London close: Stocks squeeze out a positive finish after Chinese data

London stocks managed to close just above the waterline on Monday, reversing earlier losses that came on the back of disappointing data out of China.

The FTSE 100 ended the session up 0.11% at 7,509.15, and the FTSE 250 was ahead 0.22% at 20,382.76.

Sterling was in a mixed state, last trading down 0.56% against the dollar at $1.2070, while it strengthened 0.3% on the euro to €1.1864.

“European markets have got off to a subdued start to the week, slipping lower after the latest economic data from China came in weaker than expected,” said CMC Markets chief market analyst Michael Hewson.

“Basic resources and energy sector have borne the brunt of today’s uncertainty after July industrial production and retail sales both came in well below expectations.

“The bigger surprise is why anyone is surprised by this given China’s reluctance to relax its zero-covid policy, a policy that is likely to weigh on economic growth even more as we head into the winter months.

“As the weather gets colder it’s unlikely that infection rates will go down, which means economic activity is likely to remain subdued, and consumer demand will remain weak.”

In economic news, the average price of property coming to market in the UK has dropped for the first time this year according to fresh industry data, albeit at seasonally-normal rate.

Property marketing platform Rightmove said its house price index showed asking prices falling 1.3% this month, or £4,795, to £365,173.

It said prices traditionally fall in August, with the drop “on par” with the average of 1.3% over the last 10 years

Rightmove said the summer school holidays saw “distracted” house-movers, especially those in higher-priced homes, put their plans on hold until the autumn moving season.

Some of the more urgent sellers coming to market were pricing more competitively, it added, in order to capture the attention of suitable buyers quickly and attempt to beat the average time of 136 days to complete a sale and move before Christmas.

“A drop in asking prices is to be expected this month, as the market returns towards normal seasonal patterns after a frenzied two years, and many would-be home movers become distracted by the summer holidays,” said Rightmove’s director of property science Tim Bannister.

“Indeed, for those that can, this may be their first summer holiday abroad since before the pandemic.

“Sellers who want or need to move quickly at this time of year tend to price competitively in order to find a suitable buyer fast, with some hoping to complete their move in time to enjoy Christmas in a new home.”

Across the pond, the Federal Reserve Bank of New York's regional manufacturing index surprised economists, registering its second-largest ever monthly fall - even larger than that in March 2020 at the start of the Covid-19 pandemic.

The headline index fell to -31.3 from a reading of 11.1 for July, while the sub-index linked to new orders fell to -29.6 from 6.2, and that for shipments to -24.1 from 25.3.

Another sub-index tracking the prices paid by firms also weakened to 55.5 from 64.3, and that for the number of employees at companies to 7.4 from 18.0.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, credited the recent fall in oil prices for the drop in the former and said the overall report was "startlingly terrible, but scarcely believable".

Elsewhere, Japan’s economy recovered beyond pre-Covid levels in the second quarter, with GDP expanding at 2.2% year-on-year, although that was below consensus expectations for 2.6% growth.

The world’s third-largest economy’s size stood at JPY 542.1trn (£3.36trn) at the end of the quarter, taking it above where it was at the end of 2019, while the first quarter data was revised to an expansion from a contraction.

“Japanese second quarter GDP recovered from an essentially flat - after revisions - first quarter, as the economy benefited from a post-Omicron rebound,” said Craig Botham at Pantheon.

China’s industrial production and retail sales data for July missed expectations, meanwhile, with figures released by the National Bureau of Statistics showing that retail sales rose 2.7% from July 2021, coming in well below analyst expectations of 4.9% growth and down from 3.1% in June.

Industrial production was up 3.8% in July following a 3.9% jump in June and missing expectations for a 4.3% increase.

Fixed asset investment rose 5.7% from July a year ago following 6.1% in June and versus expectations for 6.2% growth.

At the same time, China's central bank unexpectedly cut a major interest rate in an attempt to bolster an economy that was struggling to grow amid repeated Covid lockdowns and a property downturn.

