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London open: Stocks fall as China data disappoints
London stocks fell in early trade on Wednesday after the release of disappointing Chinese data, and as investors eyed the latest minutes from the Federal Reserve and a reading on the UK services sector.
At 0900 BST, the FTSE 100 was down 0.4% at 7,490.68.
Data out earlier showed that activity in China’s services sector expanded at its slowest pace in five months in June.
The Caixin/S&P Global services purchasing managers’ index fell to 53.9 from 57.1 in May – the lowest reading since January. A reading above 50 indicates expansion, while a reading below signals contraction.
The composite PMI, which includes both manufacturing and services activity, fell to 52.5 from 55.6 in May.
“Employment contracted, deflationary pressure mounted, and optimism waned in the manufacturing sector,” said Caixin senior economist Wang Zhe. “Meanwhile, the services sector continued a post-Covid rebound, but the recovery was losing steam.”
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “There are fresh concerns about the global economy powering down as data from China’s service sector underlines how tepid the post-pandemic recovery has become, just as trade tensions between Beijing and Washington ramp up.
“This has put indices in Europe on the back foot, following falls in Asia, with Japan’s Nikkei falling 0.49% and Hong Kong’s Hang Seng down 1.38%.”
On home shores, the S&P Global CIPS services PMI for June is due at 0930 BST. Investors were also eyeing the release of FOMC minutes this evening.
In equity markets, vehicle hire company Redde Northgate slumped despite posting a strong rise in annual profit, driven by higher demand.
The company reported a 34.7% rise in pre-tax profit to £178.7m. Revenue grew by a fifth to £1.49bn and the full-year dividend was lifted by 3p a share to 24p.
Outside the FTSE 350, SIG tanked after it said full-year operating profit was set to be towards the lower end of market expectations.
On the upside, Keller Group surged as it lifted its full-year earnings outlook on the back of strong first-half trading and a “robust” order book.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Pearson Plc | +2.01% | +16.40 | 833.80 |
| 2 |  |
Tesco Plc | +0.89% | +2.20 | 250.00 |
| 3 |  |
Rightmove Plc | +0.42% | +2.20 | 528.80 |
| 4 |  |
Bae Systems Plc | +0.35% | +3.20 | 912.20 |
| 5 |  |
Sainsbury (j) Plc | +0.30% | +0.80 | 270.40 |
| 6 |  |
Hikma Pharmaceuticals Plc | +0.29% | +5.50 | 1,907.00 |
| 7 |  |
Auto Trader Group Plc | +0.26% | +1.60 | 608.40 |
| 8 |  |
Itv Plc | +0.26% | +0.18 | 68.56 |
| 9 |  |
Smith & Nephew Plc | +0.25% | +3.00 | 1,203.00 |
| 10 |  |
Marks And Spencer Group Plc | +0.21% | +0.40 | 192.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -3.87% | -23.80 | 591.40 |
| 2 |  |
Prudential Plc | -2.44% | -27.00 | 1,079.00 |
| 3 |  |
Carnival Plc | -2.37% | -32.00 | 1,319.50 |
| 4 |  |
Anglo American Plc | -2.19% | -51.00 | 2,281.00 |
| 5 |  |
Kingfisher Plc | -2.11% | -4.90 | 227.20 |
| 6 |  |
Legal & General Group Plc | -1.97% | -4.50 | 223.90 |
| 7 |  |
British Land Company Plc | -1.73% | -5.50 | 313.30 |
| 8 |  |
Ashtead Group Plc | -1.53% | -82.00 | 5,282.00 |
| 9 |  |
Tui Ag | -1.49% | -9.00 | 594.50 |
| 10 |  |
Antofagasta Plc | -1.46% | -22.00 | 1,480.50 |
US close: Stocks make gains ahead of 4 July holiday
Wall Street saw a slight uptick in its major stock indices on a short-but-sweet Monday, as markets closed early ahead of the July 4th holiday.
The Dow Jones Industrial Average ended the day 0.03% higher at 34,418.47, and the broader S&P 500 advanced 0.12% to 4,455.59.
Leading the pack was the tech-heavy Nasdaq Composite, which increased 0.21% to end the session at 13,816.77.
On the currency front, the dollar was last up 0.03% on sterling at 78.8p, while it dipped 0.02% against the common currency to trade at 91.63 euro cents.
