London open: Stocks dip as World Bank warns on risks to global GDP

Stocks traded lower as the World Bank warned of the risks to global growth should central banks keep raising interest rates past what was already factored in by financial markets.

Heading into the bank holiday to mourn the passing of Queen Elizabeth II, as of 0902 BST, London's top-flight index had slipped by 0.26% to 7,263.88 but was off its lows.

Helping to buoy the FTSE 100, Sterling was down by 0.92% to 1.1361 after the Office for National Statistics reported a 1.6% month-on-month drop in retail sales (consensus: -1.4%).

According to the World Bank, central banks around the world might need to do more in order to return global core inflation down to target - roughly 200 basis points more of tightening to be exact.

Otherwise, global core inflation excluding energy would only retreat to about 5.0% in 2023, twice the average seen over the five years preceding the pandemic, which could see the rate of increase in global gross domestic product slow to 0.5%.

"Unless supply disruptions and labor-market pressures subside," that is, the Washington-based lender said.

On a related note, in a research note sent to clients, Bank of America Securities strategists, Michael Hartnett, Elyas Gabou and Myung-Jee Jung, said: "US CPI unlikely to drop below 4-5% anytime soon [...]

"Fed funds & US yields heading to 4-5% next 4-5 month [...] US unemployment rate heading to 4-5% next 4-5 quarters; world max bearish but we say new highs in yields=new lows in stocks."

In the background, August retail sales, industrial production and fixed asset investment data in China all surprised to the upside overnight, despite the drag from health restrictions, power shortages to the heat wave and declines in house prices.

Nonetheless, Julian Evans-Pritchard, senior China economist at Capital Economics, was expecting economic momentum to remain weak into 2023 due to the ongoing drag from Covid-19 restrictions in the Asian giant which it said were likely to remain in place at least until the People's Congress next March.

FedEx withdraws guidance, takes Royal Mail down with it

Royal Mail shares were hammered by the negative read-across in markets from US peer FedEx's decision to withdraw its full-year guidance after Thursday's close. It also guided analysts towards fiscal first quarter profits of $3.44 on sales of $23.3bn. That compared to consensus forecasts for $5.14 abd $23.6bn, respectively.

AstraZeneca and Sanofi said their Beyfortus drug for the prevention of lower respiratory tract disease in newborns and infants has been recommended for marketing authorisation in the European Union If approved, Beyfortus would be the first and only single-dose passive immunisation for the broad infant population, including those born healthy, at term or preterm, or with specific health conditions.

Business process outsourcing firm Capita has agreed to sell its Pay360 division to Access PaySuite in a deal that values the division at £150.0m. Capita said on Friday that the disposal of Pay360 was on a cash-free, debt-free basis, representing a 14.3x multiple on the business' 2021 underlying earnings of £10.5m.

Market Movers

FTSE 100 (UKX) 7,270.24 -0.16%
FTSE 250 (MCX) 18,779.08 -0.57%
techMARK (TASX) 4,239.86 -0.05%

FTSE 100 - Risers

AstraZeneca (AZN) 10,376.00p 2.43%
Hikma Pharmaceuticals (HIK) 1,261.00p 2.40%
Vodafone Group (VOD) 111.22p 1.81%
Barratt Developments (BDEV) 431.00p 1.60%
Flutter Entertainment (CDI) (FLTR) 10,475.00p 0.82%
HSBC Holdings (HSBA) 533.60p 0.74%
Berkeley Group Holdings (The) (BKG) 3,617.00p 0.70%
British American Tobacco (BATS) 3,457.00p 0.64%
Taylor Wimpey (TW.) 108.45p 0.60%
Imperial Brands (IMB) 1,922.50p 0.52%

FTSE 100 - Fallers

Land Securities Group (LAND) 592.80p -4.14%
InterContinental Hotels Group (IHG) 4,725.00p -3.55%
Glencore (GLEN) 486.50p -3.09%
Fresnillo (FRES) 711.00p -2.76%
Unite Group (UTG) 975.50p -2.45%
Harbour Energy (HBR) 476.00p -2.38%
Anglo American (AAL) 2,750.00p -2.33%
Melrose Industries (MRO) 109.25p -2.24%
Antofagasta (ANTO) 1,129.00p -1.95%
British Land Company (BLND) 400.60p -1.89%

FTSE 250 - Risers

National Express Group (NEX) 196.90p 5.52%
Jupiter Fund Management (JUP) 105.90p 3.32%
Redrow (RDW) 517.50p 2.48%
Investec (INVP) 396.20p 2.32%
Energean (ENOG) 1,423.00p 2.23%
Foresight Solar Fund Limited (FSFL) 124.60p 1.30%
Essentra (ESNT) 196.40p 1.24%
Ninety One (N91) 197.20p 1.23%
Telecom Plus (TEP) 1,748.00p 1.04%
Provident Financial (PFG) 182.80p 0.99%

FTSE 250 - Fallers

Royal Mail (RMG) 220.00p -11.96%
Darktrace (DARK) 359.00p -6.12%
WH Smith (SMWH) 1,413.50p -3.68%
Moonpig Group (MOON) 195.40p -3.65%
Wizz Air Holdings (WIZZ) 2,004.00p -3.56%
Ferrexpo (FXPO) 149.90p -3.48%
Aston Martin Lagonda Global Holdings (AML) 174.00p -3.28%
SSP Group (SSPG) 217.80p -2.90%
Genus (GNS) 2,692.00p -2.53%
Auction Technology Group (ATG) 818.00p -2.50%