London close: Stocks weaker after disappointing data from China
London stocks closed in the red on Monday, with miners under pressure through the session after the release of disappointing Chinese data overnight.
The FTSE 100 ended the session down 0.9% at 7,153.98, and the FTSE 250 was off 0.32% at 23,712.67.
Sterling was in a mixed state, last trading 0.11% weaker against the dollar at $1.3851, while managing gains of 0.03% on the euro to change hands at €1.1762.
“US markets have joined their European and Asian counterparts in the red today, with the new week kicking off on a negative footing,” said IG senior market analyst Joshua Mahony.
“Concerns over extended lockdowns in Japan and Australia build on a morning of Chinese data which served to highlight the detrimental impact such restrictions have upon the economic outlook.
“While China remains at the forefront of the economic recovery, the reimposition of economic restrictions in response to rising Delta cases does dampen growth expectations.”
Mahony said that as a result, “significant losses” were seen across currencies for major exporting nations in response to the China slowdown, with the euro and Australian dollar both on the back foot.
“Meanwhile, UK-listed stocks with a particular focus upon Asia have met selling pressure, with the likes of Burberry, HSBC, and Standard Chartered all losing ground.”
Figures released earlier by the National Bureau of Statistics showed that growth in China’s industrial production and retail sales slowed sharply in July amid flooding and a rise in Covid cases.
Industrial production rose 6.4% on the year following an 8.3% increase in June, coming in below consensus expectations of 7.% growth.
Retail sales grew 8.5%, down from 12.1% growth in June and undershooting expectations for a 10.9% jump.
Fixed asset investment, meanwhile, was up 10.3% on the year in July, down from 12.6% the month before and missing consensus expectations of 11.3%.
The NBS highlighted "the impact of multiple factors including the growing external uncertainties and the domestic Covid-19 epidemic and flooding situation".
It also said the country’s economic recovery is "still unstable and uneven".
Neil Wilson, chief market analyst at Markets.com, said Covid-related slowdowns, particularly the spread of the ‘Delta’ variant in Asia, softer-than-expected Chinese data, and the fallout from a very poor University of Michigan consumer sentiment report on Friday were behind the downbeat mood on Monday.
“I’d even speculate that the tragedy in Afghanistan is a factor in the downbeat mood,” he said.
“This foreign policy disaster will have repercussions - President Biden will never recover from it.
“The scenes of chaos as the US evacuates Kabul is too reminiscent of Saigon.”
Stateside, manufacturing activity in the New York area expanded more slowly in August, according to a fresh survey.
The New York Fed’s Empire State index fell to 18.3 from July’s record 23.0, making the lowest reading since March and coming in below expectations for a reading of 28.5.
Just over a third of respondents reported that conditions had improved over the month, while 16% said they had worsened.
On home shores, average asking prices for UK houses fell for the first time in 2021 during July, following the conclusion of the primary phase of Downing Street's stamp duty holiday.
Property prices had fallen an average of 0.3% since mid-July, according to data from Rightmove, principally driven by a cooling at the top end of the market, with the average asking price for a home across the UK slipping to £337,371.
At the high end, average asking prices slipped nearly £4,700 over the same period of time to £616,421.
“Our analysis shows that average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays and has also seen the greatest withdrawal of stamp duty incentives,” said Rightmove director of property data Tim Bannister.
“We also anticipate that more property will come to market when those owners have more clarity over their employers' long-term balance of home and office working.”
Finally, the UK government confirmed it had started a probe into renewable energy tariffs over concerns that providers were overstating environmental benefits.
As more people switched to so-called “green” energy deals, the government said it would review how the sector marketed those tariffs to consumers.
A total of nine million households are on contracts branded “100% renewable”, but industry figures have expressed concerns that claims are exaggerated.
In equity markets, luxury fashion brand Burberry was down 3.38% after the release of weaker-than-expected retail sales figures in one of its primary markets, China.
Miners were also a drag following the data from the People’s Republic, with Glencore down 2.12%, Anglo American off 1.93%, and Rio Tinto 2.05% lower.
BHP was in the red by 1.81% after confirming it was in talks about a potential merger of its petroleum business with Australia’s Woodside Petroleum.
