London midday: Shares down on China data, weak earnings news

The FTSE 100 was trading lower on Tuesday as weak economic data from China and disappointing corporate earnings dampened sentiment in the mining sector.

By midday in London, the UK benchmark index was down 0.7% at 7,503.48.

Overnight, China's customs administration reported a 14.5% fall in exports for the month of July, following a 12.4% drop in June and worse than the consensus estimate of -13.2%. Imports also fell more than expected, by 12.4% after a 6.8% fall in June.

“After accounting for seasonality and changes in import prices, we estimate that import volumes declined 5.3% in month-on-month terms, reversing most of the gains made earlier in the year,” said Julian Evans-Pritchard, head of China economics at Capital Economics. “This suggests that the downturn in domestic demand continued to gather pace in July.”

Demand concerns were weighing on commodity prices on Tuesday, with Brent crude down 1.5% and copper 2.3% lower.

Economic data from the UK also soured the mood. The British Retail Consortium reported that annual retail sales growth slowed to just 1.5% in July, down from 4.9% in June. Like-for-like sales growth fell from 4.2% to 1.8%.

US stock futures were pointing to a weak start on Wall Street after gains across the board on Monday. Overnight, credit ratings agency Moody’s announced it could cut its ratings on six major American banks.

Glencore leads miners lower, Abrdn sinks

Mining stocks were largely lower with Glencore leading the way after disappointing first-half results. The commodity giant reported that adjusted core earnings halved in the first six months of the year, as it blamed macro conditions on price reductions in copper, cobalt, nickel and zinc.

Shares in Anglo American, Antofagasta and Rio Rinto were also taking a hit.

Abrdn’s share price plunged around 9% following the release of the asset manager's first-half results. The company cited “challenging market conditions” and a “risk-off environment” as it reported net outflows of £4.4bn.

Banking stocks were also providing a drag on the UK’s benchmark index, with Lloyds, HSBC, Natwest and Standard Chartered all losing ground. Sentiment was hit after Italy's hard-right government imposed a 40% levy on all banking profits for the rest of 2023.

Insurance group Beazley was the standout performer of the morning session, gaining nearly 5% at 528p. Analysts at Berenberg raised their target price for the stock from 825p to 850p on Tuesday morning, saying that the recent underperformance of the stock “confounds reality”.

Other insurers, such as Hiscox and Admiral, also gained.

Hotels operator IHG was trading higher after announcing a sharp jump in half-year profit as the travel sector continued to rebound from the Covid pandemic. Operating profit at the Crowne Plaza and Holiday Inn owner rose 62% to $584m.