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London open: Stocks hit four-week low on mixed data, Middle East tensions
London stocks dropped to a four-week low on Tuesday morning as mixed economic data from the UK and China, along with rising tensions in the Middle East, hammered investors’ appetite for risk.
The FTSE 100 fell 1.2% early on to 7,869, with just two stocks in positive territory, putting it on track for its lowest close since 20 March.
Oil prices were rising on Tuesday morning after Israel said it had no choice but to respond to Iran’s 300-plus missiles and drones that were launched at the weekend. The initial muted reaction to Tehran’s attack had a similarly subdued impact on the markets on Monday, though fears are now rising of a reprisal.
“Missiles into the territory of the State of Israel will be met with a response,” said Herzi Halevi, chief of staff of the IDF, lifting Brent crude prices up 0.4% to $90.46 a barrel.
Data comes in mixed
UK markets were also following Asian markets lower overnight, with the Nikkei 225 and Hang Seng both dropping 2% each, after economic data from China underwhelmed. GDP figures for the first quarter beat expectations, with annual growth rising to 5.3% from 5.2%, but standalone data for March showed that growth had started to tail off by the end of the quarter.
Chinese retail sales rose by just 3.1% year-on-year in March after 5.5% growth in February, while industrial production growth slowed to 4.5% from 7.0% – with both figures missing economists’ expectations.
Back on home soil, the UK unemployment rate jumped to 4.2% in the three months to February, from an upwardly revised 4.0% in the three months to January, ahead of the 4.0% forecast by the market. However, pay growth was resilient, showing the average earnings growth (excluding bonuses) remained high at 6.0% in February, down just 10 basis points over the month after a particularly strong January.
“Hopes of a May interest rate cut had always appeared to rest on there being a significant downside movement in the February data for pay growth or inflation,” said Andrew Goodwin, senior economic advisor to the EY ITEM Club. “Therefore, today’s surprisingly strong outturn for pay growth reduces the chances of a May move.”
Dr Martens sinks
Shares in Dr Martens plummeted 29% after the bootmaker announced chief executive Kenny Wilson has decided to step down as it issued another profit warning for the current financial year amid continuing woes in the US, its biggest market. The company warned “we could see a worst-case scenario of profit-before-tax of around one-third of the 2024 level”.
Financials, industrials and mining stocks dominated the fallers lists, as investors sought safe havens. Savings and retirement business Phoenix Group, high street bank Natwest, industrial peers RS Group and IMI, and miners Anglo American and Rio Tinto were among the worst performers on the FTSE 100.
Meanwhile, just two stocks on the top-tier index – packaging group Mondi and insurer Admiral – were registering gains early on.
QinetiQ Group fell 4% after announcing Carol Borg’s departure as group chief financial officer, effective immediately, with Martin Cooper appointed as her successor, expected to join by October.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Centrica Plc | +0.50% | +0.65 | 131.15 |
| 2 |  |
Morrison (wm) Supermarkets Plc | +0.00% | +0.00 | 286.40 |
| 3 |  |
Evraz Plc | +0.00% | +0.00 | 82.68 |
| 4 |  |
Rsa Insurance Group Ld | +0.00% | +0.00 | 684.20 |
| 5 |  |
London Stock Exchange Group Plc | +0.00% | +0.00 | 8,620.00 |
| 6 |  |
Reckitt Benckiser Group Plc | +0.00% | +0.00 | 6,498.00 |
| 7 |  |
Micro Focus International Plc | +0.00% | +0.00 | 532.00 |
| 8 |  |
Standard Life Aberdeen Plc | +0.00% | +0.00 | 274.10 |
| 9 |  |
Royal Bank Of Scotland Group Plc | +0.00% | +0.00 | 120.90 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | -4.97% | -30.50 | 583.50 |
| 2 |  |
Scottish Mortgage Investment Trust Plc | -3.51% | -30.40 | 835.80 |
| 3 |  |
Anglo American Plc | -3.23% | -70.00 | 2,099.00 |
| 4 |  |
Auto Trader Group Plc | -2.97% | -20.60 | 672.60 |
| 5 |  |
Bhp Group Limited | -2.90% | -69.00 | 2,314.00 |
| 6 |  |
Phoenix Group Holdings Plc | -2.69% | -13.70 | 494.80 |
| 7 |  |
Marks And Spencer Group Plc | -2.64% | -6.70 | 247.50 |
| 8 |  |
Informa Plc | -2.43% | -19.60 | 788.00 |
| 9 |  |
Land Securities Group Plc | -2.37% | -15.00 | 617.00 |
| 10 |  |
Halma Plc | -2.37% | -53.00 | 2,186.00 |
US close: Stocks lower amid Middle East tensions
Wall Street stocks closed sharply lower on Monday as investors looked past some solid retail sales numbers amid ongoing tensions in the Middle East.
