London close: Stocks bounce back after shrugging off China data

Stocks in London saw an encouraging rally on Wednesday, driven largely by a robust performance from the heavyweight mining, oil, and banking sectors.

The uplift comes in spite of persistent worries stemming from recent economic data releases from China.

At the close the FTSE 100 was up 0.8% at 7,587.30, while the FTSE 250 added 0.51% to settle at 18,937.20.

On the currency front, sterling was last down 0.26% on the dollar, trading at $1.2715, while it slipped 0.43% against the euro, positioning itself at €1.1585.

“Yesterday, Rome put the wind up investors with their bank tax plans, but with more detail emerging on the plans a calmer atmosphere prevails,” said IG chief market analyst Chris Beauchamp.

“The risk of a broader Europe-wide move on banks remains, but the impact could be much less than feared 24 hours ago.

“The news allowed stocks to ride out signs of deflation in China, adding to the recent pile of bad news from that economy.”

China consumer prices unexpectedly dip, led by food costs

In economic news, the People's Republic of China saw a marginal decline in its cost of living last month, as the National Bureau of Statistics reported that the annual rate of increase in the country's consumer price index (CPI) declined from a stagnant 0.0% in June to a deflationary -0.3% in July.

The reduction was, however, more modest than the 0.4% decrease economists had anticipated.

It said the primary driver of the change was a considerable drop in food prices, which slid 1.7% on a year-on-year basis.

That reduction was chiefly attributed to negative base effects, and was a noticeable shift from the 2.3% increase that food prices had experienced during the prior month.

Goods price inflation was running at just 0.4% on the year, below the clip observed at the start of 2023, while services price growth notched a 17-month high of 1.2%.

“The lack of a more pronounced rebound in services inflation following reopening underscores how underwhelming the domestic recovery has been,” said Julian Evans-Pritchard at Capital Economics.

“But the fact that inflation in the tradable sector has slumped this year, while inflation in the non-tradable sector has picked up slightly, implies that the main factor weighing on core inflation has been the recent pullback in foreign demand rather than domestic weakness.

“We doubt that CPI and PPI will still be in deflationary territory by year-end - core inflation suggests that underlying inflation is low but still positive.”

Mining stocks and oil giants recover, insurance and office sectors slip

On London’s equity markets, Coca-Cola HBC gained 0.66% following an upgrade to its full-year forecasts.

The firm said it now expected organic growth ranging from 6% to 7% for the year, marking an improvement from its earlier guidance of 5% to 6%.

Elsewhere, the mining sector made significant gains, recouping losses experienced on Tuesday.

Glencore, having fallen out of favour due to disappointing first-half results, led the rally with an impressive 2.36% gain.

Fellow miners Anglo American, Fresnillo, and Antofagasta also posted gains of 0.19%, 0.96%, and 1.55%, respectively.

Oil behemoths BP and Shell experienced notable upticks, surging by 2.64% and 2.38%, as crude oil prices touched their highest point this year.

Banks registered gains following the Italian government's clarification on the windfall tax on domestic bank profits.

While an initial announcement suggested a heavy 40% tax on net interest margin, subsequent clarifications capped the levy at 0.1% of an institution’s assets.

Barclays, Lloyds Banking Group, and NatWest climbed by 1.24%, 0.22%, and 0.59%, respectively.

On the FTSE 250, TP ICAP Group soared 6.99% after its half-year report exceeded market expectations with an underlying operating profit of £163m against a predicted £158m.

Hill & Smith also shone, notching a 7.01% increase after its interim results outstripped analyst predictions.

On the downside, insurance titan Hiscox tumbled by 6.02%.

While the firm reported a substantial surge in first-half profits, it didn't meet the market's lofty expectations, primarily due to sluggish growth in its retail segment.

Flutter Entertainment took a 3.42% hit to its share price.

Even though the gambling behemoth met first-half projections, registering a 38% growth in revenue and a return to profitability, the stock pulled back, likely given the nearly-30% rise seen this year already.

CLS Holdings suffered a significant blow, plummeting 8.51% after the office space company recorded a substantial loss in the first half, attributed to dwindling property valuations.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,587.30 0.80%
FTSE 250 (MCX) 18,937.20 0.51%
techMARK (TASX) 4,354.98 0.20%

FTSE 100 - Risers

BP (BP.) 492.65p 2.64%
InterContinental Hotels Group (IHG) 5,934.00p 2.49%
Shell (SHEL) 2,428.50p 2.38%
Glencore (GLEN) 455.10p 2.36%
Haleon (HLN) 328.65p 1.80%
Unite Group (UTG) 965.50p 1.79%
Antofagasta (ANTO) 1,607.00p 1.55%
Standard Chartered (STAN) 753.00p 1.51%
Weir Group (WEIR) 1,825.00p 1.42%
BT Group (BT.A) 113.90p 1.38%

FTSE 100 - Fallers

Hiscox Limited (DI) (HSX) 1,046.00p -6.02%
Flutter Entertainment (CDI) (FLTR) 14,395.00p -3.42%
Severn Trent (SVT) 2,391.00p -3.39%
RS Group (RS1) 754.00p -2.33%
United Utilities Group (UU.) 956.80p -1.85%
JD Sports Fashion (JD.) 143.95p -1.40%
St James's Place (STJ) 907.20p -1.39%
International Consolidated Airlines Group SA (CDI) (IAG) 166.70p -1.21%
Scottish Mortgage Inv Trust (SMT) 687.80p -1.15%
Entain (ENT) 1,358.00p -0.95%

FTSE 250 - Risers

IWG (IWG) 166.30p 9.77%
Hill and Smith (HILS) 1,680.00p 7.01%
TP Icap Group (TCAP) 165.30p 6.99%
Jupiter Fund Management (JUP) 106.90p 5.63%
Bakkavor Group (BAKK) 105.50p 5.50%
Future (FUTR) 778.50p 4.50%
Energean (ENOG) 1,185.00p 4.22%
Harbour Energy (HBR) 265.80p 4.15%
Tritax Eurobox (GBP) (EBOX) 56.00p 3.90%
Babcock International Group (BAB) 391.00p 3.66%

FTSE 250 - Fallers

CLS Holdings (CLI) 131.20p -8.51%
Just Group (JUST) 83.70p -3.46%
TUI AG Reg Shs (DI) (TUI) 562.00p -3.35%
Pennon Group (PNN) 646.00p -2.34%
Crest Nicholson Holdings (CRST) 208.20p -2.16%
Octopus Renewables Infrastructure Trust (ORIT) 93.50p -2.10%
Aston Martin Lagonda Global Holdings (AML) 352.40p -2.06%
Capita (CPI) 19.53p -2.06%
Watches of Switzerland Group (WOSG) 680.50p -2.02%
Genus (GNS) 2,344.00p -1.92%