ARM, which designs chips for Apple Inc.’s iPhone and iPad, slid 2.4 percent as investors sold the shares with the highest valuations. Burberry (BRBY) Group Plc fell 2 percent after Berenberg Bank cut its rating on Britain’s largest maker of luxury goods.
The FTSE 100 Index retreated 72.71 points, or 1.1 percent, to 6,622.84 at the close in London, its biggest drop since March 7. The broader FTSE All-Share Index also lost 1.1 percent, while Ireland’s ISEQ Index slipped 1.1 percent. The Standard & Poor’s 500 Index dropped 1.3 percent on April 4 from its highest valuation this year.
“People have got a bit twitchy and they’re starting to feel some of these valuations have gone into la la land,” said Mike Franklin, chief investment strategist at Beaufort Securities Ltd. in London. “There are very high ratings on very slim earnings in some cases and the markets are feeling nervous about that. The S&P selloff is working its way through to the other markets.”
The S&P 500 slid the most in two months on April 4 as investors sold technology stocks including Google Inc. and Yahoo! Inc. A measure of hardware and equipment suppliers on the FTSE 350 Index dropped 2.2 percent today. The six companies in the industry group trade at an average valuation of 31.6 times forecast profit. The broader index has a price-earnings ratio of 13.8, according to data compiled by Bloomberg.
The volume of shares changing hands in U.K.-listed stocks today was 20 percent lower than the 30-day average. U.K. equities had rallied 2.6 percent in the past three weeks as Russia’s annexation of Crimea failed to lead to tit-for-tat sanctions that would disrupt world trade.
ARM slipped 2.4 percent to 972.5 pence. The company trades at 41 times estimated earnings, more than any other stock in the FTSE 350 Technology Hardware & Equipment Index. Ocado Group Plc, the online grocery service, slid 6.7 percent to 422 pence. The company, which delivers groceries from Waitrose Ltd. and Wm Morrison Supermarkets Plc trades at 151 times forward earnings.
Burberry retreated 2 percent to 1,406 pence. Berenberg cut the stock to hold from buy. The brokerage reduced its earnings forecast for Burberry in 2016, citing adverse currency movements and the end of the company’s license in Japan.
API Group Plc (API) slumped 7.4 percent to 68.5 pence after saying earnings for the year ended in March will only reach the lower end of its forecasts. The maker of packaging materials reports its results on June 4.
Marks & Spencer Group Plc (MKS) fell 2 percent to 452.9 pence. Executive director for food Steve Rowe acknowledged that price cuts by the big four supermarket chains would shake up food retailing in Britain, according to the Daily Telegraph. He said M&S would withstand the competition, the newspaper reported.
Centrica Plc gained 1.9 percent to 334.8 pence after National Grid Plc forecast adequate electricity margins in the U.K. throughout the summer, according to the utility company’s outlook for 2014.
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