London close: Stocks slip on rising oil price concerns

London’s stock markets closed in negative territory on Wednesday, as a significant rise in oil prices fuelled investor concerns over inflation.

Both major indices had recorded losses by the end of the trading day, as the FTSE 100 edged down 0.16% to close at 7,426.14, while the FTSE 250 dipped 0.21% to settle at 18,451.82.

In currency markets, sterling was last 0.45% weaker on the dollar, trading at $1.2507, while it lost 0.39% on the euro to change hands at €1.1672.

"It seemed that the FTSE 100 was fated to suffer a sharp down day, but as the session wore on buyers came in to defend the 7,400 level,” said IG chief market analyst Chris Beauchamp.

“But with little in the way of heavyweight news, and despite gains for the oil giants BP and Shell, the mood in London remains cautious.

“UK inflation remains an untamed beast, and oil’s rise threatens to upend the Bank of England’s plans for the year.”

Mixed economic indicators signal slowdown across global markets

In economic news, a minimal uptick in UK construction activity for August caught attention, showing signs of decelerating growth.

The S&P Global/CIPS UK construction purchasing managers' index (PMI) settled at 50.8, down from 51.7 in July, indicating just a marginal expansion in the sector.

While commercial building activity remained robust, hovering close to a five-month high at 54.2, civil engineering grew at a reduced pace, and housebuilding recorded its second-sharpest decline since May 2020.

New orders in the construction sector saw their fastest drop in over three years, painting a bleak picture for the industry.

“Resilient demand for commercial work and infrastructure projects are helping to keep the construction sector in expansion mode for now, but the survey's forward-looking indicators worsened in August,” said Tim Moore, economics director at S&P Global Market Intelligence.

Across the channel, eurozone retail sales for July disappointed expectations, contracting by 0.2%, according to Eurostat.

That followed a revised 0.2% increase in June, defying analysts' forecast of a milder 0.1% decline.

When broadened to the wider European Union, the sales in July decreased by 0.3%, with year-on-year figures showing a 1% decline in the euro area and a 1.2% fall across the EU.

Adding to the eurozone's economic concerns, the construction sector continued to retract, hitting its fastest pace of contraction this year.

The HCOB construction PMI for August was recorded at 43.4, a notch below July's 43.5, signalling that the industry was still in the contraction zone.

Housing construction was identified as the primary factor dragging down the overall construction activity.

Germany's industrial landscape offered no relief, with factory orders plummeting by an eye-opening 11.7% in July, much steeper than the expected 4% drop.

Year-on-year, orders were down 10.5%, unwinding after a revised 3.3% increase in June, indicating potential turbulence in the country's manufacturing sector.

Finally on data, service sector activity in the US in August was slightly softer than expected, according to the S&P Global services PMI, which came in at 50.5, compared to July’s 52.3 and missing the consensus of 51.0.

Retail and construction stocks fall, others find upside

On London’s equity markets, luxury fashion brand Burberry Group and Asia-focused insurer Prudential had a tough day, declining by 3.36% and 2.26% respectively.

Barratt Developments was down 1.23% drop, after a fall in annual profits and a cut in dividends.

The company also ruled out a share buyback this year, citing higher borrowing costs affecting mortgage affordability.

Fellow housebuilders Persimmon and Berkeley Group weren’t far behind, with their shares down by 1.65% and 0.95% respectively.

Cybersecurity firm Darktrace fell by 2.49% after it announced that while its full-year results met analysts' expectations, the company cut its guidance for full-year 2024 adjusted EBITDA margins to between 17% and 19%.

Stationery and books retailer WH Smith tumbled 5.8%, despite announcing that its full-year figures would be in line with expectations.

The decline was attributed to weaker high-street performance, which overshadowed strong trading at its airport and train station locations.

On the upside, B&M European Value Retail climbed 1.39% after a disappointing performance on Tuesday.

The upturn came after Shore Capital upgraded the stock from 'hold' to 'buy', citing the company's potential growth from the acquisition of up to 51 Wilko stores.

Investment management firm Ashmore Group saw its shares rise 1.61%, even though it reported a fall in annual profits and a 13% decline in assets under management due to market volatility.

Private equity firm Bridgepoint Group gained 3.22% after it revealed the acquisition of Energy Capital Partners Holdings for an initial £835m.

Food company Bakkavor Group's shares rose by 1.85% on the back of increased full-year guidance, driven by higher prices and volumes in China.

Lastly, software firm Sage Group was up 1.54%, following a positive note from JPMorgan, which lauded Intacct as the company’s "most important product and growth engine."

“Based on our analysis and industry discussions, we believe Intacct is a leading asset in the mid-market core financial management software space and is poised to continue taking share as its addressable market goes through a generational shift to the cloud,” JPMorgan noted.

“We believe Sage Intacct can drive upside to consensus through the North America mix shift, and international roll-out over time.”

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,426.14 -0.16%
FTSE 250 (MCX) 18,451.82 -0.21%
techMARK (TASX) 4,253.25 -0.27%

FTSE 100 - Risers

Johnson Matthey (JMAT) 1,782.00p 3.70%
Sage Group (SGE) 990.40p 1.79%
Land Securities Group (LAND) 585.20p 1.77%
Bunzl (BNZL) 2,813.00p 1.70%
B&M European Value Retail S.A. (DI) (BME) 557.00p 1.68%
SEGRO (SGRO) 727.00p 1.68%
London Stock Exchange Group (LSEG) 8,264.00p 1.30%
Relx plc (REL) 2,637.00p 1.23%
Airtel Africa (AAF) 115.70p 1.22%
Antofagasta (ANTO) 1,496.00p 1.22%

FTSE 100 - Fallers

Burberry Group (BRBY) 2,085.00p -4.71%
International Consolidated Airlines Group SA (CDI) (IAG) 153.75p -3.70%
St James's Place (STJ) 854.20p -2.27%
Prudential (PRU) 933.20p -2.26%
Abrdn (ABDN) 157.70p -2.08%
Rolls-Royce Holdings (RR.) 214.70p -2.05%
Associated British Foods (ABF) 1,961.50p -1.83%
Hargreaves Lansdown (HL.) 741.20p -1.75%
Beazley (BEZ) 541.00p -1.73%
Hiscox Limited (DI) (HSX) 980.50p -1.56%

FTSE 250 - Risers

Bridgepoint Group (Reg S) (BPT) 189.30p 8.23%
International Distributions Services (IDS) 250.40p 3.69%
Balanced Commercial Property Trust Limited (BCPT) 71.00p 3.35%
W.A.G Payment Solutions (WPS) 92.60p 2.89%
Quilter (QLT) 87.55p 2.46%
C&C Group (CDI) (CCR) 136.80p 2.40%
Bakkavor Group (BAKK) 101.00p 2.02%
Derwent London (DLN) 1,874.00p 1.96%
Spectris (SXS) 3,324.00p 1.93%
Discoverie Group (DSCV) 739.00p 1.93%

FTSE 250 - Fallers

Ferrexpo (FXPO) 74.80p -6.72%
WH Smith (SMWH) 1,390.00p -6.33%
Energean (ENOG) 1,117.00p -5.58%
Digital 9 Infrastructure NPV (DGI9) 57.80p -4.93%
Wizz Air Holdings (WIZZ) 2,090.00p -4.87%
Future (FUTR) 739.00p -4.34%
Aston Martin Lagonda Global Holdings (AML) 335.20p -3.40%
easyJet (EZJ) 421.00p -3.31%
Marshalls (MSLH) 261.20p -3.26%
Me Group International (MEGP) 159.00p -3.05%