Meggitt slipped 0.37%, even after the aerospace and defence group formally recommended a £6.3bn takeover by US peer Parker Hannifin.
Oil giants BP and Shell gushed 2.41% and 1.97% lower, respectively, on the back of falling oil prices, with Oanda analyst Craig Erlam saying oil was “testing lows” on China growth concerns.
“Oil prices are pulling back once more on Monday and once again taking a run at those lows we saw in mid-July and last week," he said.
"The sell-off has accelerated today but actually started last Thursday after WTI ran into a wall of resistance just shy of $70, which aside from being a psychological barrier is also a 50% retracement of the move from the late July highs to last week's lows.”
Just Group was in the red by 2.4% after the retirement specialist said it had sold a portfolio of lifetime mortgages to Rothesay Life for £334m.
The company announced with its interim results last week that it was in the process of selling a portfolio of LTMs with a loan value of over £475m and an IFRS value as at 30 June 2021 of £493m.
It said that the sale of the remaining tranche of loans is likely to occur over the coming weeks.
Travel-related stocks were under the cosh, with cruise operator Carnival down 3.43%, holiday organiser TUI off 3.38%, and WH Smith 3.13% weaker.
On the upside, Ultra Electronics rallied 5.95% after agreeing a £2.57bn deal to be bought by defence group Cobham.
The latter was offering £35 a share and “legally binding and enforceable commitments” to the UK government on national security matters.
Future surged 4.99% after saying it had bought consumer media company Dennis for around £300m in cash from Exponent Private Equity.
FTSE 100 - Risers
Fresnillo (FRES) 812.20p 1.83%
Coca-Cola HBC AG (CDI) (CCH) 2,709.00p 1.61%
Phoenix Group Holdings (PHNX) 673.40p 1.48%
Ocado Group (OCDO) 1,804.00p 1.35%
London Stock Exchange Group (LSEG) 7,992.00p 0.78%
AstraZeneca (AZN) 8,477.00p 0.61%
GlaxoSmithKline (GSK) 1,499.20p 0.50%
Hargreaves Lansdown (HL.) 1,491.50p 0.34%
Admiral Group (ADM) 3,620.00p 0.33%
Severn Trent (SVT) 2,879.00p 0.31%
FTSE 100 - Fallers
Prudential (PRU) 1,456.00p -4.12%
Burberry Group (BRBY) 2,058.00p -3.38%
JD Sports Fashion (JD.) 947.00p -3.05%
Weir Group (WEIR) 1,643.00p -2.98%
Entain (ENT) 1,904.50p -2.83%
Evraz (EVR) 572.20p -2.75%
Next (NXT) 7,904.00p -2.52%
Royal Dutch Shell 'A' (RDSA) 1,423.00p -2.51%
Abrdn (ABDN) 278.60p -2.45%
BP (BP.) 298.00p -2.41%
FTSE 250 - Risers
Ultra Electronics Holdings (ULE) 3,348.00p 5.88%
Future (FUTR) 3,870.00p 4.99%
Apax Global Alpha Limited (APAX) 218.00p 2.59%
Babcock International Group (BAB) 333.90p 2.36%
Volution Group (FAN) 497.50p 2.26%
Tyman (TYMN) 432.00p 2.13%
Plus500 Ltd (DI) (PLUS) 1,429.50p 2.11%
Savills (SVS) 1,367.00p 2.01%
Restaurant Group (RTN) 125.40p 1.95%
Mediclinic International (MDC) 288.80p 1.62%
FTSE 250 - Fallers
Energean (ENOG) 621.50p -4.75%
Harbour Energy (HBR) 342.00p -4.36%
Ferrexpo (FXPO) 387.20p -4.35%
Trainline (TRN) 354.00p -3.65%
Carnival (CCL) 1,483.00p -3.43%
TUI AG Reg Shs (DI) (TUI) 323.50p -3.20%
WH Smith (SMWH) 1,621.50p -3.19%
Dunelm Group (DNLM) 1,301.00p -3.13%
Ashmore Group (ASHM) 379.20p -3.07%
Virgin Money UK (VMUK) 202.20p -2.88%