FTSE 100 Live: China GDP stokes growth worries, mining stocks struggle
China’s lacklusrte GDP performance today put pressure on global stock markets.
Annual growth for the June quarter still came in at 6.3%, but that was short of the forecast 7.3% amid more signs of the country’s faltering recovery from Covid lockdowns.
The update weighed on the price of Brent Crude and meant a downbeat session for European stock markets including the FTSE 100 index.
FTSE 100 Live Monday
China worries build after GDP miss
Mining stocks struggle amid weaker outlook
Sales fall at Virgin Wines but shares higher
FTSE 100 closes down 28 points
16:57 , Simon Hunt
The FTSE 100 finished down 28 points to 7,406 at the end of the day’s trading session in London, as worse-than-expected GDP growth in China sparked fears of a gloomier picture for the global economy.
Danni Hewson, head of financial analysis at AJ Bell, said: “Dragging the index down were shares in miners and energy companies, suggesting nervousness around commodity markets and the global economy.
“China is a major consumer of commodities and disappointing economic indicators typically drive down shares in miners and oil companies for fear that demand for metals, minerals and energy products will be lower than previously hoped.
“There is a big risk corporates will report decent quarterly numbers but then pour cold water over proceedings with a more cautious outlook. After all, cost pressures are still front and centre, and there is the prospect of slower revenue growth ahead.”
New York stocks tread water with global stock slip easing as Wall Street starts
14:47 , Michael Hunter
The S&P 500 ticked up in opening trade, with help from a dash of hope that the blockbuster merger between Microsoft and computer games giant Activision Blizzard will pass muster for global competition regulators.
A rally of almost 4% for the Call of Duty maker sent it to the top of New York’s broad stock index, which added 6 points overall to 4511.0.
Expectations were growing that Activision Blizzard and Microsoft would clear the barriers in the way of their $69 billion deal. Microsoft promised over the weekend that the Call of Duty game would stay on the gaming platform of its main rival Sony, securing the title’s future on the Playstation for a decade.
Then, the UK regulator which had blocked the deal, the Competiton and Markets Authority, asked for an adjournment on the case relating to the deal to consider proposed tweaks to arrangements.
Microsoft’s stock slipped 0.3%.
Tortilla optimism on inflation as sales surge
13:56 , Simon Hunt
The boss of fast-food outlet Tortilla has said he is planning no further price rises for the rest of the year in signs UK inflation could be cooling.
Chief Financial Officer Andy Naylor said: “On the food cost input side we’ve seen a minimal increase this year…it’s definitely abating.
“The main inflationary pressure was the minimum wage rise in April.
“We are feeling confident on the input cost front…I think prices will stay relatively flat.”
Known for its meat-filled burritos, Tortilla reported a 22% jump in revenue in the first six months of the year to £32.7 million, fuelled by its rapid expansion including through franchise partnerships with contractor SSP.
The company has plans for further store openings across the UK, including its first in Northern Ireland to open later this week in Belfast, and another in Bracknell in the coming weeks.
But Naylor said trading in London had outperformed the rest of the UK over recent months.
Shares rose 1.2% to 82.5p this afternoon.
Wall Street stocks poised to join global stocks retreat on growth fears
13:35 , Michael Hunter
New York stocks are on course to slip in opening trade, joining the global pull-back on equities indices, which followed lacklustre economic data from China and knock-on concerns about global growth.
According to futures trade, the S&P 500 will ease back by around 7 points to 4530.00. Any such dip will come at the start of a busy week for corporate US earnings, which are likely to define the overall sense of direction on Wall Street this week.
After the US rate of consumer price inflation eased to 3% last week, corporate numbers are coming back into focus among stock traders. Companies moving in pre-market trade on Monday included Activision Vision, the computer games publisher in the midst of a multi-billion dollar merger with Mircosoft, which is under scrutiny at global competition regulators. Its shares were up 4% in pre-market trade as the prospect of the deal going through, complete with some concessions, moved nearer.
AT&T was down by over 1% after a broker downgrade from Citi.
Mid-session moves: pound stays perky and gold glistens while China fears knock wider mood
12:59 , Michael Hunter
Worries about the outlook for the global growth as China’s economy slows down kept the FTSE 100 under pressure today, while sterling and gold ticked higher.
AI hopes offset inflation worries to help UK business stay confident, says S&P Global
12:38
UK business confidence is getting a helping hand from the rise of Artificial Intelligence, helping offset worries on inflation.
A new report from S&P Global has found that plans to up investment in AI mean businesses expect activity to continue to grow over the coming year. Now, 29% of companies expect to invest in it, up from 18% in June.
