London close: Stocks slide on China data, Burberry warning

London stocks ended Monday in negative territory, influenced by weaker-than-expected Chinese GDP figures and a profit warning from luxury fashion house Burberry.

The FTSE 100 declined by 0.85%, closing at 8,182.96 points, while the FTSE 250 fared slightly better but still dipped by 0.06%, ending the session at 21,189.52 points.

In currency markets, sterling was last down 0.04% on the dollar, trading at $1.2983, while it edged down 0.1% against the euro to last change hands at €1.1897.

“Burberry’s results today were dire, and the shares have reacted with a 16% drop to 14-year lows,” said IG chief market analyst Chris Beauchamp.

“But the read across has caught two very different sectors, retailers and mining. It’s not often the two are moved by the same story.

“The former have been hit by worries that Burberry’s problems are not an isolated case, and that UK consumer spending is on a downward trajectory.”

Beauchamp added that the latter were down on China worries, amplified by poor GDP figures from the world’s second-largest economy, spelling trouble for demand for raw materials and luxury fashion alike.

“Across the pond, Wall Street has begun the week in strong form, led by Apple, which has managed to hit a new record high in trading.

“The summer squall in tech stocks last Thursday ended as quickly as it began, and even more lacklustre bank earnings have failed to dampen the mood.

“Small caps continue to outperform however, building on another of last week’s post-CPI developments, as hopes of a US rate cut in September continue to rise.”

China data shows economic weakness, UK house prices slip

In economic news, data from China revealed signs of weakening in the world's second-largest economy during June - the final month of the second quarter.

Official statistics showed a slowdown in retail sales, industrial production, and fixed asset investment.

Additionally, house price deflation worsened.

The quarterly GDP growth rate fell to 4.7%, down from 5.3% in the first quarter, missing the 5.1% forecasted by economists.

That marked the lowest growth rate since early 2023. June's house prices were down 4.5% year-on-year, following a 3.9% decline in May, marking the steepest decrease since June 2015.

Retail sales grew by only 2.0%, missing the 3.3% estimate, while industrial production growth eased to 5.3% and fixed asset investment growth slowed to 3.9%.

“Backloaded - and much-needed - fiscal easing will feature more prominently from hereon, but only partially offsetting a more tenuous geopolitical environment for Chinese goods in the second half,” said Louise Loo, lead economist at Oxford Economics.

“We continue to expect the economy to grow at a modest sub-1.0% sequential pace for the rest of the year, for an annual growth of 4.8% that still undershoots officials' 5% target.”

On home shores, UK house prices saw a decline in July, according to data from property marketing platform Rightmove.

Prices fell 0.4% month-on-month, with an annual increase of 0.4%, leading to an average asking price of £373,493.

The decrease was larger than the typical 0.2% decline for July, influenced by events like football’s Euros and the general election campaign.

However, expectations for a potential interest rate cut and a more stable political outlook post-election suggested a positive outlook for the autumn market.

Additionally, the number of sales agreed upon was 15% higher than the same period last year, indicating robust activity.

On the continent, industrial production dropped 0.6% in the eurozone in May, the first decline in four months, according to Eurostat.

That was less severe than the anticipated 1.0% drop, while compared to May 2023, production was down 2.9%.

The decline was noted in intermediate goods at 1.0%, capital goods at 1.2%, and durable consumer goods at 1.8%, while production for energy increased 0.8%, and non-durable consumer goods grew 1.6%.

Slovenia recorded the largest monthly decrease at 7.3%, while Ireland saw the highest growth at 6.7%.

Burberry slides on red day for UK shares

On London’s equity markets, Burberry Group plummeted 18.07% after a series of negative announcements.

The company ousted its chief executive, suspended dividend payments, and issued a profit warning following a slump in first-quarter revenues due to weak demand across all markets.

