London midday: China concerns dampen sentiment on quiet day

London stock markets were struggling for direction on Monday morning, as fresh concerns about China's economy and an absence of any new economic data or corporate earnings prompted investors to exercise some caution.

Just before midday, the FTSE 100 was down 14 points (-0.2%) 7,510, having traded within a tight range of 30 points or so for the majority of the morning session.

Stocks in Asia fell sharply overnight on the back of renewed concerns about China's property sector. Hong Kong's Hang Seng Index slumped 1.8% after Chinese developer Country Garden announced it was suspending the trading of 11 onshore bonds. The news follows a warning last week from the company that it expects to lose $7.6bn in the first half of 2023.

With no major economic data scheduled for release on Monday, the focus is now turning to the release of the UK consumer price index on Wednesday. This is expected to show that annual price growth softened from 7.9% to 6.7% in July, with prices falling 0.5% month-on-month. UK unemployment figures meanwhile are due on Tuesday.

"Market expectations are for at least another two more rate rises, and then for rates to stay elevated for over a year, however a significant slowing could see that get repriced," said Michael Hewson, chief market analyst at CMC Markets UK. "The prospect of two more rate hikes isn’t a particularly welcome one given some of the underlying vulnerabilities of the UK economy, with the housing market especially vulnerable."

In the US, data on Friday showed that producer price inflation unexpectedly picked up last month – a cause for concern for economists who had hoped that a possible slowdown in price growth may prompt the Federal Reserve to pause hiking interest rates at its next meeting.

However, Goldman Sachs predicted over the weekend that the Fed is unlikely to hike rates again this year. In fact, the bank reckons that the first rate cut will take place in the second quarter of 2023. A close eye will be kept on the publication of the minutes from the last Federal Open Market Committee meeting, scheduled for release on Wednesday.

Miners and property stocks drop, B&M jumps

Mining stocks were the morning's worst performers, with Rio Tinto, Anglo American and Antofagasta providing a drag, as sentiment was dampened by newsflow out of China. Oil peers Shell and BP were also lower.

Property stocks were also struggling on Monday, with builders Persimmon, Taylor Wimpey and Barratt Developments all losing ground.

Leading the risers on the FTSE 100 was B&M European Value Retail on the same day struggling rival discount retailer Wilko (which fell into administration last week) has given potential buyers until Wednesday to submit offers for a takeover. Deutsche Bank upped its target price for B&M from 610p to 680p on Monday, saying it could stand to benefit from the Wilko's demise.

Retail peers Frasers Group and JD Sports Fashion were also higher.

On the FTSE 250, Plus500 gained after announcing $120m of shareholder returns through a first-half dividend and new share buyback programme. The contract-for-difference platform also said that, despite "quieter market conditions", it expects 2023 results to be in line with current forecasts.

Market Movers

FTSE 100 (UKX) 7,510.13 -0.19%
FTSE 250 (MCX) 18,785.92 -0.07%
techMARK (TASX) 4,345.76 -0.04%

FTSE 100 - Risers

B&M European Value Retail S.A. (DI) (BME) 554.40p 3.09%
Airtel Africa (AAF) 117.90p 1.99%
Coca-Cola HBC AG (CDI) (CCH) 2,319.00p 1.40%
JD Sports Fashion (JD.) 145.30p 1.40%
GSK (GSK) 1,389.00p 1.31%
Smurfit Kappa Group (CDI) (SKG) 3,160.00p 1.09%
Hargreaves Lansdown (HL.) 795.40p 0.96%
Admiral Group (ADM) 2,228.00p 0.95%
CRH (CDI) (CRH) 4,583.00p 0.66%
Beazley (BEZ) 541.00p 0.65%

FTSE 100 - Fallers

Persimmon (PSN) 1,097.50p -2.83%
Fresnillo (FRES) 530.40p -1.89%
Entain (ENT) 1,290.00p -1.71%
Ocado Group (OCDO) 818.80p -1.61%
Glencore (GLEN) 438.70p -1.35%
Anglo American (AAL) 2,122.00p -1.35%
Prudential (PRU) 996.00p -1.24%
SEGRO (SGRO) 729.40p -1.03%
Spirax-Sarco Engineering (SPX) 10,365.00p -1.00%
United Utilities Group (UU.) 948.60p -0.94%

FTSE 250 - Risers

Watches of Switzerland Group (WOSG) 737.50p 5.36%
TBC Bank Group (TBCG) 2,790.00p 2.76%
Auction Technology Group (ATG) 730.00p 2.38%
Plus500 Ltd (DI) (PLUS) 1,464.00p 2.31%
North Atlantic Smaller Companies Inv Trust (NAS) 3,750.00p 2.18%
Dr. Martens (DOCS) 155.70p 2.17%
Vanquis Banking Group 20 (VANQ) 117.00p 1.92%
FDM Group (Holdings) (FDM) 592.00p 1.72%
CMC Markets (CMCX) 130.60p 1.56%
BH Macro Ltd. GBP Shares (BHMG) 345.00p 1.47%

FTSE 250 - Fallers

W.A.G Payment Solutions (WPS) 92.00p -4.17%
Liontrust Asset Management (LIO) 633.00p -2.31%
Ibstock (IBST) 153.30p -2.11%
OSB Group (OSB) 385.60p -2.08%
Molten Ventures (GROW) 250.20p -1.88%
Marshalls (MSLH) 253.20p -1.86%
Great Portland Estates (GPE) 408.00p -1.78%
Crest Nicholson Holdings (CRST) 203.60p -1.74%
Telecom Plus (TEP) 1,642.00p -1.68%
IP Group (IPO) 58.80p -1.67%