London open: FTSE edges lower despite strong China PMI
London stocks edged lower in early trade on Tuesday despite the release of encouraging Chinese manufacturing data, as investors awaited the latest reading on the UK manufacturing sector.
At 0840 BST, the FTSE 100 was down 0.4% at 5,939.37.
Spreadex analyst Connor Campbell said: "Given that the market is digesting the strongest Chinese Caixin manufacturing PMI since 2011, the UK index should be higher.
"The index hasn’t been helped by the pound’s continued rise against the dollar, the greenback suffering in the aftermath of last week’s dovish Jackson Hole address from Federal Reserve head honcho Jerome Powell.
"Though it only added another 0.2% on Tuesday, that increase pushed cable to $1.341 for the first time since it spiked towards $1.35 in the middle of last December. It’s an incredible turnaround from the sub-$1.15 lows struck in mid-March, made all the more remarkable considering it comes against a backdrop of Brexit angst, with Michel Barnier and David Frost holding emergency talks this Tuesday to try and find a way forwards. And they might struggle to - Barnier reportedly ‘won’t even discuss’ fishing rights, one of the key sticking points between the UK and EU."
A private sector survey released earlier showed Chinese factory activity rose at its fastest pace for almost a decade in August as export orders increased for the first time this year.
The Caixin/Markit manufacturing purchasing managers' index rose to 53.1 from 52.8 a month earlier, beating the consensus forecast of 52.6. A reading of 50 separates growth from expansion.
The reading was the fourth straight month of manufacturing growth and the sector's biggest expansion since January 2011. Factories in the world's second-biggest economy reported the first rise in new export orders of 2020 as overseas markets unlocked their economies, leading to a big gain in Chinese production.
The survey was slightly out of sync with an official report that showed manufacturing growth easing because of floods in southwest China. But the official PMI showed a similar trend in new export orders to the Caixin/Markit survey and also recorded growth in the services sector.
On the UK data front, Markit’s manufacturing PMI for August is due at 0930 BST.
In equity markets, British Airways and Iberia parent IAG was under the cosh after a downgrade to ‘neutral’ at JPMorgan.
Trainline was in the red after the company’s chief executive sold 800,000 shares, while budget airline Wizz Air flew lower after saying it expects capacity for the second quarter to be at roughly 60%.
Investment platform AJ Bell was also on the back foot, with traders pointing to a report suggesting that Plus500 is considering starting a stockbroking business.
On the upside, Cineworld rallied on news that Chinese multimillionaire Liu Zaiwang has become a leading shareholder in the company through his Jangho Group, sparking speculation about a possible take-private offer for the cinema chain.
Dunelm rose after saying trading was well ahead of its expectations in the past two months, helped by demand that built up during the Covid-19 lockdown. The homewares retailer said total sales surged 59% in July from a year earlier partly from pent-up demand from store closures and the timing of its summer sale. Sales rose 24% in August.
Airtel Africa gained after a positive write-up in This is Money, which said the shares are a bargain at the current price.
Market Movers
FTSE 100 (UKX) 5,939.37 -0.41%
FTSE 250 (MCX) 17,769.49 -0.11%
techMARK (TASX) 3,821.44 0.00%
FTSE 100 - Risers
Fresnillo (FRES) 1,318.00p 4.40%
Glencore (GLEN) 173.08p 2.31%
Scottish Mortgage Inv Trust (SMT) 981.50p 2.08%
Smiths Group (SMIN) 1,431.00p 2.07%
Antofagasta (ANTO) 1,095.00p 1.96%
Polymetal International (POLY) 2,065.00p 1.82%
Halma (HLMA) 2,254.00p 1.62%
Pennon Group (PNN) 1,022.00p 1.59%
Kingfisher (KGF) 274.00p 1.37%
AstraZeneca (AZN) 8,428.00p 1.06%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 203.60p -5.87%
Rolls-Royce Holdings (RR.) 229.00p -5.02%
WPP (WPP) 625.00p -3.19%
Standard Chartered (STAN) 380.10p -3.13%
Lloyds Banking Group (LLOY) 27.48p -3.07%
HSBC Holdings (HSBA) 321.30p -2.68%
ITV (ITV) 59.18p -2.54%
M&G (MNG) 168.80p -2.43%
Melrose Industries (MRO) 99.34p -2.42%
Standard Life Aberdeen (SLA) 231.50p -2.40%
FTSE 250 - Risers
Cineworld Group (CINE) 67.90p 7.64%
Dunelm Group (DNLM) 1,520.00p 6.37%
Airtel Africa (AAF) 60.20p 5.61%
Hochschild Mining (HOC) 252.20p 4.82%
Pershing Square Holdings Ltd NPV (PSH) 2,110.00p 4.71%
Helios Towers (HTWS) 160.20p 4.71%
IP Group (IPO) 76.60p 4.36%
Apax Global Alpha Limited (APAX) 174.40p 3.93%
Genus (GNS) 3,492.00p 3.62%
Watches of Switzerland Group (WOSG) 354.50p 3.50%
FTSE 250 - Fallers
Trainline (TRN) 362.20p -8.58%
Wizz Air Holdings (WIZZ) 3,648.00p -6.17%
Investec (INVP) 139.25p -5.50%
Carnival (CCL) 996.80p -5.47%
Meggitt (MGGT) 277.50p -4.61%
Hilton Food Group (HFG) 1,136.00p -4.05%
AJ Bell (AJB) 433.00p -3.67%
easyJet (EZJ) 611.40p -3.44%
PPHE Hotel Group Ltd (PPH) 1,090.00p -3.11%
Impax Environmental Markets (IEM) 340.50p -2.85%