The index company’s UK Business Outlook report, produced alongside Accenture, found the net balance of firms expecting activity to increase over the next 12 months stood at +40% in June. That was marginally down from +43% in February, but well above the record low registered in October 2022.
But there were also clear signs of the extent of inflation worries. Expectations of higher prices emained “stubbornly high” S&P said, at 51%, down somewhat from 59% earlier in the year. Wage inflation expectations were stark, with a net balance of 72% of businesses expecting higher staffing costs over the next 12 months, down from 77% in February.
Overall 45% of firms expect to increase their prices.
Accenture’s Matt Prebble said: “British businesses continue to be resilient and optimistic, despite the current economic challenges. Although still a concern, businesses expectations on inflation and staffing costs are falling, a trend that is required to ease margin and pricing pressures.”
City Comment: Now UK investors must show faith in our stock market
11:15 , Simon English
For many months the complaint has been that the UK stock market is unfairly unloved.
Our finest firms are surely worth more than the deep discounts at which they trade compared with US rivals, goes the complaint.
Fund managers with a UK focus — notably Ashmore and Liontrust just last week — were feeling the pain, as were their long-suffering investors. And the dearth of fresh stock market London listings would continue until this anomaly was corrected.
The complaint was real, and a genuine concern. Though the obvious answer to the CEO moaning his shares were cheap was a simple one: buy some then.
One sort-of solution to the predicament arrived this morning, with a £470 million offer from US private equity house Searchlight for fund group Gresham House. Searchlight thinks Gresham is cheap at that price and is probably right.
Which indicates the problem here isn’t that foreign investors find London uninvestable, are scared by memories of Liz Truss and fears of what Brexit has done to us all. It is that UK investors are the scaredy-cats, the ones lacking the gumption to see the value before their very eyes.
If the London market really is undervalued — it looks it by any number of metrics — some people are going to make a bomb by buying it cheap. It would be nice if that were our pension funds. Rather than far-sighted foreigners.
The Government is doing what it can here in fairness. Some risk-taking from within the Square Mile shouldn’t need a Government incentive though.
That is what it is supposed to be good at all by itself.
FCA faces probe into its effectiveness
10:50 , Simon Hunt
The ability of the UK’s financial regulator to do its job is set to come under close scrutiny in a new probe.
The activities of the Financial Conduct Authority, which regulates a swathe of firms in the square mile from High Street Banks to crypto trading apps, are to be reviewed by the National Audit Office in a bid to “examine how the FCA is working with others, particularly HM Treasury.”
The NAO, an independent body which monitors the performance of government operations, said the FCA’s portfolio has swelled in light of new technological innovations like cryptoassets and artificial intelligence, while it also had to deal with a host of new regulatory regimes as well as comply with a statutory objective to “facilitate the international competitiveness” of the UK economy.
The FCA will be assessed on how it plans “take action to meet aspects of the challenges and take advantage of the opportunities posed by recent changes,” the NAO said.
FTSE 100 lower but JM and Vodafone rally, Aston Martin up 4%
10:22 , Graeme Evans
Johnson Matthey is among today’s FTSE 100 risers after a City bank said shares in the clean air firm deserved to be 40% higher.
The backing follows a poor stock market run for the 200-year-old business, which helps leading energy, chemicals and automotive companies reduce harmful emissions.
Having only returned to the premier index in January, the shares have fallen more than 15% this year to leave Johnson Matthey as London’s smallest blue chip.
However, a rebound of 19p to 1773p today gave Johnson top billing in the FTSE 100 as Deutsche Bank sweetened its “buy” recommendation with an improved 2500p target.
Johnson Matthey’s shares were not alone in hitting the recovery trail today as a stronger session for Vodafone lifted the mobile phone giant 0.7p to 72.9p.
The FTSE 100 fell 23.12 points to 7411.45 but others in fightback mode included United Utilities, which recovered 11.2p to 962.2p after falling 7% in the past month.
Investors also sought out lenders after Friday’s reassuring figures by US banking heavyweight JPMorgan boosted confidence ahead of UK sector results next week.
Lloyds, which is due to report half-year figures on 26 July, rose 0.3p to 44.6p while NatWest added 2.3p to 245.3p and Barclays put on 0.9p to 156p.
In the FTSE 250 index, shares in Royal Mail owner IDS continue to show momentum after the CWU’s recent vote in favour of a pay deal ended long-running strike action.
The shares have risen 15% in the past fortnight and today added a penny to their highest level since April at 251p, with attention now turning to a trading update due on Thursday.
