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London open: Stocks fall after weak China data
London stocks fell in early trade on Wednesday as weak Chinese data dented sentiment.
At 0825 BST, the FTSE 100 was down 0.8% at 7,464.77.
Figures released earlier by the National Bureau of Statistics showed that the manufacturing purchasing managers’ index declined to 48.8 in May from 49.2 in April, coming in below consensus expectations for an increase to 49.5.
A reading above 50 indicates expansion, while a reading below signals contraction.
Meanwhile, the non-manufacturing PMI edged down to 54.5 in May from 56.4 the month before, versus expectations for a reading of 55.2.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Growth slowdown fears have accelerated as the latest data from China shows a faltering recovery, knocking back sentiment on markets. Investors have been unnerved by the snapshot showing the Chinese manufacturing sector contracted again in May, while activity across services also slowed for the fourth month in a row.
“Far from being the powerhouse which will offset America’s slowdown, China’s economic recovery from the pandemic is looking more precarious. A cloudy geo-political landscape is also causing concern, amid ongoing chip wars and sanctions, after it emerged that China turned down a US request for their defence chiefs to meet on the sidelines of a summit in Singapore.”
Streeter said worries are also lingering about the obstacles still in the path of the US budget legislation aimed at raising the debt ceiling, with harder line Republicans still strident in their opposition.
“By passing the House rules committee, it’s cleared the first hurdle, but it has plenty of other congressional jumps to navigate, before the new deadline on June 5, as lawmakers opposing increased spending limits turn more vocal,” she said.
“Today it’ll be debated in the House of Representatives with a vote expected later, before it heads to the Senate and it’ll be under intense scrutiny every step of the way.”
In equity markets, Ladbrokes owner Entain slumped as it said it is seeking a deferred prosecution agreement over alleged bribery at its former Turkish business, and that it was facing a potentially “substantial” financial penalty.
Prudential lost ground as it announced that chief financial officer James Turner has resigned due to an investigation into a code of conduct issue relating to a recent recruitment situation. The company said that Turner had fallen short of the “high standards” the group sets itself.
Drax was under the cosh after Ofgem announced an investigation into Drax Power Limited’s annual biomass profiling reporting under the Renewables Obligation scheme.
On the upside, B&M Value Retail rallied after saying it expects current adjusted core earnings to be higher than 2023, as it posted a fall in annual profits.
WH Smith was also trading up as the retailer said its expectations for the full year had improved “modestly”, hailing continued strong momentum across its global travel business.
Fresh food provider Bakkavor gained after it lifted its full-year profit outlook as it reported an “encouraging” first-quarter trading performance, in line with expectations.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Relx Plc | +1.41% | +35.00 | 2,520.00 |
| 2 |  |
Bt Group Plc | +1.30% | +1.90 | 147.80 |
| 3 |  |
Astrazeneca Plc | +1.29% | +148.00 | 11,646.00 |
| 4 |  |
Rentokil Initial Plc | +1.26% | +8.00 | 641.20 |
| 5 |  |
Sse Plc | +1.13% | +21.00 | 1,879.50 |
| 6 |  |
Scottish Mortgage Investment Trust Plc | +1.10% | +7.40 | 680.60 |
| 7 |  |
Vodafone Group Plc | +0.96% | +0.75 | 78.50 |
| 8 |  |
United Utilities Group Plc | +0.84% | +8.50 | 1,019.00 |
| 9 |  |
National Grid Plc | +0.73% | +8.00 | 1,108.00 |
| 10 |  |
Experian Plc | +0.71% | +20.00 | 2,844.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Prudential Plc | -2.98% | -33.50 | 1,091.50 |
| 2 |  |
Ocado Group Plc | -2.91% | -11.40 | 380.50 |
| 3 |  |
Burberry Group Plc | -1.99% | -44.00 | 2,164.00 |
| 4 |  |
Itv Plc | -1.91% | -1.36 | 69.72 |
| 5 |  |
Bp Plc | -1.55% | -7.25 | 459.35 |
| 6 |  |
Mondi Plc | -1.53% | -19.50 | 1,257.00 |
| 7 |  |
Bhp Group Limited | -1.42% | -32.00 | 2,217.00 |
| 8 |  |
International Consolidated Airlines Group S.a. | -1.31% | -2.05 | 154.95 |
| 9 |  |
Taylor Wimpey Plc | -1.25% | -1.45 | 114.15 |
| 10 |  |
Fresnillo Plc | -1.23% | -8.00 | 640.60 |
US close: Stocks mixed as debt ceiling deal heads to Congress
Wall Street presented a mixed performance on Tuesday on its return from the Memorial Day holiday, as the focus remained on the federal debt ceiling issue.
At the close, the Dow Jones Industrial Average was down 0.15% at 33,042.78, as the S&P 500 finished flat at 4,205.52.
The tech-heavy Nasdaq Composite meanwhile ended the day in positive territory, rising 0.32% to 13,017.43.
