London midday: Stocks stay down after China data; US debt deal eyed

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

The FTSE 100 was down 0.2% at 7,508.14.

Figures released earlier by the National Bureau of Statistics showed that the manufacturing purchasing managers’ index declined to 48.8 in May from 49.2 in April, coming in below consensus expectations for an increase to 49.5.

A reading above 50 indicates expansion, while a reading below signals contraction.

Meanwhile, the non-manufacturing PMI edged down to 54.5 in May from 56.4 the month before, versus expectations for a reading of 55.2.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Growth slowdown fears have accelerated as the latest data from China shows a faltering recovery, knocking back sentiment on markets. Investors have been unnerved by the snapshot showing the Chinese manufacturing sector contracted again in May, while activity across services also slowed for the fourth month in a row.

"Far from being the powerhouse which will offset America’s slowdown, China’s economic recovery from the pandemic is looking more precarious. A cloudy geo-political landscape is also causing concern, amid ongoing chip wars and sanctions, after it emerged that China turned down a US request for their defence chiefs to meet on the sidelines of a summit in Singapore."

Streeter said worries are also lingering about the obstacles still in the path of the US budget legislation aimed at raising the debt ceiling, with harder line Republicans still strident in their opposition.

"By passing the House rules committee, it’s cleared the first hurdle, but it has plenty of other congressional jumps to navigate, before the new deadline on June 5, as lawmakers opposing increased spending limits turn more vocal,” she said.

"Today it’ll be debated in the House of Representatives with a vote expected later, before it heads to the Senate and it’ll be under intense scrutiny every step of the way."

In equity markets, Ocado was under the cosh as the online supermarket faced demotion from the FTSE 100.

Prudential lost ground as it said that chief financial officer James Turner had resigned due to an investigation into his conduct relating to "a recent recruitment situation". The company said that Turner had fallen short of the "high standards" the group sets itself.

Ladbrokes owner Entain fell as it said it is seeking a deferred prosecution agreement over alleged bribery at its former Turkish business, and that it was facing a potentially "substantial" financial penalty.

Drax slid after Ofgem announced an investigation into Drax Power Limited's annual biomass profiling reporting under the Renewables Obligation scheme.

Ithaca Energy was also weaker after first-quarter results.

On the upside, B&M Value Retail surged after saying it expects current adjusted core earnings to be higher than 2023, as it posted a fall in annual profits.

WH Smith also traded up as it said its expectations for the full year had improved "modestly", hailing continued strong momentum across its global travel business.

Market Movers

FTSE 100 (UKX) 7,508.14 -0.19%
FTSE 250 (MCX) 18,767.53 -0.21%
techMARK (TASX) 4,569.15 0.34%

FTSE 100 - Risers

B&M European Value Retail S.A. (DI) (BME) 510.20p 8.12%
Endeavour Mining (EDV) 2,098.00p 3.15%
AstraZeneca (AZN) 11,722.00p 1.95%
Relx plc (REL) 2,533.00p 1.93%
Scottish Mortgage Inv Trust (SMT) 683.20p 1.49%
Experian (EXPN) 2,864.00p 1.42%
BT Group (BT.A) 147.80p 1.30%
Rentokil Initial (RTO) 641.40p 1.30%
Associated British Foods (ABF) 1,851.00p 1.12%
United Utilities Group (UU.) 1,019.50p 0.89%

FTSE 100 - Fallers

Ocado Group (OCDO) 376.40p -3.96%
Prudential (PRU) 1,089.00p -3.20%
BP (BP.) 453.05p -2.90%
Entain (ENT) 1,345.00p -2.15%
Burberry Group (BRBY) 2,162.00p -2.08%
Shell (SHEL) 2,235.50p -2.04%
Mondi (MNDI) 1,254.00p -1.76%
Weir Group (WEIR) 1,697.50p -1.65%
Frasers Group (FRAS) 679.00p -1.59%
Smurfit Kappa Group (CDI) (SKG) 2,878.00p -1.44%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 99.80p 4.18%
Wetherspoon (J.D.) (JDW) 735.00p 3.45%
Darktrace (DARK) 274.70p 3.43%
Mitchells & Butlers (MAB) 206.80p 2.48%
Aston Martin Lagonda Global Holdings (AML) 264.80p 2.16%
Dechra Pharmaceuticals (DPH) 3,422.00p 2.09%
Abrdn Private Equity Opportunities Trust (APEO) 442.50p 1.96%
Kainos Group (KNOS) 1,290.00p 1.90%
WH Smith (SMWH) 1,555.00p 1.77%
Bytes Technology Group (BYIT) 502.00p 1.70%

FTSE 250 - Fallers

Drax Group (DRX) 553.60p -6.14%
Ithaca Energy (ITH) 143.70p -5.46%
Watches of Switzerland Group (WOSG) 651.50p -2.69%
Harbour Energy (HBR) 221.10p -2.47%
TI Fluid Systems (TIFS) 124.80p -2.35%
ITV (ITV) 69.50p -2.22%
TBC Bank Group (TBCG) 2,305.00p -2.12%
Energean (ENOG) 1,076.00p -2.00%
Future (FUTR) 738.00p -1.93%
Currys (CURY) 50.05p -1.77%