London stocks were in the red by midday on Monday, with miners pacing the decline after China set a weaker-than-expected growth target, as investors looked to a speech by US Federal Reserve chair Jerome Powell and the non-farm payrolls this week.
The FTSE 100 was down 0.4% at 7,917.81.
Richard Hunter, head of markets at Interactive Investor, said: “Investors remain temperamental amid conflicting economic signals, with this week providing yet another test of the general mettle.
“Apart from Chair Powell’s comments this week in a two-day testimony to Congress, Friday looms large as the latest non-farm payrolls report falls due. Last month’s report rattled investors with a breath-taking addition of 517,000 jobs, and a further reduction to the unemployment rate, suggesting that the labour market is starting to show signs of immunity from the hiking cycle.
“However, expectations for February are more modest, with a consensus for 225000 jobs to have been added, while investors will also have an eye on any revisions to the previous bumper reading.”
On home shores, investors were digesting a survey showing that business activity in the construction sector jumped last month.
The S&P Global CIPS UK Construction PMI came in at 54.6 in February, up significantly on January’s 48.4 and well above analyst forecasts for 48.6.
The highest since May 2022, it was the first time the index had risen above the neutral 50 point in three months. A reading below 50 indicates contraction, while one above that suggests growth.
Driving the growth was a rebound in commercial work – with a reading of 55.3 – as well as a positive contribution from civil engineering, at 52.3.
Respondents said the improving near-term economic outlook had helped boost orders for commercial projects, while input cost inflation had fallen to its lowest level since November 2020.
However, the housing sector continued to struggle, with activity remaining under 50 for the third month running, at 47.4. Respondents said higher interest rates were weighing on the market, and reported new house building projects being cut back in anticipation of weaker demand.
Tim Moore, economics director at S&P Global Market Intelligence, said: “Construction companies appear increasingly confident about the year ahead business outlook, with optimism rebounding strongly from the lows seen in the final quarter of 2022.”
In equity markets, heavily-weighted miners slumped after China set a modest economic growth target of around 5% for this year. Anglo American, Rio Tinto, Antofagasta and Glencore were among the worst performers on the FTSE 100.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “It’s clear that a return to stability is Beijing’s main aim, rather than big expansionary plans, after the painful past few years. The 5% target for growth announced at the National People’s Congress was not as high as had been hoped, particularly given the recent resurgence in factory activity and business confidence, indicating there is reticence towards signing off any blockbuster stimulus plans any time soon.
“This will nudge down hopes that China could provide the extra steam to offset declines in other major economies, prompted by efforts to rein in rampant inflation. The exception appears to be for defence which will see budgets increased by more than 7%, but rather than being encouraging this development will be tinged with worries about heightened geopolitical risk.”
On the upside, Aston Martin surged, with traders pointing to a good Formula 1 performance. The shares also got a boost from a target price upgrade at Jefferies.
Elsewhere, shipping services company Clarkson gained after it reported a sharp rise in annual earnings, driven by a strong performance in its broking division.
B&Q owner Kingfisher and Tesco rallied after upgraded to ‘buy’ from ‘hold’ at Jefferies, while B&M European Value Retail was higher after an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets.
Market Movers
FTSE 100 (UKX) 7,917.81 -0.37%
FTSE 250 (MCX) 19,967.09 0.21%
techMARK (TASX) 4,665.23 0.47%
FTSE 100 – Risers
Flutter Entertainment (CDI) (FLTR) 13,805.00p 3.33%
Rolls-Royce Holdings (RR.) 154.60p 3.31%
Rightmove (RMV) 572.60p 2.65%
BT Group (BT.A) 148.00p 2.17%
Airtel Africa (AAF) 123.80p 1.81%
Land Securities Group (LAND) 670.60p 1.39%
Centrica (CNA) 105.60p 1.20%
Tesco (TSCO) 259.30p 1.17%
Entain (ENT) 1,398.50p 1.16%
B&M European Value Retail S.A. (DI) (BME) 494.20p 1.08%
FTSE 100 – Fallers
Ocado Group (OCDO) 520.40p -5.42%
Anglo American (AAL) 2,924.50p -3.88%
Rio Tinto (RIO) 5,962.00p -2.96%
Beazley (BEZ) 625.00p -2.80%
Antofagasta (ANTO) 1,620.00p -2.64%
Glencore (GLEN) 509.60p -2.56%
Mondi (MNDI) 1,395.00p -1.80%
Fresnillo (FRES) 761.80p -1.75%
Endeavour Mining (EDV) 1,750.00p -1.41%
Smith (DS) (SMDS) 337.50p -1.29%
FTSE 250 – Risers
Aston Martin Lagonda Global Holdings (AML) 277.70p 15.71%
Clarkson (CKN) 3,515.00p 6.35%
Capital & Counties Properties (CAPC) 130.30p 4.66%
Moonpig Group (MOON) 123.60p 3.00%
Plus500 Ltd (DI) (PLUS) 1,823.00p 2.19%
Wetherspoon (J.D.) (JDW) 576.00p 2.13%
Edinburgh Worldwide Inv Trust (EWI) 169.60p 2.05%
Hikma Pharmaceuticals (HIK) 1,792.50p 1.96%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 148.60p 1.78%
IMI (IMI) 1,610.00p 1.77%
FTSE 250 – Fallers
Genuit Group (GEN) 300.00p -2.91%
Hunting (HTG) 276.50p -1.95%
Chemring Group (CHG) 282.00p -1.91%
SThree (STEM) 464.50p -1.80%
Balfour Beatty (BBY) 351.20p -1.79%
TP Icap Group (TCAP) 194.10p -1.77%
Spire Healthcare Group (SPI) 224.00p -1.75%
Elementis (ELM) 126.90p -1.63%
Auction Technology Group (ATG) 666.00p -1.62%
Ibstock (IBST) 160.10p -1.60%