Other second tier risers included Aston Martin Lagonda, which is still firing on all cylinders after doubling in value over the past year. The shares lifted another 4% or 13.2p to 331p in a session when the FTSE 250 index drifted 38.57 points to 18,528.24.
H&M to enter Brazil
09:36 , Simon Hunt
H&M has taken another step on its expansion across Latin America as it unveiled plans to set up shop in Brazil.
The Danish fashion brand first launched in Latin American with the opening of a store Mexico in 2012, and today is also present in Peru, Uruguay, Chile and Colombia, among others.
The firm hopes to launch physical stores and a website in Brazil in 2025. Last year its profits took a knock from its withdrawal from the Russian market, as it laid out measures to reduce costs by over £100 million.
H&M said in a statement: “We’ve had good development in Latin America and see great potential in Brazil.
“With a population of over 210 million in Brazil and a strong appreciation for fashion, there is considerable potential for expansion in the market.”
Sales slide at Virgin Wines
09:18 , Simon Hunt
Virgin Wines today became the latest e-commerce business to see its post-pandemic fortunes turn sour after it posted a slump in sales.
The Norwich-based drinks subscription service saw a more than two-thirds rise in revenues between 2019 and 2021 as Brits turned to online food shopping during the shutdown of the high street amid Covid restrictions. But in the twelve months to the end of June sales slid 14.5% to £59 million and are now just 4% above 2020 levels, in signs spending on premium bottles of wine has been curtailed by Brits on squeezed incomes.
The firm continued to make a small pre-tax profit of £500,000 and raised hopes for a sales turnaround as it pointed to a positive trend of customer cancellation rates in the most recent quarter.
Virgin Wines shares rose 3.4% to 30p. The stock is down 60% since the start of the year.
Miners struggle but FTSE 100 holds firm, Trainline up 3%
08:37 , Graeme Evans
Mining stocks are trading lower on the back of today’s China figures, with shares in Anglo American and Antofagasta the hardest hit following falls of around 2%.
The FTSE 100 index is 4.51 points lower at 7430.06 but that represents a better-than-expected performance and smaller than the declines seen in Europe.
Johnson Matthey posted the best blue-chip performance, lifting 23p to 1777p after analysts at Deutsche Bank enhanced their “buy” recommendation with a new 2500p target.
The FTSE 250 index drifted 41.68 points to 18,525.13 in a session when Trainline was the best mid-cap stock following a rise of 3% or 7.1p to 267.1p.
Sterling holds gains ahead of inflation reading
07:47 , Graeme Evans
The pound remains above $1.30 this morning, having recently risen to its highest level since April 2022 on expectations for a pause in US interest rate hikes.
A half point increase in UK rates is still on the cards for next month, although much will depend on the outcome of Wednesday’s inflation reading.
The annual rate of inflation is forecast to fall from 8.7% to 8.3%, but with little change in core prices at around 7%.
The dollar index against six major currencies has been at a 15-month low, drien by last week’s softer-than-expected US inflation figure of 3%.
FTSE 100 seen lower after China GDP miss
07:14 , Graeme Evans
European stock markets are facing a downbeat session after China posted a weaker-than-expected second quarter GDP figure of 6.3%.
The Shanghai Composite fell by more than 1% as the latest estimate of growth in the world’s second largest economy came in below forecasts of 7.3%. Markets in Hong Kong and Tokyo were closed today.
Further evidence of China’s faltering recovery from Covid lockdowns was also seen in the rate of annual growth in retail sales, which missed estimates after slowing to 3.1% in June from the 12.7% seen in May.
Having traded sharply higher last week, IG Index expects the FTSE 100 index to open 0.6% or 45 points lower at 7396.
Morning refresh: what you need to know to start the day
06:43 , Simon Hunt
Good morning from the City desk of the Evening Standard.
Shares opened lower in China this morning after second-quarter GDP growth of 6.3% fell short of expectations. Analysts had expected growth to be as high as 7.3% according to a Reuters polls. The growth rate was up 0.8% on the first quarter.
In further signs a recovery of the Chinese economy had stalled, the youth unemployment rate rose to a new record of 21.3%. National Bureau of Statistics spokesperson Fu Linghui said youth unemployment could rise further yet before declining later in the year.
Here’s a look back at our top stories from Friday:
London fell to third in European IPO rankings behind Istanbul and Milan, raising fresh concerns the capital had fallen ‘out of favour’ with investors.
Strong demand for its classic trench coat help lift sales 18% between April and June at luxury fashion brand Burberry.
MPs have begun an inquiry into sexism in the UK finance sector to establish whether “enough work has been done” to improve gender pay parity, build more supportive workplace cultures and stamp out harassment and misogyny.