The People’s Bank of China trimmed its medium-term lending rate by 10 basis points to 2.75%. Analysts had forecast no change.

“China’s economy is suffering from ongoing Covid lockdowns and a fragile property market,” said Hargreaves Lansdown fund manager Steve Clayton.

“Developers reported lower rates of investment into new building projects whilst sales of new homes dived by 31% in the year to end-July.”

On London's equity markets, miners were under pressure, with Anglo American down 2.09%, Antofagasta off 1.22%, and Rio Tinto 2.24% lower.

Oil giants Shell and BP also gushed lower, losing a respective 1.49% and 1.17%, as oil prices slid.

On the upside, RS Group - formerly Electrocomponents - jumped 5.06% after the Times reported over the weekend that it could be the subject of a takeover bid.

It pointed to speculation of a possible £15 a share bid, which was a significant premium to the present share price and above the £12.35 high it hit last November before worries about a recession kicked in.

Drugmaker AstraZeneca gained 2.33% after it said its Enhertu drug, jointly produced with Japan’s Daiichi Sankyo, had been proven to offer statistically significant and clinically meaningful progression-free survival amongst breast cancer patients.

Insurer Phoenix Group reversed earlier losses to gain 0.5%, after saying it had delivered a record first-half performance and upping its dividend.

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

Market Movers

FTSE 100 (UKX) 7,509.15 0.11%
FTSE 250 (MCX) 20,382.76 0.22%
techMARK (TASX) 4,389.16 0.29%

FTSE 100 - Risers

RS Group (RS1) 1,143.00p 5.06%
London Stock Exchange Group (LSEG) 8,440.00p 3.13%
AstraZeneca (AZN) 10,962.00p 2.33%
Admiral Group (ADM) 2,304.00p 2.30%
International Consolidated Airlines Group SA (CDI) (IAG) 120.58p 2.10%
Melrose Industries (MRO) 154.85p 1.83%
Ocado Group (OCDO) 944.80p 1.77%
Dechra Pharmaceuticals (DPH) 3,630.00p 1.74%
Aveva Group (AVV) 2,494.00p 1.71%
Centrica (CNA) 81.24p 1.66%

FTSE 100 - Fallers

GSK (GSK) 1,406.00p -3.03%
Rio Tinto (RIO) 4,735.50p -2.24%
Anglo American (AAL) 2,901.00p -2.09%
Mondi (MNDI) 1,674.00p -1.82%
Glencore (GLEN) 464.50p -1.67%
Harbour Energy (HBR) 376.20p -1.62%
Fresnillo (FRES) 742.20p -1.52%
Shell (SHEL) 2,182.00p -1.49%
Standard Chartered (STAN) 597.60p -1.42%
Antofagasta (ANTO) 1,130.50p -1.22%

FTSE 250 - Risers

888 Holdings (DI) (888) 155.90p 9.74%
Wizz Air Holdings (WIZZ) 2,532.00p 7.47%
ICG Enterprise Trust (ICGT) 1,126.00p 3.87%
Pets at Home Group (PETS) 365.00p 3.68%
easyJet (EZJ) 422.60p 3.68%
Oxford Instruments (OXIG) 2,250.00p 3.44%
Indivior (INDV) 315.60p 3.28%
Abrdn Private Equity Opportunities Trust (APEO) 463.00p 3.12%
TP Icap Group (TCAP) 155.30p 2.92%
HGCapital Trust (HGT) 414.00p 2.86%

FTSE 250 - Fallers

Auction Technology Group (ATG) 894.00p -4.68%
Energean (ENOG) 1,238.00p -3.81%
Aston Martin Lagonda Global Holdings (AML) 524.40p -3.64%
CMC Markets (CMCX) 253.00p -3.44%
Tullow Oil (TLW) 50.35p -3.17%
TI Fluid Systems (TIFS) 175.20p -2.88%
XP Power Ltd. (DI) (XPP) 2,225.00p -2.84%
Darktrace (DARK) 414.80p -2.72%
Wood Group (John) (WG.) 154.80p -2.49%
ITV (ITV) 71.40p -2.41%