London midday: Equities drop after disappointing manufacturing PMIs

London stocks were in the red on Monday after disappointing manufacturing data in the UK and in China.

Markit’s purchasing mangers’ index on UK manufacturing fell to 51.9 in December from 52.5 in November, missing analysts’ estimates of 52.8. A reading above 50 signals an expansion in activity while a level below that indicates a contraction.

In China, Caixin’s PMI on manufacturing fell to 48.2 in December from 48.6 the previous month, below expectations of 48.9.

Mark Dampier, head of investment research at Hargreaves Lansdown, said that the fall in Chinese stock market had little to do with weak manufacturing data.

“It has far more to do with worries that major shareholders will reduce their positions after the ban of share sales and short selling which came in at the end of trading on Friday,” she said.

“Long term investors need to ignore much of this short term noise and make sure they have enough cash for everyday needs. Despite the seas of red, market falls should be seen as buying opportunities.”

Markit’s PMI on Eurozone manufacturing was revised upwards to 53.2 in December from the 'flash' estimate of 53.1. Analysts had expected an unchanged reading. November’s print was revised down from 53.1 to 52.8.

US manufacturing data from ISM and Markit are due at 1500 GMT and 1445 GMT, respectively. The US will also see the release of construction spending data at 1500 GMT while US Federal Reserve policymaker John Williams speaks after the closing bell.

Elsewhere, German inflation figures will be released at 1300 GMT, with analysts pencilling in an improvement in December.

Meanwhile, oil prices recovered on concerns about the row between Saudi Arabia and Iran. Saudi Arabia cut ties with Iran on Sunday in response to the invasion of its embassy in Tehran.

At 1144 GMT Brent crude rose 2.25% to $38.14 per barrel and West Texas Intermediate increased 1.12% to $37.46 per barrel.

On the company front, mining stocks slid on the back of a 2.11% decline in copper prices and worse-than-expected UK and China manufacturing PMIs. Anglo American, Glencore and BHP Billiton were among the top fallers.

“Though the current Saudi Arabia/Iran tensions may be fuelling a Brent Crude bounce back (the black stuff now up 1.5%), copper has continued to collapse this morning, giving the FTSE’s commodity sector all the reason it needed to carry its persistent predilection for heavy losses into the New Year,” said Connor Campbell, financial analyst at Spreadex.

Randgold Resources and Fresnillo, however, rallied as gold prices jumped 1.23% and silver prices increased 1.39% on the Comex.

Insurance companies RSA Insurance, Direct Line and Aviva slumped after UBS estimated net losses of £150m to £308m from the damage of storms Desmond, Eva and Frank.

Diageo was sitting lower after it completed the sale of its major wine interests, including US-based Chateau and Estate Wines and the UK-based Percy Fox arm, to Treasury Wine Estates.

Grainger edged higher after saying it had exchanged contracts with Turbo Group Holdings to sell its Retirement Solutions business on or before 20 May, subject to Turbo gaining approval from the Financial Conduct Authority. Grainger expects a £55m profit on the sale of its equity release division.

Market Movers

FTSE 100 (UKX) 6,089.44 -2.45%
FTSE 250 (MCX) 17,151.32 -1.60%
techMARK (TASX) 3,197.78 -1.75%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 4,225.00p 1.98%
easyJet (EZJ) 1,751.00p 0.63%
TUI AG Reg Shs (DI) (TUI) 1,215.00p 0.33%
SABMiller (SAB) 4,050.00p -0.48%
United Utilities Group (UU.) 929.50p -0.64%
GlaxoSmithKline (GSK) 1,363.00p -0.73%
Worldpay Group (WI) (WPG) 305.00p -0.75%
Smiths Group (SMIN) 931.50p -0.85%
Barratt Developments (BDEV) 620.00p -0.96%
Next (NXT) 7,220.00p -0.96%

FTSE 100 - Fallers

Glencore (GLEN) 84.37p -6.75%
Anglo American (AAL) 279.65p -6.61%
Standard Chartered (STAN) 532.30p -5.57%
Old Mutual (OML) 171.00p -4.42%
Prudential (PRU) 1,465.50p -4.28%
Antofagasta (ANTO) 449.40p -4.24%
Aviva (AV.) 494.80p -4.11%
Standard Life (SL.) 374.10p -4.00%
Burberry Group (BRBY) 1,149.00p -3.85%
St James's Place (STJ) 971.00p -3.67%

FTSE 250 - Risers

Allied Minds (ALM) 431.80p 7.95%
Keller Group (KLR) 865.50p 3.84%
Grainger (GRI) 240.30p 3.22%
NCC Group (NCC) 304.90p 1.63%
IP Group (IPO) 208.10p 1.51%
Cairn Energy (CNE) 160.00p 1.46%
NMC Health (NMC) 851.50p 1.31%
Cable & Wireless Communications (CWC) 75.15p 1.14%
Vectura Group (VEC) 178.00p 1.14%
Entertainment One Limited (ETO) 168.70p 1.02%

FTSE 250 - Fallers

CLS Holdings (CLI) 1,715.00p -5.77%
Fidelity China Special Situations (FCSS) 135.60p -5.57%
Ocado Group (OCDO) 289.70p -4.74%
Atkins (WS) (ATK) 1,556.00p -4.31%
Weir Group (WEIR) 957.00p -4.30%
OneSavings Bank (OSB) 338.70p -4.24%
Dunelm Group (DNLM) 904.00p -4.14%
BGEO Group (BGEO) 1,828.00p -3.99%
Drax Group (DRX) 234.90p -3.89%
Intermediate Capital Group (ICP) 603.50p -3.75%