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London open: Shares make muted start as China data hits miners
It was a subdued start for UK equity indices on Tuesday as weaker-than-expected economic data out of China dragged mining stocks into the red.
Poor UK retail sales figures also dampened sentiment in the market, with the FTSE 100 trading 0.1% lower at 7,546.65 by 0900 BST.
Overnight, China’s customs administration reported a 14.5% fall in exports for the month of July, following a 12.4% drop in June and worse than the consensus estimate of -13.2%. Imports also reduced by 12.4% after a 6.8% fall in June (consensus: -5.6%).
“Exports are now falling in all of China’s significant markets, except Russia, meaning that China will need to rely more on domestic demand to stabilise growth in H2,” said Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics.
“Policymakers appear determined to allow household spending and business investment to take the lead in this recovery cycle, even if that means a drawn-out, ‘tortuous’ upturn.”
On home shores, the British Retail Consortium reported that annual retail sales growth slowed to just 1.5% in July, down from 4.9% in June. Like-for-like sales also slowed, from 4.2% to 1.8%.
Glencore leads miners lower, Abrdn sinks
Glencore, Anglo American, Antofagasta and Rio Rinto were all trading lower early on.
Glencore was the worst performer of the lot after reporting that adjusted core earnings halved in the first six months of the year. The company blamed macro conditions on price reductions in copper, cobalt, nickel and zinc.
Shares in Abrdn plunged around 9% following the release of the asset manager’s first-half results. The company cited “challenging market conditions” and a “risk-off environment” as it reported net outflows of £4.4bn.
Banking stocks were also providing a drag on the UK’s benchmark index, with Lloyds, HSBC and Standard Chartered all losing ground.
Hotels operator IHG was trading higher after announcing a sharp jump in half-year profit as the travel sector continued to rebound from the Covid pandemic. Operating profit at the Crowne Plaza and Holiday Inn owner rose 62% to $584m.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hiscox Ltd | +2.56% | +28.00 | 1,123.00 |
| 2 |  |
Intercontinental Hotels Group Plc | +2.19% | +124.00 | 5,782.00 |
| 3 |  |
Pearson Plc | +1.87% | +15.80 | 859.40 |
| 4 |  |
Carnival Plc | +1.78% | +22.00 | 1,258.50 |
| 5 |  |
St. James’s Place Plc | +1.64% | +15.00 | 931.40 |
| 6 |  |
Auto Trader Group Plc | +1.09% | +6.80 | 628.40 |
| 7 |  |
Itv Plc | +1.08% | +0.80 | 74.90 |
| 8 |  |
Segro Plc | +0.97% | +7.20 | 748.40 |
| 9 |  |
Admiral Group Plc | +0.94% | +20.00 | 2,138.00 |
| 10 |  |
National Grid Plc | +0.83% | +8.00 | 973.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Glencore Plc | -4.19% | -19.15 | 437.55 |
| 2 |  |
Melrose Industries Plc | -2.32% | -12.60 | 530.60 |
| 3 |  |
Smith (ds) Plc | -2.29% | -7.00 | 298.40 |
| 4 |  |
Rolls-royce Holdings Plc | -2.24% | -4.70 | 204.80 |
| 5 |  |
Anglo American Plc | -2.11% | -46.50 | 2,154.00 |
| 6 |  |
Antofagasta Plc | -2.05% | -33.00 | 1,578.00 |
| 7 |  |
Standard Chartered Plc | -1.77% | -13.20 | 733.80 |
| 8 |  |
Wpp Plc | -1.71% | -13.80 | 794.80 |
| 9 |  |
Bhp Group Limited | -1.70% | -40.00 | 2,306.50 |
| 10 |  |
Ocado Group Plc | -1.59% | -13.60 | 839.20 |
US close: Stocks bounce back from dire week
Wall Street experienced a bounce-back on Monday, with stocks closing notably higher following their most challenging week since March.
The Dow Jones Industrial Average saw an uptick of 1.16%, closing at 35,473.13 points, while the S&P 500 advanced by 0.9% to settle at 4,518.44.
By the closing bell the tech-heavy Nasdaq Composite wasn’t far behind, climbing 0.61% to end the day at 13,994.40.
Minor fluctuations were meanwhile seen in currency markets, with the dollar last up by a marginal 0.01% on sterling, trading at 78.23p.
