London midday: Stocks fall as China and UK manufacturing data disappoint

UK stocks were in the red on Tuesday as worse-than-expected China and UK manufacturing data dragged mining shares lower.

China’s official manufacturing purchasing managers’ index dropped to 50.1 in April from 50.2 in March, the National Bureau of Statistics revealed, missing economists’ estimates of 50.4. However it was above the 50 level that separates an expansion from a contraction.

The Caixin PMI on China manufacturing contracted further to 49.4 in April from 49.7 in March, according to Markit, below forecasts of 49.9.

“Given the differences in the official manufacturing reading, which just remained in growth territory for a second month, the numbers would suggest that perhaps the larger state owned firms are benefiting from recent stimulus efforts more so than the small to medium sized private firms,” said Craig Erlam, senior market analyst at Oanda.

“The benefits could flow through to them in the coming months but I think today’s data is a reminder of the challenging times ahead for the world’s second largest economy.”

Closer to home, UK manufacturing unexpectedly entered contraction territory in April.

The Markit/CIPS UK manufacturing PMI slipped to 49.2 in April from a downwardly-revised 50.7 in March, missing expectations for a reading of 51.2 and the first time the PMI has fallen below 50.0 in over three years.

UK industry has been dragged lower by lacklustre trends in production and new orders, together with declines in both employment and stocks of purchases.

Meanwhile, down under, the Royal Bank of Australia cut interest rates by 25 basis points to 1.75% to address a sharp decline in inflation in March.

Michael Hewson, chief market analyst at CMC Markets, said while the move by the RBA was predicted by many analysts, the slide back into deflation was not too surprising given the recent declines in commodity prices in the first quarter.

“It also ignores the fact that these same prices have rebounded, which means that this may well have been a temporary phenomenon,” he said.

“This, it would appear seems to have escaped the notice of the RBA as they become the latest in a long line of central bankers to adopt the reflex reaction function of cutting rates due to lower prices, ignoring the possibility that in some cases these can be a good thing.”

Mining stocks were the biggest fallers on the FTSE 100 following the disappointing manufacturing reports, including Anglo American, Glencore, BHP Billiton and Rio Tinto.

Going the other way, shares in RSA Insurance Group jumped after Barclays upgraded the stock to ‘overweight’ from ‘equalweight’ and lifted the price target to 545p from 457p.

Just Eat gained as it said it now expects full year profits to be larger than previously indicated after the number of famished Britons ordering takeaway food online continued to increase in the first three months of the year.

Aberdeen Asset Management plunged after reporting a 40% drop in first half profit amid weakness in emerging markets. Numis cut the stock to ‘hold’ from ‘add’, saying said it was “an all-round bad set of results”.

Meanwhile, oil prices fell with Brent crude down 0.74% to $45.49 per barrel and West Texas Intermediate down 1.03% to $44.32 per barrel.

Market Movers

FTSE 100 (UKX) 6,180.18 -0.99%
FTSE 250 (MCX) 16,742.66 -0.35%
techMARK (TASX) 3,051.43 -0.26%

FTSE 100 - Risers

RSA Insurance Group (RSA) 470.80p 2.55%
Admiral Group (ADM) 1,901.00p 2.37%
ITV (ITV) 228.50p 1.47%
Direct Line Insurance Group (DLG) 366.50p 1.27%
Smith & Nephew (SN.) 1,167.00p 0.95%
Vodafone Group (VOD) 221.10p 0.87%
Experian (EXPN) 1,260.00p 0.72%
Worldpay Group (WI) (WPG) 268.80p 0.71%
Rexam (REX) 629.00p 0.64%
National Grid (NG.) 981.00p 0.64%

FTSE 100 - Fallers

Anglo American (AAL) 692.50p -9.29%
Glencore (GLEN) 153.00p -6.08%
Standard Chartered (STAN) 524.40p -5.02%
BHP Billiton (BLT) 887.50p -4.89%
Rio Tinto (RIO) 2,194.50p -4.61%
Antofagasta (ANTO) 461.80p -4.43%
Royal Bank of Scotland Group (RBS) 221.00p -3.91%
Rolls-Royce Holdings (RR.) 644.50p -3.73%
International Consolidated Airlines Group SA (CDI) (IAG) 507.50p -3.33%
Pearson (PSON) 779.00p -3.23%

FTSE 250 - Risers

Just Eat (JE.) 413.00p 7.69%
Regus (RGU) 308.10p 5.37%
Cable & Wireless Communications (CWC) 76.10p 3.40%
Polymetal International (POLY) 728.50p 2.75%
Hastings Group Holdings (HSTG) 180.80p 2.67%
Hikma Pharmaceuticals (HIK) 2,252.00p 2.18%
UDG Healthcare Public Limited Company (UDG) 624.00p 1.96%
Vesuvius (VSVS) 326.90p 1.74%
Rightmove (RMV) 3,925.00p 1.74%
Barr (A.G.) (BAG) 569.00p 1.70%

FTSE 250 - Fallers

Aberdeen Asset Management (ADN) 269.40p -9.81%
Tullow Oil (TLW) 260.20p -6.97%
Indivior (INDV) 150.40p -6.47%
Kaz Minerals (KAZ) 162.70p -5.13%
Ophir Energy (OPHR) 71.50p -5.11%
Evraz (EVR) 134.80p -5.07%
Amec Foster Wheeler (AMFW) 470.40p -4.76%
AO World (AO.) 173.70p -4.72%
Drax Group (DRX) 307.40p -3.82%
Cairn Energy (CNE) 215.70p -3.66%