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 closed down 0.2 percent, 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 among the biggest blue-chip fallers, taken down by a pan-European tech sector which marked 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 5.8 percent on the mid-cap index.
Polar Capital Technology Trust fell 4 percent on the mid-caps, while Allianz's technology investment trust was down 2.3 percent among small caps. 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 pounds in 2000, but are just 2 pounds today." "During this initial tech boom, Sage shares also hit a high at 8 pounds, yet despite the increased profits and dividends since, the share price is now 6.70 pounds." Tech stocks aside, the decline took down a mixed bag of stocks, reflecting a downbeat day across European benchmarks, with the STOXX 600 down 0.9 percent.
Brokers' greater caution on cyclicals, advocating a move towards more defensive sectors, was reflected in the FTSE's moves. Miners Antofagasta and Fresnillo were some of the biggest fallers while defensive stocks BT and Vodafone gained. A rare bright spot was the energy sector, with oil firms Royal Dutch Shell and BP up as oil prices rose, with traders betting the crude market has bottomed.
Mitie hit a more than a one year high, up 13.5 percent 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 pound cost efficiency programme Mitie launched. Liberum upped the stock from "sell" to "hold". Meanwhile, shares in Acacia Mining dropped 13 percent after Tanzanian media reported a government investigation team had accused the company of operating in the country illegally.
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