London midday: Stocks stay down on US recession fears; UK data upbeat

London stocks were still weaker by midday on Wednesday as poor US manufacturing data reignited fears about the country’s economy, while heavy falls for Nvidia also weighed on sentiment.

The FTSE 100 was down 0.6% at 8,247.85.

Russ Mould, investment director at AJ Bell, said: "The latest US manufacturing figures weren’t as good as expected, acting like a gust of wind to topple the house of cards and once again put markets into reverse amid fears about the strength of the economy.

"While it’s always alarming to see share prices flash red, it’s perfectly normal to see further market pullbacks after you get the type of wobble seen over the summer.

"Compounding the latest market sell-off were reports the US Justice Department sent subpoenas to Nvidia and other companies as it steps up antitrust investigations into AI chips."

There was some encouraging news on the UK macro front, however, as a survey showed that business activity picked up in August at its fastest pace since April.

The S&P Global PMI composite output index rose to 53.8 from 52.8 in July.

Meanwhile, the services PMI business activity index came in at 53.7 in August, up from 52.5 the month before and above the neutral 50.0 mark that separates contraction from expansion for the tenth consecutive month.

Tim Moore, economics director at S&P Global Market Intelligence, said: "August data highlighted a recovery in UK service sector performance as improving economic conditions and domestic political stability helped to bolster customer demand. New business again increased at a robust pace after a lull in decision-making earlier this summer. This fuelled the fastest upturn in service sector activity since April and extended the current period of growth to ten months.

"Service providers responded to the upturn in business conditions by hiring additional staff in August. Job creation remained faster than seen on average in the first half of 2024, despite headwinds from scarce candidate availability and elevated wage pressures.

"Higher salary payments resulted in another sharp rise in cost burdens across the service economy. However, the overall rate of input price inflation resumed its recent descent in August and reached its lowest since January 2021. Adding to meaningful signs of softer inflationary pressures in the service sector, the latest survey indicated that average prices charged increased at the weakest pace for three-and-a-half years.”

In equity markets, housebuilder Barratt Developments was down as it reported a sharp fall in annual profit, citing cost-of-living pressures, higher mortgage rates and limited consumer confidence. The company said pre-tax profit slumped to £170.5m from £705m, with completions down 18.6% to 14,000.

Segro declined after agreeing to buy rival Tritax EuroBox in a deal with an implied enterprise value of around £1.1bn including debt.

Hilton Food also fell despite posting a jump in interim adjusted operating profit, while Direct Line nudged lower as the insurer’s half-year operating profit missed expectations.

Airtel Africa tumbled after a downgrade to ‘neutral’ by JPMorgan, while British Gas owner Centrica lost ground after a cut to ‘hold’ at HSBC.

Packaging firm DS Smith was hit by a downgrade to ‘hold’ by Stifel, but Compass Group was a little firmer after an upgrade to ‘outperform’ by BNP Paribas Exane.

Balanced Commercial Property Trust jumped after agreeing to be bought by private investment firm Starwood Capital for £673.5m.

Market Movers

FTSE 100 (UKX) 8,247.85 -0.61%
FTSE 250 (MCX) 20,675.94 -0.64%
techMARK (TASX) 4,860.96 -0.84%

FTSE 100 - Risers

RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 99.72p 1.10%
Rolls-Royce Holdings (RR.) 476.70p 0.93%
Melrose Industries (MRO) 468.60p 0.84%
BT Group (BT.A) 141.50p 0.75%
Compass Group (CPG) 2,421.00p 0.67%
Imperial Brands (IMB) 2,205.00p 0.55%
Rightmove (RMV) 663.00p 0.45%
British American Tobacco (BATS) 2,880.00p 0.45%
NATWEST GROUP (NWG) 334.90p 0.36%
Vodafone Group (VOD) 75.92p 0.34%

FTSE 100 - Fallers

Airtel Africa (AAF) 107.90p -6.98%
Convatec Group (CTEC) 227.20p -4.38%
Entain (ENT) 615.80p -2.90%
Centrica (CNA) 122.35p -2.86%
Ashtead Group (AHT) 5,268.00p -2.62%
SEGRO (SGRO) 857.40p -2.57%
Prudential (PRU) 629.80p -2.45%
Burberry Group (BRBY) 637.80p -2.30%
M&G (MNG) 211.40p -2.22%
Sage Group (SGE) 991.20p -2.20%

FTSE 250 - Risers

Balanced Commercial Property Trust Limited (BCPT) 94.40p 9.51%
Coats Group (COA) 99.00p 2.70%
Apax Global Alpha Limited (APAX) 146.40p 2.09%
XPS Pensions Group (XPS) 298.00p 2.05%
Baltic Classifieds Group (BCG) 290.50p 1.57%
FirstGroup (FGP) 159.50p 1.53%
CMC Markets (CMCX) 315.00p 1.29%
Twentyfour Income Fund Limited Ord Red (TFIF) 105.20p 1.15%
Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 279.50p 1.08%
TP Icap Group (TCAP) 238.00p 1.06%

FTSE 250 - Fallers

Hilton Food Group (HFG) 931.00p -4.32%
Edinburgh Worldwide Inv Trust (EWI) 140.40p -4.23%
Ocado Group (OCDO) 337.30p -4.01%
Carnival (CCL) 1,109.00p -3.44%
Wizz Air Holdings (WIZZ) 1,216.00p -2.80%
Allianz Technology Trust (ATT) 330.00p -2.65%
JPMorgan Japanese Inv Trust (JFJ) 531.00p -2.57%
Watches of Switzerland Group (WOSG) 390.20p -2.50%
Polar Capital Technology Trust (PCT) 2,795.00p -2.44%
Moonpig Group (MOON) 203.50p -2.40%