London close: Stocks finish higher despite economic sentiment

London stocks managed a positive start to the week on Monday, reversing earlier losses despite ongoing concerns for the global economy after disappointing data from China and warnings the US could be headed for recession.

The FTSE 100 ended the session up 0.63% at 7,464.80, and the FTSE 250 was ahead 0.01% at 19,924.11.

Sterling was in a mixed state, last trading 0.02% stronger on the dollar at $1.2264, while it weakened 0.09% against the euro to €1.1767.

“After an early dip prompted by a sharp slowdown in Chinese retail sales in April, markets in Europe have recovered to some extent from their intraday lows, however, there has been a big mismatch between how the FTSE 100 is performing and weakness in the DAX,” said CMC Markets chief market analyst Michael Hewson.

“Sentiment continues to remain cautious, with the DAX sliding back as it becomes ever more apparent that the Chinese economy is likely to stay in the doldrums for a while yet, with the damage caused by Covid restrictions unlikely to improve significantly until well into the summer.

“To give an indication of how badly the Chinese economy has been hit by lockdowns, the latest car sales data for April showed that no cars were sold in Shanghai throughout the entire month, compared to 26,311 a year ago.”

For a major exporter like Germany Hewson said that was not good news, leading to weakness in the likes of Porsche, BMW and Mercedes-Benz.

“On the FTSE 100 the best sector has been basic resources despite weakness in commodity prices, although copper prices have managed to hold onto Friday’s gains.”

Data released overnight showed Chinese industrial output shrank unexpectedly in April as the output of automobiles plummeted at an annual rate of nearly 32%, alongside an 11% year-on-year drop in retail sales.

Economists blamed Covid-19 mobility restrictions for the poor data, as Beijing maintained its ‘zero-Covid’ policy in the face of the more transmissible variants of the virus currently circulating.

On home shores, the energy regulator said it was considering increasing the number of times it reviewed the energy price cap earlier in the day.

The cap, introduced in 2019 to prevent energy companies overcharging customers for gas and electricity, is currently reviewed twice a year.

At the most recent review in April, it was hiked 54% in response to the soaring wholesale energy prices, with another eye-watering increase expected to add to the cost-of-living crisis in October.

Ofgem said it was now considering reviewing the cap quarterly, arguing that a more frequent review would better reflect accurate energy prices, and make the market “fairer and more resilient”.

Consumers would see the benefit “much sooner” when wholesale prices fall, it added, although increases would also be passed on much sooner than currently.

“Our top priority is to protect consumers by ensuring a fair and resilient energy market that works for everyone,” said Ofgem chief executive Jonathan Brearley.

“The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.”

In corporate news, high street baker Greggs closed down 0.46% after it posted a 15.8% rise in like-for-like sales in the 10 weeks to 14 May at company-managed stores, but said it expected figures to “normalise” against comparisons with more “robust” trading periods last year.

Total sales for the period rose to £495m from £378m, as the pasty pusher held guidance, but said cost pressures were increasing as a result of inflation and the cost-of-living crisis.

Credit reference agency Experian was off 1.85% after it agreed to acquire a 51% stake in Brazilian fintech group MOVA Sociedade de Empréstimo entre Pessoas as part of a BRL 40.0m (£6.45m) cash deal.

Experian, which purchased the stake from private investor Érico Sodre Quirino and founder and chief executive Roberto Tesch, said it also held a call option to acquire the remaining 49% of MOVA between 2026 and 2028.

Diploma fell 5.68% after its interim revenues missed estimates, with the maker of specialist seals and medical measuring instruments saying it expected annual operating margins to be at the top end of guidance after posting a rise in interim profits.

In broker note action, Aviva slumped 2.15% after a downgrade to ‘neutral’ by Goldman Sachs, which came at the same time as a share consolidation.

Rolls-Royce was in the red by 3.78% after JPMorgan reiterated its ‘underweight’ rating on the engine maker, noting that the company’s capital markets day only focused on the civil aero division.

“We have concerns on the strategy RR is pursuing via its ‘New Markets’ division,” JPMorgan said.

