London close: Stocks fall on renewed slowdown concerns

London stocks closed well below the waterline on Thursday, with sentiment dented by worries about inflation and a global slowdown as investors digested a rise in jobless claims across the pond.

The FTSE 100 ended the session down 1.63% at 7,039.81, and the FTSE 250 was off 1.23% at 18,480.66.

Sterling was also weaker, last trading down 0.85% on the dollar at $1.1788, and losing 0.4% against the euro to €1.1776.

“We’ve seen further weakness in commodity prices as markets start to price in a double whammy of slowing growth and higher interest rates,” said CMC Markets chief market analyst Michael Hewson.

“This is being felt in basic resources and energy as both copper and oil prices slide sharply, dragging the FTSE 100 back towards last week’s lows, led by the likes of Anglo American, Rio Tinto and Glencore.

“UK house builders also can’t catch a break, despite sales numbers which still look quite robust across the sector, with investors apparently concerned about the sustainability of margins as well as sales at a time when interest rates look set to rise sharply and house price growth could slow sharply.”

In economic news, Americans filed new unemployment claims at an accelerated clip in the week ended 9 July, according to the Labor Department.

Initial claims for unemployment benefits increased by 9,000 week-on-week to 244,000, ahead of market expectations for a reading of 235,000 for the highest print since November 2021.

On a non-seasonally adjusted basis, initial claims rose by 21,384 week-on-week to 241,314, with notable increases seen in New York, Kentucky, and Indiana.

Staying stateside, US producer prices increased to 140.43 points in June, according to the Bureau of Labor Statistics, up from 138.89 points in May.

The producer price index for final demand increased a seasonally adjusted 1.1% in June following advances of 0.9% in May and 0.4% in April.

On an unadjusted basis, final demand prices moved ahead 11.3% for the 12 months ended 30 June - the largest increase since a record 11.6% jump in March.

On this side of the Atlantic, Brussels lifted its forecasts for inflation across the European Union, and trimmed its growth outlook, as the fallout from Russia’s invasion of Ukraine continued to weigh heavily.

Publishing its summer economic forecasts, the European Commission said it now expected inflation to reach 7.6% in the eurozone - up from 6.1% - and 8.3% in the wider bloc this year, before easing to 4.0% in the eurozone and 4.6% in the EU in 2023.

The spring forecast had expected 2023 inflation to peak at 2.3% in the single currency countries and at 3.2% in the EU as a whole.

On home shores, the latest Royal Institution of Chartered Surveyors residential market survey showed house prices continued to grow in June, but at a slower pace than previously seen.

A net balance of 65% of respondents reported an increase in house prices.

That remained well above the long-run average of 13%, although it was down on both April’s high of 78% and May’s 73%.

Surging inflation had seen the Bank of England increase the cost of borrowing five times since December.

Despite that, and the cost-of-living crisis, house prices were still being broadly supported by a lack of supply, despite a softening in demand.

RICS found that new properties being listed for sale remained largely unchanged in June, while new buyer enquiries fell for the third successive month, with -27% of respondents reporting a fall in interest from would-be buyers,

The volume of sales also dipped in June, with -13% reporting a fall in newly agreed sales.

A balance of -9% anticipated a fall in transactions in the coming months; 37% expected prices to continue rising over the next year.

“Pricing across much of the housing market remains resilient for now, with a shortage of stock continuing to be a feature highlighted by many respondents to the survey,” said Simon Rubinsohn, chief economist at RICS.

“Although buyer enquiries have predictably slipped a little of late, this needs to be placed in the context of the healthy level of demand in previous months.”

In equity markets, Barratt Developments fell 1.46% after it said annual profits were on track to beat forecasts following buoyant demand for new homes, but warned of rising build costs.

Peers Taylor Wimpey and Berkeley Group also lost ground, losing 1.61% and 0.71% respectively, although Redrow bucked the trend to jump 4.67% after announcing a £100m share buyback.

