London close: Stocks weaker amid concerns for global stability

Stocks in London finished in negative territory on Tuesday, largely influenced by unfavourable economic data from China coupled with underwhelming corporate earnings reports.

The FTSE 100 index retreated 0.36% to settle at 7,527.42 points, while the FTSE 250 edged down 0.11%, finishing at 18,841.54.

On the currency front, sterling was last down 0.48% on the dollar to trade at $1.2723, while it ticked up 0.02% against the euro to change hands at €1.1621.

“Last week’s US credit rating downgrade seemed like the perfect beginning of a market selloff, but this morning’s abysmal China trade data is a much more compelling reason for investors to cut back on risk,” said IG chief market analyst Chris Beauchamp.

“The losses started in Europe and have now overtaken the US - the odds of a sizeable correction are now much higher.

“A pullback is certainly overdue, and the recent outbreak of confidence about a soft landing also leaves markets vulnerable in the short-term.”

Fresh data paints a mixed picture across global markets

In economic news, the British retail landscape faced challenges in July, as incessant rainfall coupled with rising inflation led to an inevitable slump in sales, according to fresh data.

A joint survey by the British Retail Consortium and KPMG highlighted a mere 1.5% year-on-year rise in retail sales values, a notable dip from the usual 12-month average growth rate of 3.9%.

The unfavourable conditions prompted retailers to ramp up promotions to lure price-sensitive consumers.

While the season typically sees a surge in clothing and footwear sales, retailers in those sectors saw declines.

Cumulatively, non-food sales saw a 0.5% dip in the three months leading to July.

Furthermore, food and beverage sales experienced their most sluggish growth since winter - a downturn exacerbated by the prevalent heavy rainfall.

“We are starting to see a big rise in the number of promotions that retailers are putting in place in order to get shoppers through the door, as they battle to keep market share,” said Paul Martin, KPMG’s head of retail.

“Price conscious consumers are shopping more carefully, more aware of where bargains can be found and what they are getting for their money – which is biting hard into retail margins and profitability.

“UK consumers have been hugely resilient throughout the cost-of-living crisis but stubbornly high inflation coupled with rapidly rising interest rates will test their ability and willingness to keep on spending for the rest of this year.”

Across the pond, the US trade deficit with global partners shrunk in June, thanks to a decrease in imports.

The Department of Commerce reported a 4.1% month-on-month decline, with the trade deficit settling at $65.5bn, slightly above economists' predictions.

While exports witnessed a marginal drop of 0.1%, imports took a 1% hit.

A significant drop in goods imports was seen, especially in sectors like computers, finished metal shapes, and crude oil.

The business environment in the US meanwhile showed hints of optimism, with small business confidence seeing an uptick in July.

The National Federation of Independent Business' optimism index nudged up to 91.9 in July, surpassing expectations.

In Asia, China’s trade dynamics posed concerns, as both imports and exports declined more than anticipated in July.

The downturn indicated a lukewarm recovery trajectory for the world's second-largest economy, potentially nudging Beijing towards more aggressive fiscal measures.

Imports plummeted 12.4% year-on-year, while exports contracted by 14.5%.

The country’s trade surplus swelled to $80.6bn in July, surpassing expert consensus.

Mining and banking struggles versus stellar insurers, hotels

On London’s equity markets Glencore rode the dip, falling 2.86% following its first-half results that showed a halving of adjusted core earnings.

The company blamed the results on macroeconomic conditions affecting prices of metals like copper, cobalt, nickel, and zinc.

Peers Anglo American, Antofagasta and Rio Tinto also experienced declines.

Asset manager Abrdn saw its shares plummet 11.08% after unveiling its first-half results as well.

Citing “challenging market conditions” and a “risk-off environment”, the company reported net outflows of £4.4bn.

The UK’s banking sector also felt the pressure, with Lloyds Banking Group down 1.07%, HSBC Holdings off 1.47%, NatWest Group 1.08% lower, and Standard Chartered slipping 0.8%.

Sentiment in the sector was impacted after Italy's hard-right government introduced a 40% levy on banking profits for the remainder of 2023.

On the upside, insurer Beazley spiked 5.06% after Berenberg analysts raised its target price for the stock, stating that its recent underperformance was baffling.

Fellow insurers Hiscox and Admiral Group also rode the positive wave.

Elsewhere, Intercontinental Hotels Group (IHG) reported a sharp increase in half-year profits, reflecting the travel sector's recovery from the pandemic.

The company, which owns brands including Crowne Plaza and Holiday Inn, saw operating profit surge 62% to $584m, pushing its shares up by 2.44%.

TI Fluid Systems rocketed 15.41% after the company announced a significant dividend increase and a notable growth in earnings.

Wealth manager Quilter's shares were propelled 13.46% after it reported a 25% increase in adjusted profits for its first half and bumped its interim dividend.

Finally, building materials group SIG was 4.38% firmer after the company reassured investors of productivity initiatives slated for the second half, keeping full-year profits in line with recent guidance.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,527.42 -0.36%
FTSE 250 (MCX) 18,841.54 -0.11%
techMARK (TASX) 4,350.35 -0.12%

FTSE 100 - Risers

Beazley (BEZ) 530.00p 5.16%
InterContinental Hotels Group (IHG) 5,790.00p 2.33%
Hiscox Limited (DI) (HSX) 1,113.00p 1.64%
Admiral Group (ADM) 2,150.00p 1.51%
AstraZeneca (AZN) 11,030.00p 1.32%
National Grid (NG.) 975.80p 1.08%
Pearson (PSON) 852.60p 1.07%
Rightmove (RMV) 575.40p 0.98%
GSK (GSK) 1,365.00p 0.95%
Pershing Square Holdings Ltd NPV (PSH) 2,994.00p 0.88%

FTSE 100 - Fallers

Abrdn (ABDN) 193.00p -11.67%
Fresnillo (FRES) 544.20p -3.37%
Melrose Industries (MRO) 527.00p -2.98%
Glencore (GLEN) 444.60p -2.65%
Barclays (BARC) 147.08p -2.48%
IMI (IMI) 1,547.00p -2.40%
Entain (ENT) 1,371.00p -2.32%
Johnson Matthey (JMAT) 1,725.00p -2.24%
Anglo American (AAL) 2,156.50p -2.00%
WPP (WPP) 792.80p -1.95%

FTSE 250 - Risers

TI Fluid Systems (TIFS) 149.80p 15.41%
Quilter (QLT) 80.85p 13.39%
Dunelm Group (DNLM) 1,179.00p 2.70%
Me Group International (MEGP) 158.20p 2.59%
Urban Logistics Reit (SHED) 120.20p 2.56%
Greggs (GRG) 2,596.00p 2.53%
Lancashire Holdings Limited (LRE) 599.50p 2.48%
HGCapital Trust (HGT) 401.50p 2.41%
Scottish American Inv Company (SAIN) 514.00p 2.19%
Hilton Food Group (HFG) 705.00p 2.17%

FTSE 250 - Fallers

Vanquis Banking Group 20 (VANQ) 117.00p -4.88%
Helios Towers (HTWS) 83.10p -3.37%
Close Brothers Group (CBG) 838.00p -2.95%
Virgin Money UK (VMUK) 168.30p -2.69%
Future (FUTR) 745.00p -2.61%
Aston Martin Lagonda Global Holdings (AML) 359.80p -2.60%
4Imprint Group (FOUR) 5,080.00p -2.50%
Liontrust Asset Management (LIO) 614.00p -2.23%
Petershill Partners (PHLL) 167.20p -2.22%
Jupiter Fund Management (JUP) 101.20p -2.13%