Kainos Group slid 7.43% after analysts at Berenberg downgraded the software outfit to 'hold' from 'buy', stating the firm was now "stuck in an awkward spot".

Berenberg said its decision to downgrade Kainos was "a difficult one" and noted that it might seem "odd" given its bullish position regarding the IT services landscape and the fact that it even thinks scope remains for the firm to outperform consensus topline forecasts.

On the upside, British Gas owner Centrica was ahead 3.61% after Ofgem revealed its plans to introduce quarterly consumer price cap reviews.

“Adjusting the cap more regularly in the current high and rising inflation environment means energy bills will go up more frequently, which could spell disaster for households already struggling to stay financially afloat,” said Myron Jobson, senior personal finance analyst at Interactive Investor.

Fintech outfit Plus500 jumped 4.1% after it said trading was "very strong" in the second quarter, with the group growing increasingly confident of its full-year performance.

As a result of its "strong performance" in 2022 year-to-date, Plus500 now expected that full-year revenue and underlying earnings to be "significantly ahead" of current market expectations.

Elsewhere, Phoenix Group was boosted 2.76% by a rating upgrade at Goldman Sachs.

Reporting by Josh White at Sharecast.com. Additional reporting by Alexander Bueso, Michele Maatouk, Frank Prenesti and Abigail Townsend.

Market Movers

FTSE 100 (UKX) 7,464.80 0.63%
FTSE 250 (MCX) 19,924.11 0.01%
techMARK (TASX) 4,328.13 0.42%

FTSE 100 - Risers

Fresnillo (FRES) 756.80p 4.62%
Glencore (GLEN) 477.00p 3.39%
Phoenix Group Holdings (PHNX) 633.80p 2.76%
Antofagasta (ANTO) 1,382.50p 2.52%
GlaxoSmithKline (GSK) 1,789.40p 2.45%
Informa (INF) 554.20p 2.44%
Sainsbury (J) (SBRY) 244.60p 2.43%
Tesco (TSCO) 287.50p 1.96%
Vodafone Group (VOD) 120.06p 1.90%
Land Securities Group (LAND) 742.00p 1.78%

FTSE 100 - Fallers

Aviva (AV.) 394.65p -26.52%
Rolls-Royce Holdings (RR.) 80.68p -3.78%
Scottish Mortgage Inv Trust (SMT) 778.80p -3.35%
Smith (DS) (SMDS) 304.80p -3.12%
RS Group (RS1) 898.50p -2.55%
Spirax-Sarco Engineering (SPX) 10,925.00p -2.41%
Ashtead Group (AHT) 3,877.00p -2.32%
Avast (AVST) 486.00p -2.00%
Experian (EXPN) 2,652.00p -1.85%
Mondi (MNDI) 1,535.50p -1.79%

FTSE 250 - Risers

Polymetal International (POLY) 255.10p 7.18%
Apax Global Alpha Limited (APAX) 188.00p 4.44%
TP Icap Group (TCAP) 123.90p 4.27%
Plus500 Ltd (DI) (PLUS) 1,573.00p 4.10%
Chrysalis Investments Limited NPV (CHRY) 137.80p 3.92%
Playtech (PTEC) 530.00p 3.82%
Ferrexpo (FXPO) 152.50p 3.80%
Centrica (CNA) 79.82p 3.61%
Drax Group (DRX) 776.00p 3.54%
Abrdn Private Equity Opportunities Trust (APEO) 465.00p 3.33%

FTSE 250 - Fallers

Kainos Group (KNOS) 1,047.00p -7.43%
Network International Holdings (NETW) 209.20p -7.27%
Diploma (DPLM) 2,456.00p -5.68%
Baltic Classifieds Group (BCG) 148.40p -5.24%
Trainline (TRN) 288.70p -4.66%
Wizz Air Holdings (WIZZ) 2,942.00p -3.75%
Baillie Gifford US Growth Trust (USA) 163.40p -3.67%
Volution Group (FAN) 359.00p -3.49%
Darktrace (DARK) 382.70p -3.24%
Fidelity Special Values (FSV) 260.50p -2.80%