It slightly depreciated against the euro by 0.02%, to 90.87 euro cents, while it declined 0.01% on the yen, changing hands at JPY 142.48.
“After a late sell-off on Friday, US markets managed to open higher,” said CMC Markets chief market analyst Michael Hewson.
“The main focus this week [will be] on the latest inflation numbers for July due later in the week, in the wake of what was a reasonably solid jobs report on Friday.”
Fed governor signals potential further hikes; June’s consumer credit surpasses expectations
Focus on Monday landed with Federal Reserve governor Michel Bowman, who indicated a likelihood of additional interest rate hikes going forward.
The aim of the potential hikes would be to realign inflation with the central bank’s 2% target.
Bowman reiterated her stance from a previous meeting over the weekend, emphasising her attention towards evident price growth aligned with the target.
Moreover, she highlighted her intent to monitor signs of declining consumption and a potential easing in the job market.
In other economic news, consumer credit data unveiled that borrowing in June exceeded expectations.
American consumers borrowed a significant $17.85bn more in June, overshadowing the anticipated $13bn consensus rise in credit.
Market participants were now setting their sights on the forthcoming July consumer price index, scheduled for release on Thursday 10 June.
Key moves in Tesla, Campbell Soup and Berkshire Hathaway
In equity markets, shares of electric car giant Tesla dipped 0.95%, in the wake of an announcement that the company’s chief financial officer Zach Kirkhorn had decided to step down.
Kirkhorn would be the second CFO to resign from the position in just over four years, although he had been associated with Tesla since 2010.
Elsewhere, food conglomerate Campbell Soup Company fell 1.79% after it announced the acquisition of Sovos Brands, in a deal carrying an enterprise value of $2.7bn.
On the upside, Warren Buffett’s Berkshire Hathaway saw its Class A shares jump 3.43% after it reported a shift to profitability in the second quarter over the weekend, primarily driven by returns from its investment portfolio and gains in its insurance holdings.
Tuesday newspaper round-up: Energy price cap, France, Defence stocks
The energy price cap is keeping bills artificially high and fuelling inflation, an influential think tank has warned. The Centre for Policy Studies (CPS) is urging ministers to scrap the cap, arguing that it prevents people from accessing cheaper deals. The energy price cap was originally introduced in 2017 as a temporary measure to stop energy companies overcharging loyal customers who didn’t shop around for deals. The Government argued it would protect vulnerable customers, such as those on prepayment meters or with a disability. – Daily Telegraph
France has become Europe’s top energy exporter amid a surge in British demand after the country’s state-backed nuclear power operator finally fixed cracks in its ageing fleet of reactors. The country’s total net exports stood at 17.6 TWh in the first six months of 2023, according to data analysis company Enappsys. This is roughly enough energy to power 5 million homes for a year. Enappsys said most of this flowed to Italy and Britain, which were the two largest importers of energy in Europe over the same period. – Daily Telegraph
UK fund managers have come under fire after it emerged many had cut back their holdings in major British defence stocks since Russia’s invasion of Ukraine last year. Fund managers based in the UK have slashed their holdings in companies including BAE Systems and Qinetiq by an average of 9 per cent since the start of 2022, according to data from the London Stock Exchange Group. At the same time, EU investors increased their ownership of British defence groups by 9 per cent while raising exposure to European companies by 4 per cent. – Daily Mail
Britain’s hard-pressed retailers are being forced to slash their prices to drum up business after dismal summer weather and ever-higher interest rates combined to depress consumer spending in July. The monthly health check of high street and online spending patterns from the British Retail Consortium and the consultancy KPMG reported a steep annual drop in the volume of sales and an increasing number of retailers offering promotional offers to woo consumers reluctant to part with their cash. – Guardian
A biomass plant in Teesside backed by Macquarie has secured emergency funding of £80 million to avert an “imminent cashflow crisis”. The Tees Renewable Energy Plant has raised extra funding as it races to relaunch operations after delays and setbacks to the £1 billion project. The plant is one of the largest of its kind in the world and is capable of producing enough electricity for 600,000 homes. Documents seen by The Times warn that the plant was on course to breach a £15 million liquidity requirement last month and risked becoming cashflow-negative by late September. – The Times
