London close: Stocks fall after disappointing manufacturing data

UK equities declined on Monday as traders weighed a batch of disappointing manufacturing reports and hawkish remarks from Federal Reserve officials.

Manufacturing data came in worse-than-expected in the eurozone, in Japan and in the US.

Markit’s eurozone manufacturing purchasing managers’ index dipped to 51.5 in May from 51.7 in April, missing forecasts for a reading of 51.9 but above the 50 level that separates an expansion from a contraction in sector activity.

The Nikkei flash PMI for Japanese manufacturing dropped to 47.6 in May from 48.2 in April, signalling a further contraction.

Markit’s flash US manufacturing PMI fell to 50.5 in May from 50.8 in April, below the 51.0 reading expected by economists.

The US also saw a batch of Fed policymakers fuelling speculation of an interest rate hike at the 14-15 June meeting.

St Louis Federal Reserve president James Bullard said that the relatively tight labour market in the US may place upward pressure on inflation, strengthening the case for higher interest rates.

San Francisco Fed president Eric Rosengren said in an interview with the Financial Times, published on Monday, that the US economy was displaying the conditions needed for a 25 basis point interest rate hike next month.

San Francisco Fed chief John Williams said three or four interest rate hikes over the course of 2017 was also "about right", Reuters reported.

Meanwhile, a strong dollar and signs that the global crude supply glut continues sent oil prices lower with Brent crude down 1.03% to $48.22 per barrel and West Texas Intermediate down 0.66% to $48.09 per barrel at 1638 BST.

On the company front, Royal Mail rallied after RBC Capital Markets upgraded the stock to ‘sector perform’ from ‘underperform’ and lifted the price target to 525p from 445p.

ARM Holdings, which designs chips for Apple, was also in the black following reports the US tech giant has asked its suppliers to deliver up to 78 million of its upcoming updated iPhone models.

Mitie Group advanced after saying total annual operating profit grew 100.9% to £112.5m, with basic earnings per share growth of 119.6%. £112.5m, with basic earnings per share growth of 119.6%.

Inmarsat was under the cosh after Morgan Stanley downgraded the stock to ‘equalweight’ from ‘overweight’ and slashed the price target to 800p from 1,350p as it cut its earnings forecasts for the stock.

ICAP slumped after Credit Suisse downgraded its stance on the stock to ‘neutral’ from ‘outperform’ and cut the price target to 450p from 475p following the full-year 2016 results, with the valuation up with events.

Sports Direct was also lower as Goldman Sachs downgraded the stock to a 'neutral' rating and removed the retailer off its Pan-Europe Buy List after cutting its earnings per share (EPS) forecasts for this and next year.

Market Movers

FTSE 100 (UKX) 6,147.53 -0.14%
FTSE 250 (MCX) 17,046.71 0.74%
techMARK (TASX) 3,081.78 0.41%

FTSE 100 - Risers

Royal Mail (RMG) 513.00p 4.29%
3i Group (III) 521.50p 3.17%
DCC (DCC) 6,620.00p 2.08%
ARM Holdings (ARM) 963.00p 1.96%
easyJet (EZJ) 1,498.00p 1.90%
Hargreaves Lansdown (HL.) 1,284.00p 1.66%
Travis Perkins (TPK) 1,890.00p 1.61%
Royal Bank of Scotland Group (RBS) 235.30p 1.51%
International Consolidated Airlines Group SA (CDI) (IAG) 524.00p 1.45%
Berkeley Group Holdings (The) (BKG) 3,241.00p 1.19%

FTSE 100 - Fallers

Inmarsat (ISAT) 724.50p -4.04%
Tesco (TSCO) 161.85p -1.49%
Vodafone Group (VOD) 225.85p -1.42%
Old Mutual (OML) 167.80p -1.12%
Rolls-Royce Holdings (RR.) 636.00p -1.09%
GKN (GKN) 272.30p -1.05%
Standard Life (SL.) 328.20p -1.00%
SSE (SSE) 1,521.00p -0.91%
BP (BP.) 358.25p -0.90%
Imperial Brands (IMB) 3,667.50p -0.86%

FTSE 250 - Risers

Mitie Group (MTO) 292.20p 6.80%
Pendragon (PDG) 40.09p 5.42%
Shawbrook Group (SHAW) 294.00p 4.89%
Entertainment One Limited (ETO) 180.90p 4.33%
Polypipe Group (PLP) 318.10p 4.30%
Laird (LRD) 348.60p 4.12%
CLS Holdings (CLI) 1,603.00p 4.09%
IP Group (IPO) 157.40p 3.62%
Indivior (INDV) 169.50p 3.48%
Countrywide (CWD) 373.10p 3.27%

FTSE 250 - Fallers

ICAP (IAP) 413.90p -4.12%
Sports Direct International (SPD) 354.10p -4.04%
Ocado Group (OCDO) 263.10p -2.41%
Allied Minds (ALM) 328.70p -2.26%
Vedanta Resources (VED) 371.50p -2.11%
Tullow Oil (TLW) 242.40p -1.86%
Assura (AGR) 56.90p -1.64%
Hastings Group Holdings (HSTG) 183.90p -1.55%
Greencore Group (GNC) 356.20p -1.47%
Wood Group (John) (WG.) 618.50p -1.36%