London open: Investors reassess growth outlook amid US-China trade war
AstraZeneca
11,268.00p
16:40 23/04/24
Stocks in London have started the session lower, with the positive impact from the release of a stronger-than-expected reading on China's manufacturing sector overnight swamped by investors' increasing concerns around the outlook for growth.
Construction & Materials
9,923.42
16:59 23/04/24
FTSE 100
8,044.81
16:49 23/04/24
FTSE 250
19,799.72
16:59 23/04/24
FTSE 350
4,424.29
16:59 23/04/24
FTSE All-Share
4,378.75
17:14 23/04/24
Health Care Equipment & Services
11,737.57
16:59 23/04/24
Kier Group
128.40p
16:40 23/04/24
Pharmaceuticals & Biotechnology
21,866.08
16:59 23/04/24
Smith & Nephew
984.80p
16:44 23/04/24
CMC Markets UK's chief market analyst, Michael Hewson, said: "For most of this year the assumption had been that, for all the sound and fury around the imposition of tariffs, they wouldn’t last that long and any damage could be easily mitigated.
"Now it seems that tariffs are likely to last a lot longer and be more wide ranging than originally thought, and investors seem to be now slowly waking up to this."
Against that backdrop, as of 0852 BST the FTSE 100 was trading down by 1.08% or 77.24 points to 7,084.47.
According to Morgan Stanley, should the White House move ahead with blanket 25% tariffs on all Chinese exports, versus roughly half at present, and China retaliate, then the US economy could fall into a recession within nine months.
Last week, economists at Barclays had already cut their projections for US growth in 2019, predicting a slowdown to 1.0% by year-end and that the Federal Reserve would cut short-term official interest rates three times before the year was out, starting in September.
At the weekend, speaking at the Shangri-La Dialogue conference in Singapore, US Secretary of Defence, Patrick Shanahan, said his country would no longer 'tip toe' around Chinese behaviour in Asia.
However, while Shanahan's speech was described as at sometimes conciliatory, China's Defence Minister, Wei Fenghe, warned Washington not to meddle in security matters related to Taiwan and the South China Sea, with his tone described by some commentary as acerbic.
Overnight on Saturday, Chinese retaliatory tariffs on $60bn-worth of US goods had kicked-in, hot on the heels of Beijing's announcement of a blacklist of foreign companies, which was followed by an investigation into US air shipping giant FedEx.
On a more positive note, activity in China's manufacturing sector was steady last month, according to the results of perhaps the most closely-followed survey of conditions in the sector.
Caixin's factory sector PMI for the month of May printed at 50.2, unchanged from the month before and ahead of the consensus forecast for a reading of 50.0.
Nevertheless, Julian Evans-Pritchard at Capital Economics said: "overall, the downbeat PMI readings for April and May suggest that economic growth has not yet bottomed out and is consistent with our view that there are still some downside risks to near-term activity.
"Further ahead, we expect renewed policy easing and the lagged impact of faster credit growth to support the economy."
At 0930 BST, IHS Markit would release its UK manufacturing sector Purchasing Managers Index for the month of May.
For later in the day, in the States, the ISM institute's factory sector PMI was scheduled for release at 1500 BST.
Two top Fed officials, the head of the Richmond Fed, Tom Barkin, and his opposite number at St. Louis Fed, James Bullard, were set to take to the podium after the close of trading in London.
AstraZeneca delivers, Kier disappoints
AstraZeneca announced on Monday that its Lynparza pancreatic cancer drug has returned positive phase three trial results, doubling the amount of patients with no disease progression. Three-year overall survival data showed no disease progression at one year for 34% of patients using Lynparza versus 15% on placebos, while 22% of patients with Lynparza had no progression compared to 15% on placebo after two years in multi-centre trials that saw subjects taking two 300mg doses per day.
Troubled construction company Kier said full year underlying operating profit would be £25m lower than previous expectations with higher net debts. Kier, which had reported debt at the end of 2018 of £180.5m, down from £624m said it was likely to report a net debt position as at 30 June 2019, which would have an adverse impact on its FY2019 average month-end net debt position. Net costs from a strategic review of the company were also expected to be £15m than previously forecast.
Smith & Nephew has completed its acquisition of orthopaedic joint reconstruction outfit Brainlab, whose technology is used in more than 500 hospitals worldwide. The FTSE 100-listed global medical technology business said the transaction continues its strategy of investing in best-in-class technologies that enhance its portfolio of digital and robotic surgical products.
Market Movers
FTSE 100 (UKX) 7,083.36 -1.09%
FTSE 250 (MCX) 18,784.63 -0.98%
techMARK (TASX) 3,471.93 -0.47%
FTSE 100 - Risers
NMC Health (NMC) 2,309.00p 2.49%
Fresnillo (FRES) 777.60p 1.25%
BAE Systems (BA.) 454.50p 0.46%
National Grid (NG.) 793.40p 0.08%
Diageo (DGE) 3,325.50p 0.00%
London Stock Exchange Group (LSE) 5,282.00p -0.04%
Flutter Entertainment (FLTR) 5,624.00p -0.07%
Sainsbury (J) (SBRY) 199.90p -0.10%
SSE (SSE) 1,076.00p -0.23%
Relx plc (REL) 1,838.00p -0.24%
FTSE 100 - Fallers
Ocado Group (OCDO) 1,147.00p -3.98%
Hargreaves Lansdown (HL.) 2,189.00p -3.40%
Melrose Industries (MRO) 159.45p -2.74%
St James's Place (STJ) 1,019.50p -2.58%
TUI AG Reg Shs (DI) (TUI) 711.80p -2.49%
Informa (INF) 757.60p -2.45%
ITV (ITV) 104.70p -2.38%
Standard Life Aberdeen (SLA) 261.30p -2.24%
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FTSE 250 - Risers
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Hochschild Mining (HOC) 159.20p 2.71%
Vivo Energy (VVO) 129.20p 2.38%
Daejan Holdings (DJAN) 5,630.00p 2.36%
Polymetal International (POLY) 866.20p 1.91%
Bakkavor Group (BAKK) 122.60p 1.49%
Sabre Insurance Group (SBRE) 258.69p 1.45%
Syncona Limited NPV (SYNC) 239.00p 1.06%
Wizz Air Holdings (WIZZ) 3,162.00p 0.89%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 347.00p 0.58%
FTSE 250 - Fallers
Kier Group (KIE) 159.90p -42.52%
Premier Oil (PMO) 73.26p -6.96%
Cairn Energy (CNE) 151.90p -3.98%
Plus500 Ltd (DI) (PLUS) 607.40p -3.86%
Just Group (JUST) 46.02p -3.84%
Capita (CPI) 107.85p -3.83%
CYBG (CYBG) 176.15p -3.74%
Entertainment One Limited (ETO) 422.20p -3.39%
Metro Bank (MTRO) 660.50p -3.37%
Intu Properties (INTU) 89.86p -3.06%