London open: Stocks fall on China data; services PMI eyed

by | Sep 5, 2023

(Sharecast News) – London stocks fell in early trade on Tuesday following uninspiring Chinese data, as investors eyed the latest reading on the UK services sector.
At 0910 BST, the FTSE 100 was down 0.7% at 7,402.65.

Investors were digesting the latest data out of China, where the Caixin services purchasing managers’ index for August fell to 51.8 from 54.1 in July, coming in below consensus expectations of 53.0.

Susannah Streeter head of money and markets at Hargreaves Lansdown, said: “Sentiment has turned downbeat again on China as fresh brushstrokes are painted on the picture of its slowing economy.

“The closely watched Caixin PMI data showed growth in the services sector decelerating by more than expected. Services had been a brighter spot in the economy, with hopes that consumers would continue to spend on trips out and education, but demand is turning more sluggish with any stimulus efforts to spur spending not hitting the mark.

“The data has overshadowed relief that the struggling property giant Country Garden has managed to make key interest payments on its debt, reducing, for now, concerns about contagion in the financial sector. China appears to be taking one step forward, but two steps back, as optimism one day turns to pessimism the next.

“The FTSE 100 has opened lower as concerns spread again about demand in the huge Chinese economy for the goods listed companies produce, from metals and minerals to expensive handbags and premium drinks brands.”

On homes, the latest figures from the British Retail Consortium showed that sales growth jumped in August, as an improvement in consumer confidence drove spending on health and beauty products, and food and drink.

Total retail sales increased at an annual rate of 4.1% last month, accelerating from the 1.5% growth registered in July after disappointing weather dampened footfall for many retailers.

The three-month moving average for annual sales growth increased to 3.6% in August from 3.5% in July, BRC said.

The three-month average growth rate of food sales eased from 8.4% to 8.2%, but this was offset by an improvement in the decline in non-food, from -0.5% to -0.2%.

BRC chief executive Helen Dickinson said: “Sale of non-food products had their best month since February, particularly for health and beauty products as retailers continued to invest in new, exciting brands, and customers splurged on self-care.”

Dickinson said that while easing inflation will come as a welcome relief for many, sale growth may fall in the coming months, even if volume growth does not.

“Furthermore, high interest rates and high winter energy bills will put pressure on many households to spend cautiously. Retailers are combatting this through a clear focus on great value for consumers, expanding budget ranges, and finding ways to cut costs where possible,” she said.

In equity markets, B&M European Value Retail tumbled after a downgrade to ‘underweight’ from ‘overweight’ at JPMorgan Cazenove. Tesco was also weaker after a downgrade to ‘neutral’ from ‘overweight’ by JPM.

Equipment rental firm Ashtead was under the cosh as it reported a record performance in its fiscal first quarter, but cut its forecast for UK growth due to a “softening” market.

On the upside, Lancashire Holdings jumped after an upgrade to ‘equalweight’ from ‘underweight’ at Morgan Stanley.

Market Movers

FTSE 100 (UKX) 7,402.65 -0.67%
FTSE 250 (MCX) 18,416.16 -0.58%
techMARK (TASX) 4,256.71 -0.43%

FTSE 100 – Risers

Centrica (CNA) 154.05p 0.69%
Convatec Group (CTEC) 231.40p 0.61%
Beazley (BEZ) 547.50p 0.18%
Whitbread (WTB) 3,491.00p 0.17%
Halma (HLMA) 2,145.00p 0.09%
Relx plc (REL) 2,585.00p 0.04%
Admiral Group (ADM) 2,370.00p -0.04%
Pearson (PSON) 850.80p -0.05%
Compass Group (CPG) 2,009.00p -0.05%
AstraZeneca (AZN) 10,682.00p -0.07%

FTSE 100 – Fallers

B&M European Value Retail S.A. (DI) (BME) 534.20p -5.78%
Ashtead Group (AHT) 5,188.00p -5.12%
Ocado Group (OCDO) 845.80p -3.76%
Tesco (TSCO) 256.60p -2.73%
Sainsbury (J) (SBRY) 262.50p -2.27%
Entain (ENT) 1,160.50p -2.15%
JD Sports Fashion (JD.) 140.05p -1.75%
Fresnillo (FRES) 552.80p -1.74%
Kingfisher (KGF) 227.90p -1.64%
Flutter Entertainment (CDI) (FLTR) 14,110.00p -1.64%

FTSE 250 – Risers

Lancashire Holdings Limited (LRE) 585.00p 2.45%
Caledonia Investments (CLDN) 3,460.00p 2.22%
Bakkavor Group (BAKK) 100.00p 2.04%
The European Smaller Companies Trust (ESCT) 156.50p 1.29%
Diversified Energy Company (DEC) 84.70p 0.95%
Bridgepoint Group (Reg S) (BPT) 175.80p 0.63%
Vanquis Banking Group 20 (VANQ) 107.20p 0.56%
Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 269.00p 0.56%
Chemring Group (CHG) 291.50p 0.52%
Bankers Inv Trust (BNKR) 97.60p 0.41%

FTSE 250 – Fallers

Jupiter Fund Management (JUP) 95.40p -3.15%
Hammerson (HMSO) 23.80p -2.86%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 581.20p -2.43%
Darktrace (DARK) 364.20p -2.36%
Wizz Air Holdings (WIZZ) 2,179.00p -2.33%
Abrdn Private Equity Opportunities Trust (APEO) 425.00p -2.19%
Marks & Spencer Group (MKS) 222.30p -2.07%
Wetherspoon (J.D.) (JDW) 687.50p -2.00%
Currys (CURY) 48.62p -1.94%
Herald Investment Trust (HRI) 1,744.00p -1.80%

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