Playtech tumbled 18.22% after TTB Partners said it would not be making a bid for the company due to "challenging underlying market conditions".

Ashmore Group and SSP Group were also in the red by a respective 6.34% and 4.73% after trading updates, while Ninety One Group fell 2.13% as it traded without entitlement to the dividend.

Admiral Group plunged 18.11% and Direct Line Insurance slid 11.68% after motor insurer Sabre Insurance said it expected to pay out a smaller dividend for 2022, as it warned over the impact of claims inflation.

Sabre shares themselves were down 39.77%.

On the upside, credit-checking firm Experian rose 3.54% after it reiterated its annual targets following a strong start to the year.

Dechra Pharmaceuticals was also in the black, adding 0.74% after it announced the refinancing of its debt facilities.

Hays gained 0.34% after the recruiter said it had delivered a record end to the year after the heightened demand for labour worldwide boosted fees.

It also said group operating profit for the 2022 financial year was now expected to come in around £210m, at the top end of guidance, as a result.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk, Iain Gilbert and Abigail Townsend.

Market Movers

FTSE 100 (UKX) 7,039.81 -1.63%
FTSE 250 (MCX) 18,480.66 -1.23%
techMARK (TASX) 4,233.12 -1.22%

FTSE 100 - Risers

Experian (EXPN) 2,661.00p 3.54%
Avast (AVST) 518.00p 2.49%
Entain (ENT) 1,103.50p 1.94%
Centrica (CNA) 85.90p 1.45%
Scottish Mortgage Inv Trust (SMT) 779.00p 1.41%
RS Group (RS1) 916.50p 1.33%
Pershing Square Holdings Ltd NPV (PSH) 2,480.00p 1.23%
International Consolidated Airlines Group SA (CDI) (IAG) 107.46p 1.21%
Dechra Pharmaceuticals (DPH) 3,576.00p 0.74%
Severn Trent (SVT) 2,872.00p 0.70%

FTSE 100 - Fallers

Admiral Group (ADM) 1,933.50p -18.11%
Fresnillo (FRES) 644.00p -5.93%
Standard Chartered (STAN) 543.20p -5.72%
Ocado Group (OCDO) 777.40p -5.29%
Anglo American (AAL) 2,547.50p -5.12%
Antofagasta (ANTO) 991.60p -4.79%
Rio Tinto (RIO) 4,567.00p -4.70%
Aviva (AV.) 383.70p -4.10%
Glencore (GLEN) 401.30p -4.10%
Harbour Energy (HBR) 315.20p -3.90%

FTSE 250 - Risers

Redrow (RDW) 513.50p 4.67%
Mitie Group (MTO) 61.70p 4.05%
888 Holdings (DI) (888) 150.00p 2.67%
easyJet (EZJ) 364.40p 2.36%
BH Macro Ltd. GBP Shares (BHMG) 4,600.00p 2.34%
Polymetal International (POLY) 160.00p 1.83%
Coats Group (COA) 62.80p 1.78%
Diploma (DPLM) 2,328.00p 1.57%
Bellway (BWY) 2,195.00p 1.43%
Hipgnosis Songs Fund Limited NPV (SONG) 109.60p 1.29%

FTSE 250 - Fallers

Playtech (PTEC) 422.00p -18.22%
Direct Line Insurance Group (DLG) 208.80p -11.68%
Aston Martin Lagonda Global Holdings (AML) 371.30p -7.68%
Wetherspoon (J.D.) (JDW) 540.00p -6.49%
Ashmore Group (ASHM) 192.30p -6.34%
CMC Markets (CMCX) 270.00p -6.09%
Ninety One (N91) 183.70p -5.99%
Mitchells & Butlers (MAB) 160.70p -5.97%
Hiscox Limited (DI) (HSX) 871.40p -5.10%
Hochschild Mining (HOC) 75.80p -4.83%