Despite Congressional Republicans and the White House striking a deal on the debt ceiling over the weekend, the agreement still needed approval from Congress in the coming days to avert a potential government debt default.
On the currency front, the dollar slipped 0.01% against sterling to trade at 80.55p, while it was unchanged on the yen at JPY 138.79.
The greenback edged up 0.01% on the common currency, however, to change hands at 93.17 euro cents.
“This continues to be a remarkably bifurcated market,” said IG chief market analyst Chris Beauchamp.
“Nvidia’s results continue to power chip makers and other stocks that can be linked to the boom in AI, no matter how tenuous.
“Meanwhile, in a perhaps unsurprising development, it has proven impossible to maintain the sunny optimism of Friday, when markets surged on news of a debt ceiling deal in principle.”
Beauchamp said that while it was still likely that a deal would pass Congress without too many hiccoughs, the risk of a delay meant stocks were not seeing the triumphant progress to the end of May that looked likely last week.
House prices rise further, consumer confidence slips
In economic news, the S&P CoreLogic Case-Shiller home price index, a key measure of house prices, showed a continued upward trend in the sector.
The index increased by 0.4% in March, making for the second consecutive monthly gain.
“Two months of increasing prices do not a definitive recovery make, but March’s results suggest that the decline in home prices that began in June 2022 may have come to an end,” said Craig Lazzara, managing director at S&P Dow Jones Indices.
Contrarily, consumer confidence demonstrated a slight dip, according to the Conference Board.
Its consumer confidence index fell to 102.3 in May from a print of 103.7 in April.
Moreover, there was a drop in the number of consumers who believed jobs were readily available, with that measure falling four percentage points to 43.5%.
“However, expectations for jobs and incomes over the next six months held relatively steady,” the survey compiler said.
Finally on data, the manufacturing sector exhibited signs of contraction in the Dallas region, according to the Federal Reserve Bank of Dallas.
The regional manufacturing index dropped to -29.1 in May, from -23.4 in April, making for a three-year low that was significantly lower than the -19.5 economists had pencilled in.
Nvidia in focus, Ford strikes the right note with broker
In equities, graphics processor giant Nvidia was up 2.99% after a series of new product and partnership announcements were made by its founder and chief executive Jensen Huang at a tech trade show in Taiwan.
During the session, the firm’s market cap also briefly surpassed the $1trn mark.
Ford Motor Company meanwhile accelerated 4.14% following an upgrade at Jefferies, which shifted its rating on the carmaker from ‘hold’ to ‘buy’.
“Last week’s investor event in Dearborn raised our confidence that Ford finally has the plan and the team in place to close a deficit of execution that has dogged shares for years,” the bank said.
It added that the gap between Ford’s ambitions and consensus stuck below 6% was attractive, saying it expected sequential improvements across divisions.
Meanwhile, consumer goods giant Newell Brands was in focus, rising 1.73% after the maker of Sharpie markers and Yankee Candles announced a restructuring plan aimed at cost cutting and streamlining distribution.
Wednesday newspaper round-up: Prepayment meters, rail services, BAE Systems
British households on prepayment meters face missing out on up to £130m of support for their energy bills if they fail to redeem government vouchers before they expire in a month’s time. Under the energy bills support scheme, which runs until 30 June, all households are entitled to discounts of up to £400 on their bills. – Guardian
Rail services in parts of England have ground to a halt with the first of three train strikes this week taking place as the long-running dispute between the unions and the government over pay, jobs and conditions continues. A 24-hour strike by members of the driver’s union Aslef is under way and a further day of industrial action is planned for Saturday, the day of the FA Cup final. – Guardian
The boss of BAE Systems has discussed setting up weapons production inside Ukraine in talks with Volodymyr Zelensky. In a further sign of Britain’s central role in arming Ukrainian forces, the FTSE 100 maker of Challenger 2 tanks, artillery pieces and ammunition crucial to the war against Russia held direct talks with the country’s president, both sides confirmed on Tuesday evening. As well as manufacturing and repair facilities, Mr Zelensky and BAE chief executive Charles Woodburn discussed setting up a local office in the country. – Telegraph
A fund management company behind a scandal-hit property investment trust that raised £740 million from UK investors has been accused of disguising rent arrears and secretly releasing a developer from refurbishment obligations. Home Reit, which specialises in housing for the homeless, said after hiring corporate investigators that Alvarium Home Reit Advisors, its former manager, had failed to bring several matters to its attention. It said the “lack of transparency” had “hampered the board’s ability to assess the medium-term financial strength of its tenant base and the ability of its tenants to pay rent”. It also said the manager had provided “inaccurate information” to an outside body, the Good Economy, a consultancy that had been responsible for assessing the trust’s social, environmental and economic impact. The consultants were blocked from carrying out physical inspections of properties. – The Times
The construction of new offices in London’s West End is consistently outpacing the City for the first time as demand from financial services trails that of other sectors. The volume of space being developed in the Square Mile business district is close to its lowest level in at least eight years, according to research by Deloitte, in contrast with the steady recovery in activity in the West End since the pandemic. – The Times
