London close: Stocks rise despite weaker global data

Equity markets in London managed a positive close on Wednesday, despite underwhelming economic indicators from across Europe, with utility plays among the more buoyant sectors.

The FTSE 100 saw an increase of 0.68% to close at 7,320.53, while the FTSE 250 added 1.12% to settle at 18,226.49.

At the same time, sterling experienced minor slips against its major pairs, declining 0.1% on the dollar to trade at $1.2719, while it weakened 0.29% against the euro to change hands at €1.1705.

“European and US stock indices advanced for a third straight day on Nvidia earnings optimism with the chip maker announcing its results after the bell,” said IG senior market analyst Axel Rudolph.

“Swiftly retreating US yields on the back of much worse-than-expected eurozone, UK and US flash August PMIs ahead of Thursday's Jackson Hole symposium dampened optimism towards the end of the day, however.

“Eurozone business activity fell the most in almost three years, whereas the US private sector nearly stagnated, making it dangerous for central banks to continue their restrictive monetary policy.”

UK, eurozone and US economic activity faces downward pressure in August

In economic news, output in the UK's private sector dropped sharply in August, seeing its most significant dip since January 2021.

Data from the S&P Global/CIPS flash composite output index highlighted a fall from 50.8 in July to 47.9 in August.

That decline moved the reading below the critical 50-point threshold, indicating contraction rather than expansion - a phenomenon not seen since January.

The downturn, a 31-month low, was put down to a quicker decrease in new orders, resulting from hesitant domestic economic scenarios and climbing borrowing costs.

“High interest rates continue to cast a shadow over the UK economy, creating a lull in new orders, stunting output, and ensuring prospects for the private sector remain uncertain,” said John Glen, CIPS chief economist.

“This reduction in activity has provided UK supply chains with much-needed respite after the instability of the last two years.

“High interest rates are starting to have their intended effect of dampening demand and reducing inflationary pressures, leading to moderated input costs and reduced raw material prices for manufacturers.”

On the continent, business activities in the eurozone faced intensifying contraction in August.

The contraction, previously restricted to the manufacturing sector, now extended its grip to the service sector as well.

S&P Global’s preliminary composite index unveiled a drop from 48.6 in July to 47.0 in August - its nadir since November 2020.

Excluding the months affected by the pandemic, it was the most severe contraction the common currency area had experienced since April 2013.

Across the pond, the United States was not exempt from the economic strain either.

While not contracting, the American private sector in August teetered on the edge of stagnation, as the S&P Global flash composite output index, which combines both manufacturing and service sector activity data, recorded a decline to 50.4 from July's 52.0.

Utility and mining stocks among those on the rise

On London’s equity markets, utility stocks put in a robust performance, with Severn Trent climbing 2.17%, SSE increasing 1.08%, National Grid advancing 2.06%, and United Utilities Group ahead 1.19%.

The positive trajectory in utility stocks was reinforced by broker RBC, which spotlighted National Grid and SSE as standout selections in the sector on Wednesday morning.

Miners also basked in the upward trend, with Anglo American gaining 1.1%, Rio Tinto rising 1.99%, and Fresnillo jumping 3.31%.

Reckitt Benckiser Group saw an uplift of 0.92% after it announced the upcoming retirement of its CFO and executive director, Jeff Carr, scheduled for the end of March next year.

The company said it would welcome Shannon Eisenhardt, currently serving as the finance chief of consumer, brand, and marketplace at Nike, on 17 October.

Flow-control manufacturer Rotork enjoyed a 2.3%, in the wake of Peel Hunt upgrading the firm to 'buy'.

The broker set a bullish price target for Rotork's stock at 380p, a substantial rise from its present 294p mark.

Insurance behemoth Prudential experienced a boost as well, climbing 2.02% after Deutsche Bank adjusted its target price for the stock as it awaited its imminent results.

The bank also expressed its continued confidence in the firm, terming it an "attractive" investment given its current valuation.

On the downside, JD Sports Fashion slipped 0.07% after its US-based peer Foot Locker revised its full-year forecasts downwards.

Ithaca Energy also took a hit, plummeting 5.62% after the company projected lower production for the coming year due to the UK government's windfall tax.

The outlook came despite the firm posting a substantial increase in first-half profits, with heightened production and reduced costs countering a decline in oil and gas prices.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,320.53 0.68%
FTSE 250 (MCX) 18,226.49 1.12%
techMARK (TASX) 4,233.26 0.84%

FTSE 100 - Risers

Endeavour Mining (EDV) 1,669.00p 4.18%
Unite Group (UTG) 937.50p 3.19%
SEGRO (SGRO) 726.20p 2.95%
Fresnillo (FRES) 553.00p 2.79%
Flutter Entertainment (CDI) (FLTR) 14,000.00p 2.64%
Land Securities Group (LAND) 597.00p 2.58%
Anglo American (AAL) 2,052.50p 2.52%
Ocado Group (OCDO) 737.60p 2.42%
Prudential (PRU) 963.60p 2.27%
National Grid (NG.) 963.40p 2.18%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 133.15p -5.40%
BP (BP.) 471.15p -1.41%
Centrica (CNA) 144.50p -1.33%
Frasers Group (FRAS) 784.50p -1.32%
B&M European Value Retail S.A. (DI) (BME) 563.00p -1.02%
Johnson Matthey (JMAT) 1,562.50p -0.83%
Shell (SHEL) 2,353.00p -0.65%
Standard Chartered (STAN) 711.40p -0.50%
Next (NXT) 6,758.00p -0.47%
Spirax-Sarco Engineering (SPX) 9,702.00p -0.33%

FTSE 250 - Risers

Molten Ventures (GROW) 233.20p 6.00%
Great Portland Estates (GPE) 408.40p 5.53%
Wetherspoon (J.D.) (JDW) 686.00p 5.05%
Savills (SVS) 877.00p 4.40%
Derwent London (DLN) 1,899.00p 4.11%
Hammerson (HMSO) 25.32p 4.11%
Tritax Big Box Reit (BBOX) 139.50p 3.87%
Ferrexpo (FXPO) 79.85p 3.70%
Centamin (DI) (CEY) 89.65p 3.58%
Carnival (CCL) 1,146.00p 3.57%

FTSE 250 - Fallers

Ithaca Energy (ITH) 155.00p -5.37%
Harbour Energy (HBR) 241.70p -2.70%
Dr. Martens (DOCS) 153.40p -2.11%
Me Group International (MEGP) 152.80p -1.80%
Apax Global Alpha Limited (APAX) 166.40p -1.77%
Watches of Switzerland Group (WOSG) 688.50p -1.64%
TUI AG Reg Shs (DI) (TUI) 510.00p -1.63%
Coats Group (COA) 74.90p -1.32%
Keller Group (KLR) 751.00p -1.31%
Indivior (INDV) 1,828.00p -1.19%