At the close, the Dow Jones Industrial Average was down 0.65% at 37,735.11, while the S&P 500 lost 1.20% to 5,061.82 and the Nasdaq Composite saw out the session 1.79% weaker at 15,885.02.
The Dow closed 248.13 points lower on Monday, extending losses recorded on Friday as investors digested earnings from a number of big-name US banks.
Focus on Monday was firmly centred on Iran’s launch of drones and missiles on Israel over the weekend, the first direct attack on Israel from Iranian territory, and while the bulk of the threats were intercepted, traders remained concerned regarding potential retaliation from Israeli president, Isaac Herzog, who branded the strike a “declaration of war”.
On the macro front, retail sales were up 0.6% month-on-month in February, according to the Census Bureau, following an upwardly revised 1.1% fall in January but below market forecasts for a 0.8% increase and suggesting a potential slowdown in consumer spending.
Following the report, the yield on the benchmark 10-year Treasury note rose more than seven basis points to 4.608% – its highest point since mid-November.
Elsewhere, the NY Empire State manufacturing index fell to -20.9 in March, down from -2.4 in February and significantly worse than forecasts for a reading of -7. Demand softened as new orders declined to -17.2 and shipments dropped to -6.9.
On another note, total business inventories, a key component of gross domestic product, rose by 0.4% month-on-month in February, according to the Census Bureau, following an unrevised reading for January and ahead of market forecasts of a 0.3% increase.
Finally, the National Association of Home Builders‘ housing market index was unchanged in April at 51.0, its highest level since July 2023, with the gauge for current sales conditions increasing one point to 57, and the component gauging traffic of prospective buyers improving by one point to 35.
In the corporate space, Goldman Sachs traded higher on the back of quarterly earnings that came in ahead of expectations on both the top and bottom lines, while Tesla shares headed south after news broke that the electric vehicle manufacturer will lay off roughly 10% of its workforce on the back of falling global sales, and Salesforce weighed on the Dow as shares sunk on the back of a report that the software giant was in discussions to acquire data management firm Informatica.
Tuesday newspaper round-up: Tesla, Trump trial, Boeing, Thames Water, Apple
Tesla is to cut more than 14,000 jobs as Elon Musk’s groundbreaking electric car company feels the heat of a global price war with Chinese rivals at the same time as stalled demand for zero-emission vehicles. In an email to staff amid reports that workers in California and Texas have begun receiving redundancy notices, Musk stated: “As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity.” – The Times
Donald Trump appeared to fall asleep in court on the first day of his hush money case as he became the first US president to stand criminal trial. Mr Trump seemingly dozed off on Monday morning in the New York courtroom as his lawyers clashed with prosecutors over what evidence would be admissible. The former president has been charged with falsifying business records ahead of the 2016 election to cover up a $130,000 (£104,000) payment made to Stormy Daniels, an adult film star. – Telegraph
An internal service for Boeing employees to raise safety and quality concerns has “exploded” this year, an executive claimed, after a whistleblower said he endured retaliation for speaking up. The planemaker has come under intense scrutiny since a terrifying cabin panel blowout in January prompted fresh questions about the production of its bestselling commercial jet, the 737 Max. – Guardian
Thames Water has less than two months to persuade the regulator that it has a feasible plan for its survival. The troubled water company must present its plans to Ofwat before the regulator’s publication on June 12 of its draft determinations that set out what households will pay in water bills through to 2030. The date effectively is D-Day for whether Thames Water, the financially stricken supplier and sewerage operator, becomes an investable proposition and is able to attract new equity investors to save the heavily indebted company. – The Times
Apple has lost its spot as the world’s biggest mobile phone seller after a steep sales drop as South Korean rival Samsung retook the lead in the global market share. Samsung had been the biggest seller of mobile phones for 12 years until the end of 2023, when sales of Apple’s iPhone models overtook it. – Guardian