The greenback meanwhile remained steady on the yen, last changing hands at JPY 144.68.
“The first half of the year finished with most indices heading higher,” said IG chief market analyst Chris Beauchamp earlier.
“The bullish atmosphere from Friday has not carried over into the new week however, mainly thanks to the US holiday tomorrow.
“After the caution of the first half, a lot of investors will be looking to put their money to work, even if it comes after six months of solid gains.”
Factory sector activity faces increased slowdown amid declining prices
On the economic front, the US manufacturing sector experienced a noticeable deceleration in its activity over the last month, alongside an accelerated decrease in prices, according to the Institute for Supply Management (ISM).
The survey results revealed a decline in the manufacturing purchasing managers’ index (PMI) from 46.9 in May to 46.0 in June, falling short of the anticipated mild improvement to 47.1.
An important component of the survey, the new orders sub-index, did register a minor increase, moving from 42.6 to 45.6.
However, with a reading still below the 50-point threshold, the figure suggested an ongoing contraction, albeit at a somewhat reduced rate.
On the other hand, the sub-index for production experienced a decline, slipping from 51.1 to 46.7, indicating a setback in manufacturing output.
Additionally, the survey revealed a drop in the prices paid sub-index, which tracks the cost burdens shouldered by firms.
The index receded from 44.2 to 41.8, implying a more rapid decline in prices.
Survey responses across various sub-sectors painted a nearly uniform picture of a softer outlook for demand.
However, purchasing managers in the fabricated metal products and primary metals industries provided some exceptions to the trend.
Electric vehicle stocks rev up; Tattooed Chef tumbles amid bankruptcy filing
In equities, Tesla‘s shares accelerated 6.9% after the electric car maker announced record-breaking delivery numbers.
“Tesla’s cut price gamble appears to be paying off handsomely as it makes deeper inroads into the Chinese market,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“Offering more affordable price tags has been a shrewd move in other markets too, where consumers have been grappling with the cost-of-living crisis but are still eager to join the electric vehicle revolution.”
Rivian Automotive, another player in the EV market, surged a robust 17.41% after the company reaffirmed its 2023 production guidance of 50,000 vehicles, effectively doubling its output from the prior year.
Adding fuel to the optimism, Bloomberg reported that the company had internally communicated to staff that a production level of 62,000 units was a feasible target.
On the downside, Tattooed Chef, a producer of plant-based food, plummeted 46.58% after the company announced at the end of last week its intention to file for Chapter 11 bankruptcy protection.
Wednesday newspaper round-up: Morrisons, Thames Water, Matalan
Morrisons is closing a fruit-packing plant in Bradford, putting 450 jobs at risk in the supermarket’s home city where it traces its roots back to 1899. The debt-laden supermarket chain, which is battling to save costs after a takeover in October 2021 by the American private equity group Clayton Dubilier & Rice, said it was moving operations from the Cutler Heights area of the West Yorkshire city – its first ever fruit-packing plant – to another plant in Thrapston, Northamptonshire, and a distribution centre in Wakefield in the second part of this year. – Guardian
London’s mayor Sadiq Khan “lacks the legal power” to extend the ultra-low emission zone (Ulez) to the whole of the capital, five Conservative-led councils have argued in the high court. Lawyers for four outer London boroughs – Bexley, Bromley, Harrow and Hillingdon – and Surrey county council said that “key information was not disclosed” in consultations over the proposed expansion of the Ulez. – Guardian
A £1bn cash injection will not be enough to steady the ship at crisis-hit Thames Water, the industry regulator has warned. Ofwat said the cash that Thames is currently seeking from investors is only expected to get the troubled company through to the end of March 2025, with further injections needed for a lasting turnaround beyond that. – Telegraph
The planned £4 billion sale of Center Parcs is said to be hanging in the balance after a number of prospective bidders dropped out of the race amid a sharp downturn in private equity dealmaking. First-round bids were due towards the end of June, with Brookfield Property Partners, which has owned Center Parcs since 2015, taking a handful of parties through to the second stage. – The Times
Matalan has been accused of employing “cowboy buying practices” by a group of Asian suppliers after the retailer reportedly asked for price cuts of 20 per cent on some clothing orders. The manufacturers, who spoke to The Times on condition of anonymity, claimed that the discount fashion and homeware chain is engaged in some of the “most aggressive, unreasonable buying practices” they had ever seen. – The Times
