London close: Stocks hit by weak reading on US consumer confidence

London stocks finished well off their session highs on Tuesday despite signs of progress in Sino-US trade relations, as a weaker than expected reading on US consumer sentiment weighed on investor sentiment.

By the end of the session the top-flight index had fallen 1.11% to 6,307.01.

Hitting sentiment, the US conference Board revealed a drop in its consumer confidence index from a reading of 91.7 for July to 84.8 (Barclays: 92.0).

"Consumer spending has rebounded in recent months but increasing concerns amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead," said Conference Board director Lynn Franco.

That news offset positive headlines on the US-China trade front.

US trade Representative Robert Lighthizer said in a statement that the two countries had discussed the phase one trade deal in a call, that there had been progress and that both sides are committed to its success.

Meanwhile, Beijing said that they had agreed "to create conditions and atmosphere to continue pushing forward the implementation of the trade deal".

Spreadex analyst Connor Campbell said: "That the superpowers can still strike a cordial note, despite the numerous ongoing issues they have had over the past few months - ‘China virus’/Huawei/TikTok and WeChat bans/the consulate debacle/sanctions on citizens from both nations - is reassuring for investors, keeping the cold war at a more comfortable temperature."

Hopes of a Covid-19 vaccine or treatment also continued to underpin the mood, with AstraZeneca shares higher after the pharmaceuticals giant said the first participants in a UK Phase I trial of a combination of two monoclonal antibodies to prevent and treat the virus have been dosed.

Elsewhere, software group Aveva rallied after agreeing to buy US-based real-time data software maker OSIsoft for $5bn including debt.

Housebuilders were a drag throughout much of the session, with Persimmon, Barratt Developments, Berkeley, Taylor Wimpey, Bellway, Crest Nicholson and Vistry all weaker.

CMC Markets analyst David Madden said: "Keep in mind that last week Persimmon shares hit a five month high so it seems that a bit of profit taking is doing the rounds."

James Fisher was also weaker fell after cutting its interim dividend by 29% as first-half profit fell, although the company did say it expects trading to improve.

Also putting a dampener on things was the release of a survey from the Confederation of British Industry showing that retail employment fell in August at its fastest pace since the financial crisis, with worse to come as the government withdraws support for jobs.

Respondents registered a score of -45% when asked about employment, down from -20% in May. The reading was the lowest since February 2009 when the UK was reeling from the financial crisis. The outlook for September is worse with a score of -52%, with zero marking the division between contraction and expansion.

Alpesh Paleja, the CBI's lead economist, said: "The furlough scheme has proved effective at insulating workers and businesses in some of the worst-hit sectors during the pandemic, but these findings reinforce fears that many job losses have been delayed rather that avoided."

Market Movers

FTSE 100 (UKX) 6,037.01 -1.11%
FTSE 250 (MCX) 17,577.89 -0.61%
techMARK (TASX) 3,828.83 -0.08%

FTSE 100 - Risers

Aveva Group (AVV) 4,646.00p 7.25%
GVC Holdings (GVC) 800.60p 3.81%
InterContinental Hotels Group (IHG) 4,448.00p 3.37%
International Consolidated Airlines Group SA (CDI) (IAG) 202.20p 2.48%
Ocado Group (OCDO) 2,500.00p 2.17%
Hikma Pharmaceuticals (HIK) 2,387.00p 1.66%
Avast (AVST) 548.50p 1.29%
Whitbread (WTB) 2,398.00p 1.18%
Homeserve (HSV) 1,342.00p 1.05%
Flutter Entertainment (FLTR) 12,220.00p 0.91%

FTSE 100 - Fallers

CRH (CRH) 2,933.00p -3.42%
ITV (ITV) 60.64p -3.32%
Anglo American (AAL) 1,844.20p -3.26%
Informa (INF) 402.80p -3.24%
RSA Insurance Group (RSA) 443.80p -3.21%
Taylor Wimpey (TW.) 117.80p -3.09%
Barratt Developments (BDEV) 509.80p -3.08%
Royal Dutch Shell 'B' (RDSB) 1,082.00p -2.99%
Evraz (EVR) 321.50p -2.87%
Pearson (PSON) 569.20p -2.87%

FTSE 250 - Risers

Cineworld Group (CINE) 58.50p 7.06%
Equiniti Group (EQN) 115.80p 5.40%
PPHE Hotel Group Ltd (PPH) 1,055.00p 4.23%
TBC Bank Group (TBCG) 905.00p 3.75%
Barr (A.G.) (BAG) 428.00p 3.36%
Apax Global Alpha Limited (APAX) 166.00p 3.12%
Gamesys Group (GYS) 1,146.00p 2.68%
Virgin Money UK (VMUK) 92.72p 2.66%
Cairn Energy (CNE) 139.90p 2.57%
WH Smith (SMWH) 1,045.00p 2.56%

FTSE 250 - Fallers

Fisher (James) & Sons (FSJ) 1,116.00p -9.27%
Inchcape (INCH) 482.80p -4.40%
Telecom Plus (TEP) 1,352.00p -3.92%
Capital & Counties Properties (CAPC) 121.30p -3.57%
Babcock International Group (BAB) 268.10p -3.53%
Marshalls (MSLH) 625.00p -3.47%
Hochschild Mining (HOC) 227.80p -3.47%
Balfour Beatty (BBY) 231.00p -3.43%
Bellway (BWY) 2,300.00p -3.32%
Oxford Instruments (OXIG) 1,576.00p -3.31%