London midday: FTSE lower as China data adds to recession fears

London stocks were off lows but still in the red by midday on Wednesday as disappointing Chinese trade data dented sentiment.

The FTSE 100 was down 0.5% at 7,262.23.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "As politicians scramble to put sticking plasters on what looks set to be a longer-term energy crisis, the outlook for the global economy has darkened again, sending fresh jitters through financial markets.

"Indices in Asia fell, after China posted worse-than-expected trade figures for August, adding to worries about the ailing economy. Export growth slowed way beyond estimates, with fresh Covid curbs taking their toll and punishing heatwaves reducing factory activity. Shipments increased 7.1% year on year, below market expectations of around 12%, the first single digit growth since April.

"The pain of inflation felt in countries around the world, is also leading to a drop in orders, as consumers ring fence budgets for essentials like food and conserve cash to pay for higher energy bills. With China’s recovery slowing markedly, there is even less power to re-charge growth in the world economy and that’s led to a fresh sell off in metals like iron ore and copper."

Investors were also mulling the latest comments from Russian president Vladimir Putin. According to reports, Putin has threatened to cut off energy supplies if price caps are imposed on Russia's oil and gas exports, warning the West that it would be "frozen" like a wolf's tail in a famous Russian fairy tale.

On home shores, the latest survey from Halifax showed that house prices edged higher in August, reversing July’s decline.

According to the latest Halifax House Price Index, house prices increased by 0.4% last month, compared to fall of 0.1% in July. A typical house now costs an average of £294,260, a fresh record. The annual pace of growth eased from 11.8% to 11.5%, however, the lowest level in three months.

Kim Kinnaird, director at Halifax Mortgages, called August’s increase "relatively modest", noting that monthly house price inflation has averaged at around 0.9% over the last year.

Victoria Scholar, head of investment at Interactive Investor, said: "We are starting to see tentative signs that the boom in housing could be starting to ease off. With rising mortgage costs, the threat of recession, sky-high inflation and the cost-of-living crisis, transactions in the housing market are expected to cool.

"With the uncertain macroeconomic backdrop, potential buyers may hold off before looking to purchase while homeowners may wait before putting their properties on the market. Despite this the chronic housing shortage remains with demand still sharply outstripping supply (not helped by expensive build cost inflation), suggesting that even in a serious economic downturn, the UK housing market may still find support."

In equity markets, miners were under the cosh after the China data, with Glencore, Rio and Anglo all lower.

Barratt Developments fell even as it said that full-year adjusted pre-tax profit rose to a record £1.05bn as completions recovered to pre-pandemic levels. Statutory pre-tax profit was down 20.9% to £642.3m.

Retailer WH Smith lost ground despite saying it had continued to see a "strong performance" from its travel unit in the second half, with group revenue coming in "comfortably in excess" of pre-Covid levels.

On the upside, energy firms SSE and Centrica rallied, while NCC was sitting pretty at the top of the FTSE 250 after an upgrade to buy at Investec.

In other broker note action, Phoenix Group was knocked lower by a downgrade to ‘underweight’ at Morgan Stanley, while pub group Mitchells & Butlers slumped after downgrade to ‘equalweight’ by the same outfit.

Market Movers

FTSE 100 (UKX) 7,262.23 -0.52%
FTSE 250 (MCX) 18,761.92 -0.31%
techMARK (TASX) 4,244.62 -0.14%

FTSE 100 - Risers

SSE (SSE) 1,784.00p 5.75%
Centrica (CNA) 83.72p 2.17%
Hargreaves Lansdown (HL.) 851.80p 2.01%
Smith & Nephew (SN.) 1,103.00p 1.66%
Fresnillo (FRES) 692.60p 1.23%
Harbour Energy (HBR) 473.50p 1.15%
Admiral Group (ADM) 2,194.00p 1.15%
Sage Group (SGE) 724.00p 0.86%
Abrdn (ABDN) 152.85p 0.76%
BAE Systems (BA.) 788.80p 0.72%

FTSE 100 - Fallers

Ocado Group (OCDO) 710.00p -3.38%
Ashtead Group (AHT) 4,074.00p -3.16%
Standard Chartered (STAN) 585.20p -2.89%
Associated British Foods (ABF) 1,469.50p -2.65%
Next (NXT) 6,064.00p -2.00%
Glencore (GLEN) 477.60p -1.90%
DCC (CDI) (DCC) 4,832.00p -1.75%
Coca-Cola HBC AG (CDI) (CCH) 1,916.00p -1.74%
Phoenix Group Holdings (PHNX) 603.60p -1.73%
Rio Tinto (RIO) 4,653.50p -1.69%

FTSE 250 - Risers

NCC Group (NCC) 223.50p 12.88%
Drax Group (DRX) 678.50p 4.06%
Energean (ENOG) 1,293.00p 3.94%
Abrdn Private Equity Opportunities Trust (APEO) 416.00p 2.72%
Telecom Plus (TEP) 1,892.00p 2.60%
Syncona Limited NPV (SYNC) 198.00p 2.38%
CMC Markets (CMCX) 222.00p 1.83%
Lancashire Holdings Limited (LRE) 501.00p 1.83%
TI Fluid Systems (TIFS) 143.40p 1.70%
Moonpig Group (MOON) 193.00p 1.69%

FTSE 250 - Fallers

Mitchells & Butlers (MAB) 154.40p -6.37%
WH Smith (SMWH) 1,392.50p -5.85%
Investec (INVP) 397.30p -4.84%
Aston Martin Lagonda Global Holdings (AML) 411.80p -4.61%
Marks & Spencer Group (MKS) 123.70p -4.59%
Ferrexpo (FXPO) 138.80p -4.54%
Hipgnosis Songs Fund Limited NPV (SONG) 107.60p -3.24%
Tyman (TYMN) 210.50p -3.00%
Crest Nicholson Holdings (CRST) 220.60p -2.90%
Balanced Commercial Property Trust Limited (BCPT) 96.90p -2.71%