London midday: FTSE slumps as recession fears, uninspiring data dent mood

London stocks had extended losses by midday on Friday amid recession fears, with a batch of uninspiring UK data doing little to lift the mood.

The FTSE 100 was down 1.2% at 7,336.57

Russ Mould, investment director at AJ Bell, said: "Moves by three major central banks in a week to continue pushing up interest rates has put a halt to any thought of a Santa rally for the markets.

"The fall in US and UK retail sales just goes to show how the higher cost of living is hurting people and businesses. People appear to be more cautious on Christmas spending and they’re going out less which is hurting the hospitality industry.

"When Christmas wish-lists include a warm house rather than a PlayStation or Apple Watch, you know the country is experiencing a deep freeze in both weather and the economy.

"The idea that interest rates will keep going up has shifted investors’ attention back to the banking sector, with NatWest among the top FTSE risers. It is one of the few industries whose earnings should benefit from the higher cost of borrowing."

A survey out earlier showed the downturn in UK economic activity eased in December, but output in the manufacturing sector fell to a four-month low.

The S&P Global/CIPS flash composite purchasing managers' index, which measures activity in both the services and manufacturing sectors, rose to a three-month high of 49.0 from 48.2 in November. A reading above 50 indicates expansion, while a reading below signals contraction. This was ahead of expectations for a reading of 48.0.

The services sector was behind most of the improvement, with the flash PMI business activity index rising to 50.0 this month from 48.8 in November, hitting a three-month high.

However, the manufacturing output index fell to 43.9 in December from 44.7 a month earlier. The flash UK manufacturing PMI fell to 44.7 from 46.5.

Also on Friday, figures released earlier by the Office for National Statistics showed that retail sales unexpectedly fell last month.

Sales declined by 0.4% in November following a 0.9% increase in October, missing expectations for a 0.3% jump. Sales in October had bounced back from the impact of the additional Bank Holiday in September for the Queen’s funeral.

Excluding fuel, retail sales were down 0.3% on the month in November.

And finally, a survey from GfK revealed that consumer confidence remains at historic lows as the poor economic climate continues to weigh heavily

The latest GfK consumer confidence index was -42, up two points on November but still only seven points off September’s record low of -49.

In equity markets, miniature wargames manufacturer Games Workshop surged after saying it had reached an agreement in principle with Amazon Content Services for Amazon to develop its intellectual property into film and television productions.

In a brief statement, Games Workshop said its intended that rights will initially be granted to develop the Warhammer 40,000 universe.

The agreement will also see the company grant Amazon associated merchandising rights.

Elsewhere, BT Group was in focus after saying it was combining its global and enterprise units into a single unit to be called BT Business, in a move designed to save £100m a year to the end of 2025.

RS Group - formerly Electrocomponents - fell after it said that Lindsley Ruth was stepping down as chief executive with immediate effect for personal reasons.

Rank Group tumbled as it issued another profit warning.

In broker note action, National Express was under the cosh after a downgrade to ‘hold’ at Liberum, while Wood Group and Bunzl were both knocked lower by downgrades at Barclays.

Bodycote fell after a downgrade to ‘hold’ at Numis, but Helios Towers gained after an initiation at ‘overweight’ by Morgan Stanley.

Market Movers

FTSE 100 (UKX) 7,336.57 -1.21%
FTSE 250 (MCX) 18,581.29 -1.65%
techMARK (TASX) 4,333.22 -1.44%

FTSE 100 - Risers

Standard Chartered (STAN) 614.60p 1.65%
NATWEST GROUP (NWG) 259.20p 0.27%
Sainsbury (J) (SBRY) 218.50p 0.09%
Smurfit Kappa Group (CDI) (SKG) 3,037.00p 0.03%
Pershing Square Holdings Ltd NPV (PSH) 2,855.00p 0.00%
Aveva Group (AVV) 3,208.00p -0.03%
Tesco (TSCO) 223.40p -0.04%
Airtel Africa (AAF) 110.90p -0.09%
Compass Group (CPG) 1,898.50p -0.21%
Unilever (ULVR) 4,124.00p -0.31%

FTSE 100 - Fallers

SEGRO (SGRO) 758.80p -4.55%
Unite Group (UTG) 899.50p -3.95%
Land Securities Group (LAND) 618.40p -3.28%
Rentokil Initial (RTO) 515.40p -3.23%
Bunzl (BNZL) 2,852.00p -3.03%
British Land Company (BLND) 388.50p -2.95%
DCC (CDI) (DCC) 4,130.00p -2.82%
Intermediate Capital Group (ICP) 1,163.50p -2.80%
Persimmon (PSN) 1,224.50p -2.78%
Schroders (SDR) 443.20p -2.74%

FTSE 250 - Risers

Games Workshop Group (GAW) 8,410.00p 15.21%
Apax Global Alpha Limited (APAX) 191.60p 1.16%
Investec (INVP) 480.70p 0.88%
Helios Towers (HTWS) 101.70p 0.79%
SDCL Energy Efficiency Income Trust (SEIT) 99.40p 0.61%
Templeton Emerging Markets Inv Trust (TEM) 143.20p 0.56%
Auction Technology Group (ATG) 744.00p 0.54%
Vietnam Enterprise Investments (DI) (VEIL) 581.00p 0.52%
Close Brothers Group (CBG) 1,025.00p 0.49%
Indivior (INDV) 1,794.00p 0.34%

FTSE 250 - Fallers

Trainline (TRN) 270.50p -7.65%
Balanced Commercial Property Trust Limited (BCPT) 89.20p -6.69%
Sirius Real Estate Ltd. (SRE) 73.00p -6.05%
Home Reit (HOME) 36.20p -5.97%
ITV (ITV) 70.22p -5.72%
Target Healthcare Reit Ltd (THRL) 76.40p -5.68%
Wizz Air Holdings (WIZZ) 2,118.00p -5.61%
Bodycote (BOY) 559.00p -5.25%
National Express Group (NEX) 136.40p -5.15%
Currys (CURY) 58.50p -4.96%