Billiton were some of the top weights, while defensive stocks Reckitt Benckiser, BT and Vodafone were among the top gainers.

A rare bright spot was the energy sector, with oil firms Royal Dutch Shell and BP up as oil prices gained with traders betting the crude market has bottomed.

Mitie hit a one-year high, up 9.2 per cent after the contractor swung to a full-year operating loss after restating its accounts. Its cost-cutting programme and outlook were well received by investors. "Completed accounting review is providing Mitie with a base from which to build after a tumultuous 12 months," said Stifel analysts, praising the £45 million cost efficiency programme Mitie launched.

Liberum upped the stock from "sell" to "hold".

Meanwhile, shares in Acacia Mining fell 7 per cent after Tanzanian media reported a government investigation team had accused the company of operating in the country illegally.

REUTERS