Ocado Group dropped 10.42% after Bernstein downgraded the stock to ‘underperform’ from ‘outperform,’ drastically reducing its price target from 1,000p to 250p.

Bernstein cited numerous issues, including paused customer fulfilment centres, impending refinancing, and stalled projects with Kroger, predicting a need for additional cash.

Ocado was also set to release its half-year results on Tuesday.

The retail sector more generally faced pressure, with Marks and Spencer Group down 3.1%, Frasers Group declining 3.6%, and B&M European Value Retail slipping 0.38%.

B&M's upcoming first-quarter trading update added to the sector's cautious sentiment.

Miners were also hit by the weaker-than-expected economic growth data from China, as Antofagasta and Anglo American fell by 3.6% and 1.31%, respectively.

Oil giant BP saw a 1.31% decline following a downgrade to ‘equalweight’ by Morgan Stanley.

Robert Walters experienced a 1.31% drop after reporting continued declines in net fee income for the second quarter, attributing the slump to ongoing muted client and candidate confidence amid challenging market conditions.

Watches of Switzerland fell by 5.61% after Swatch Group, which owns several luxury Swiss brands, reported a fall in first-half sales and operating profit due to weak demand in China, impacting European markets broadly.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,182.96 -0.85%
FTSE 250 (MCX) 21,189.52 -0.06%
techMARK (TASX) 4,818.47 -0.61%

FTSE 100 - Risers

Smurfit Westrock (DI) (SWR) 3,758.00p 2.68%
Ashtead Group (AHT) 5,350.00p 2.45%
3i Group (III) 3,067.00p 1.69%
Barclays (BARC) 225.75p 1.48%
BAE Systems (BA.) 1,279.00p 0.87%
InterContinental Hotels Group (IHG) 8,384.00p 0.82%
International Consolidated Airlines Group SA (CDI) (IAG) 175.10p 0.63%
Smith (DS) (SMDS) 423.40p 0.62%
London Stock Exchange Group (LSEG) 9,482.00p 0.57%
Standard Chartered (STAN) 727.40p 0.55%

FTSE 100 - Fallers

Burberry Group (BRBY) 744.00p -16.08%
Frasers Group (FRAS) 843.50p -3.60%
Antofagasta (ANTO) 2,145.00p -3.60%
Croda International (CRDA) 3,945.00p -3.17%
Marks & Spencer Group (MKS) 299.90p -3.13%
Smith & Nephew (SN.) 1,070.50p -2.68%
SSE (SSE) 1,821.50p -2.54%
Prudential (PRU) 715.00p -2.32%
Severn Trent (SVT) 2,598.00p -2.29%
National Grid (NG.) 929.40p -2.25%

FTSE 250 - Risers

Kier Group (KIE) 157.60p 4.10%
Playtech (PTEC) 549.00p 3.58%
TBC Bank Group (TBCG) 3,035.00p 3.06%
Bank of Georgia Group (BGEO) 4,515.00p 2.85%
Close Brothers Group (CBG) 500.00p 2.80%
Mony Group (MONY) 238.00p 2.67%
Apax Global Alpha Limited (APAX) 161.00p 2.55%
Just Group (JUST) 110.60p 2.41%
Diversified Energy Company (DEC) 1,208.00p 2.29%
Genus (GNS) 1,890.00p 2.27%

FTSE 250 - Fallers

Ocado Group (OCDO) 340.40p -10.42%
Indivior (INDV) 774.00p -4.97%
PureTech Health (PRTC) 175.20p -3.84%
Watches of Switzerland Group (WOSG) 391.20p -3.79%
Victrex plc (VCT) 1,112.00p -2.97%
Dr. Martens (DOCS) 74.40p -2.75%
Quilter (QLT) 118.50p -2.63%
Ashmore Group (ASHM) 175.40p -2.56%
Aston Martin Lagonda Global Holdings (AML) 158.90p -2.52%
Pennon Group (PNN) 650.00p -2.40%