London close: Stocks mixed ahead of central bank meetings

London's stock markets closed with mixed results on Monday as miners faced pressure following disappointing Chinese economic data.

Investors were also eyeing a crucial week ahead filled with central bank meetings.

The FTSE 100 index ended the day down 0.13% at 7,544.89 points, while the FTSE 250 managed to gain 0.26%, closing at 18,750.39 points.

In currency markets, sterling was last up 0.03% on the dollar, trading at $1.2553, while it advanced 0.17% against the euro, changing hands at €1.1677.

"It's been a relatively subdued start to what is set to be a busy week of central bank rate meetings, with the FTSE 100 underperforming on the back of weakness in the basic resource sector," said CMC Markets chief market analyst Michael Hewson.

"The latest inflation numbers out of China showed that the world's second-biggest economy posted its biggest decline in headline CPI for three years in a sign that the economy is slipping into deflation, while PPI remained in negative territory for the 14th month in succession.

"These concerns over weak demand are weighing on the likes of Glencore, Rio Tinto and the rest of the mining sector, as iron ore prices decline."

Prices slide in China, UK manufacturing performs robustly

In economic news, China's consumer prices registered a notable decline in a weekend data release, marking the fastest rate of decrease in three years.

The National Bureau of Statistics revealed that the consumer price index fell by 0.5% both monthly and annually compared to October, surpassing consensus forecasts of a 0.2% decline.

Meanwhile, core inflation, which excludes volatile food and energy prices, remained steady at 0.6%.

On the other hand, China's producer price index dropped by 3.0% year-on-year in November, the 14th consecutive decline and the sharpest since August, exceeding economists' expectations of a 2.8% fall.

"Consumer demand is likely to revive only gradually, given soft sentiment and a shaky labour market," said Duncan Wrigley at Pantheon Macroeconomics.

"The December Politburo meeting statement struck a more confident tone about China's recovery prospects than the mid-year readout.

"Policymakers called for 'appropriately intensifying' fiscal policy, while monetary policy should be flexible and targeted; that is fiscal policy should take the lead in supporting growth."

On home shores, the UK manufacturing sector exhibited a robust performance in the fourth quarter, as per the manufacturing outlook survey by BDO and Make UK.

The output balance soared to 20 from just three in the prior quarter, while sentiment improved significantly.

Respondents anticipated output to maintain similar levels in the first quarter of 2024, with a balance of 15.

Total orders strengthened, albeit slower, rising to 7 from -1 in the third quarter.

The report noted the unusual phenomenon of output surpassing orders, which could indicate stockpiling or restocking in preparation for the coming year.

Export orders exceeded UK orders, a trend not seen since late 2019.

"After the economic and political shocks of the last few years there is some semblance of stability returning for manufacturers," said Fhaheen Khan, senior economist at Make UK.

"While growth is not exactly supercharged, the positive announcements in the Autumn Statement can at least allow them to plan with more certainty."

Elsewhere, the UK housing market showed signs of stabilising in December despite declining house prices.

According to the Rightmove house price index, house prices fell by 1.9% this month, exceeding the 20-year average seasonal decline of 1.5%.

Nevertheless, year-on-year prices were only 1.1% lower, with the average asking price at £355,177.

Sellers adopted more competitive pricing strategies in response to challenging market conditions but recognised the shift towards a more stable market environment.

The shift was expected to encourage more family movers to return to the market.

"We entered this year under a cloud of uncertainty, as the fallout from the autumn mini-budget filtered through to lower activity levels," said Tim Bannister, director of property science at Rightmove.

"High mortgage rates, which have added to already-stretched buyer affordability, have been a challenge throughout 2023, and this is likely to carry into next year.

"However, for now there appears to be more calm and certainty heading into 2024, and the annual fall of 1.1% in asking prices highlights the market's much better-than-predicted resilience this year."

Miners and utilities fall, Rolls-Royce rises on broker outlook

On London's equity markets, heavily weighted miner Glencore slid 3.39%, reflecting general weakness in the resources sector.

The downturn was also seen in industry peers Centamin and BlackRock World Mining Trust, which fell 1.31% and 2%, respectively, on the back of the disappointing Chinese data.

Utilities also declined, with SSE down 1.49%, while Severn Trent showed a more modest decline of 0.12%.

On the upside, Rolls-Royce was ahead 0.76% after a price target increase by Citigroup, which revised its outlook on the stock after the engine maker's capital markets day.

Citigroup cited a significant boost in earnings per share forecasts, with a 27% increase expected in the near term and a substantial 52% rise in the long term.

The bank attributed these improvements to "very strong" cash generation.

Citigroup also expressed confidence in the sustainability of medium-term free cash flow, predicting well over 30p per share, which was anticipated to continue and should be considered in the stock's valuation.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,544.89 -0.13%
FTSE 250 (MCX) 18,750.39 0.26%
techMARK (TASX) 4,135.01 0.13%

FTSE 100 - Risers

JD Sports Fashion (JD.) 172.60p 3.38%
Rolls-Royce Holdings (RR.) 296.90p 2.63%
Hargreaves Lansdown (HL.) 765.20p 2.24%
Marks & Spencer Group (MKS) 265.00p 1.84%
Next (NXT) 8,142.00p 1.75%
WPP (WPP) 734.40p 1.63%
Melrose Industries (MRO) 568.40p 1.61%
Land Securities Group (LAND) 654.00p 1.58%
Unite Group (UTG) 995.00p 1.58%
Antofagasta (ANTO) 1,536.00p 1.45%

FTSE 100 - Fallers

Glencore (GLEN) 439.30p -3.96%
Centrica (CNA) 143.75p -3.81%
Endeavour Mining (EDV) 1,700.00p -3.41%
Standard Chartered (STAN) 647.00p -1.97%
Rio Tinto (RIO) 5,484.00p -1.77%
SSE (SSE) 1,850.00p -1.73%
International Consolidated Airlines Group SA (CDI) (IAG) 156.00p -1.52%
Burberry Group (BRBY) 1,497.50p -1.38%
British American Tobacco (BATS) 2,292.50p -1.04%
Vodafone Group (VOD) 68.55p -1.01%

FTSE 250 - Risers

Watches of Switzerland Group (WOSG) 715.00p 6.80%
Baltic Classifieds Group (BCG) 222.00p 3.98%
RHI Magnesita N.V. (DI) (RHIM) 3,192.00p 3.50%
Inchcape (INCH) 682.00p 3.24%
British Land Company (BLND) 387.90p 3.11%
Plus500 Ltd (DI) (PLUS) 1,617.00p 2.99%
QinetiQ Group (QQ.) 306.00p 2.75%
Discoverie Group (DSCV) 719.00p 2.69%
Bytes Technology Group (BYIT) 578.50p 2.66%
Bridgepoint Group (Reg S) (BPT) 248.40p 2.48%

FTSE 250 - Fallers

Helios Towers (HTWS) 71.80p -5.28%
Future (FUTR) 594.00p -3.41%
PZ Cussons (PZC) 143.40p -3.24%
Ceres Power Holdings (CWR) 174.10p -3.17%
TUI AG Reg Shs (DI) (TUI) 606.00p -2.96%
FirstGroup (FGP) 162.70p -2.92%
Genus (GNS) 1,979.00p -2.61%
Syncona Limited NPV (SYNC) 118.00p -2.48%
Diversified Energy Company (DEC) 1,287.50p -2.38%
Coats Group (COA) 71.80p -2.31%