London open: FTSE falls amid recession fears

London stocks kicked off the month of September on the back foot on Thursday amid recession fears.

At 0820 BST, the FTSE 100 was down 0.7% at 7,237.07.

Richard Hunter, head of markets at Interactive Investor, said: "Markets remain unable to snap their recent losing streak, with investors still positioning for tougher times ahead.

"Central to current concerns are recessionary fears in the US and a beleaguered China. With the world’s two largest economies - and growth engines - under pressure, the immediate outlook is poor, with markets yet to find an equilibrium, suggesting that further declines could follow in the absence of more positive developments.

"US markets ended the month on a sour note, with the weakest August performance for several years. Historians have also pointed to September being a typically challenging month also, and in the meantime the pace and severity of interest rate rises globally remains under debate. The latest comments from a Fed member echoed the hawkish tone coming from the central bank, with the possibility of rates not only rising to over 4% but remaining there for some time, and that the possibility of recession was increasing.

"With the possibility of a global slowdown alongside tense investor sentiment, the UK market unsurprisingly took both barrels in early exchanges. The weakness of sterling and a strong oil price have provided some support at different times over the course of this year, but the premier index is not immune from the current global outlook, with the FTSE 100 now having shed 2% in the year to date."

Hunter said the final month of the third quarter "is likely to be riddled with more questions than answers as the impacts of a tightening environment begin to wash through".

Investors were mulling the latest survey from Nationwide, which showed that annual house price growth eased less than expected in August but there are signs of a further slowdown to come.

Annual house price growth slowed to 10% from 11% in July, but was ahead of expectations for growth of 8.9%. On the month, meanwhile, house prices rose 0.8% in August following a 0.2% increase the month before, and versus expectations for a 0.1% uptick.

Nationwide chief economist Robert Gardner said: "There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer enquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels. However, the slowdown to date has been modest, and combined with a shortage of stock on the market, has meant that price growth has remained firm.

"We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with inflation set remain in double digits into next year. Moreover, the Bank of England is widely expected to continue raising interest rates, which will also exert a cooling impact on the market if this feeds through to mortgage rates, which have already increased noticeably in recent months."

Still to come, the UK S&P Global/CIPS manufacturing PMI for August is due at 0930 BST.

In equity markets, Glencore, Admiral, Antofagasta, Endeavour, Redde Northgate, PageGroup and Centamin all fell as they traded without entitlement to the dividend.

Consumer goods giant Reckitt Benckiser slumped as it said chief executive officer Laxman Narasimhan will step down at the end of September.

Rio Tinto was in the red after agreeing to buy the remaining shares in Canada’s Turquoise Hill Resources it does not already own for $3.3bn.

Advertising giant WPP lost ground as it announced the acquisition of European ecommerce consultancy Newcraft for an undisclosed sum.

On the upside, IT services provider Kainos was trading higher after it said full-year results were expected to meet current market forecasts for revenues of £335.7m to £373.4m and adjusted pre-tax profits of £62.7m to £66.5m.

Market Movers

FTSE 100 (UKX) 7,237.07 -0.65%
FTSE 250 (MCX) 18,936.19 -0.67%
techMARK (TASX) 4,290.74 -0.50%

FTSE 100 - Risers

Centrica (CNA) 76.46p 0.95%
Pearson (PSON) 866.80p 0.46%
British American Tobacco (BATS) 3,460.50p 0.26%
BP (BP.) 442.55p 0.24%
Imperial Brands (IMB) 1,900.00p 0.18%
AstraZeneca (AZN) 10,654.00p 0.09%
Meggitt (MGGT) 798.80p 0.08%
Harbour Energy (HBR) 477.30p 0.06%
London Stock Exchange Group (LSEG) 8,106.00p 0.05%
National Grid (NG.) 1,078.50p 0.05%

FTSE 100 - Fallers

Glencore (GLEN) 449.50p -5.03%
Admiral Group (ADM) 2,021.00p -4.76%
Reckitt Benckiser Group (RKT) 6,390.00p -3.88%
Rolls-Royce Holdings (RR.) 74.84p -2.81%
Endeavour Mining (EDV) 1,639.00p -2.61%
Anglo American (AAL) 2,721.00p -2.23%
Entain (ENT) 1,245.50p -2.16%
Rio Tinto (RIO) 4,679.00p -1.93%
Intermediate Capital Group (ICP) 1,341.50p -1.87%
Ocado Group (OCDO) 712.60p -1.85%

FTSE 250 - Risers

Chrysalis Investments Limited NPV (CHRY) 75.50p 5.01%
IP Group (IPO) 73.00p 4.29%
Essentra (ESNT) 204.00p 2.51%
FirstGroup (FGP) 116.50p 1.22%
Moneysupermarket.com Group (MONY) 199.60p 1.17%
Mitie Group (MTO) 73.00p 0.41%
Ascential (ASCL) 203.80p 0.39%
Worldwide Healthcare Trust (WWH) 3,260.00p 0.31%
The Renewables Infrastructure Group Limited (TRIG) 145.40p 0.28%
4Imprint Group (FOUR) 3,810.00p 0.26%

FTSE 250 - Fallers

Pagegroup (PAGE) 398.20p -8.29%
Redde Northgate (REDD) 327.00p -4.53%
Diversified Energy Company (DEC) 126.60p -4.38%
NCC Group (NCC) 188.40p -3.88%
Network International Holdings (NETW) 232.20p -3.57%
BlackRock World Mining Trust (BRWM) 605.00p -3.35%
LondonMetric Property (LMP) 211.00p -2.85%
Molten Ventures (GROW) 363.40p -2.78%
Currys (CURY) 62.00p -2.67%
Centamin (DI) (CEY) 88.30p -2.67%