London open: Stocks edge down after China growth figures
London stocks edged lower in early trade on Monday as investors digested disappointing growth figures out of China.
At 0845 BST, the FTSE 100 was down 0.2% at 7,222.38.
Figures released earlier by the National Bureau of Statistics showed China’s economic growth slowed sharply in the third quarter amid power shortages and supply chain issues.
Growth slowed to 4.9% in the three months to the end of September from 7.9% in the previous quarter, marking the weakest growth in a year. This was below economists’ expectations for a 5.0% increase.
Growth also slowed sharply in seasonally-adjusted quarter-on-quarter terms, from 1.2% in the second quarter to 0.2% in the third.
Pantheon Macroeconomics economist Craig Botham said a slowdown in the y/y was always on the cards given base effects, but the q/q slowdown reflects the headwinds that arose in the third quarter.
"An obvious candidate for such a headwind is the energy crisis that emerging in September, and sure enough, delving into the subcomponents, there was a particularly sharp slowdown in secondary sector GDP growth, from 7.5% y/y to 3.6%,” he said.
"Meanwhile, tertiary sector GDP growth also saw a considerable slowdown, to 5.4% y/y from 8.3%. A larger part of this decline can be attributed to base effects, but still, we think this also shows the chill extending across the property sector. We will need to wait for a more detailed industry breakdown to confirm the drivers, but the monthly data does seem to support this interpretation."
Data also showed that industrial production grew by 3.1% in September year-over-year, down from 5.3% growth in August and marking the slowest growth since March 2020, with manufacturing hit hard by supply chain disruptions and chip shortages.
Retail sales rose 4.4% on the year in September, up from 2.5% in August. Botham said a rebound had been on the cards after the surprisingly strong services surveys, driven by fading Covid outbreaks and the attendant easing of restrictions.
In UK equity markets, travel-related shares were under the cosh following gains at the end of last week, with British Airways parent IAG, Wizz Air, Carnival and easyJet all lower.
On the upside, gambling software group Playtech surged nearly 60% after agreeing to be bought by Australian gaming machine maker Aristocrat Leisure in a £2.1bn deal. Sydney-based Aristocrat is paying 680p a share, a 58% premium to the company’s last closing price on October 15.
Drinks manufacturer C&C Group fizzed higher after an upgrade to ‘overweight’ at Barclays, while Drax was trading higher after an upgrade to ‘buy’ from ‘hold’ at Jefferies.
Market Movers
FTSE 100 (UKX) 7,222.38 -0.16%
FTSE 250 (MCX) 22,957.27 -0.12%
techMARK (TASX) 4,557.28 -0.52%
FTSE 100 - Risers
Pershing Square Holdings Ltd NPV (PSH) 2,865.00p 1.06%
Smith & Nephew (SN.) 1,290.50p 1.06%
SSE (SSE) 1,587.00p 0.89%
Barclays (BARC) 199.56p 0.88%
Evraz (EVR) 622.20p 0.78%
Polymetal International (POLY) 1,339.50p 0.71%
Hargreaves Lansdown (HL.) 1,481.50p 0.71%
Tesco (TSCO) 269.80p 0.71%
BHP Group (BHP) 2,003.00p 0.69%
Royal Dutch Shell 'B' (RDSB) 1,806.00p 0.61%
FTSE 100 - Fallers
Pearson (PSON) 600.00p -3.29%
International Consolidated Airlines Group SA (CDI) (IAG) 178.34p -2.50%
Burberry Group (BRBY) 1,835.50p -1.98%
Informa (INF) 539.00p -1.89%
Whitbread (WTB) 3,312.00p -1.69%
Compass Group (CPG) 1,465.50p -1.64%
Flutter Entertainment (CDI) (FLTR) 14,390.00p -1.57%
Rolls-Royce Holdings (RR.) 142.30p -1.56%
Royal Mail (RMG) 415.90p -1.42%
InterContinental Hotels Group (IHG) 5,034.00p -1.26%
FTSE 250 - Risers
Playtech (PTEC) 675.00p 57.27%
888 Holdings (888) 416.40p 4.62%
C&C Group (CDI) (CCR) 258.00p 3.53%
Drax Group (DRX) 547.50p 2.91%
Diversified Energy Company (DEC) 110.40p 2.79%
BlackRock World Mining Trust (BRWM) 591.00p 2.25%
Darktrace (DARK) 898.50p 2.22%
BlackRock Smaller Companies Trust (BRSC) 2,050.00p 1.99%
Ferrexpo (FXPO) 326.40p 1.87%
Vietnam Enterprise Investments (DI) (VEIL) 742.00p 1.64%
FTSE 250 - Fallers
Carnival (CCL) 1,560.60p -3.12%
Babcock International Group (BAB) 333.70p -2.28%
AO World (AO.) 146.80p -2.13%
Wizz Air Holdings (WIZZ) 4,559.00p -2.13%
easyJet (EZJ) 632.20p -1.86%
4Imprint Group (FOUR) 2,915.00p -1.85%
Ultra Electronics Holdings (ULE) 3,228.00p -1.82%
IMI (IMI) 1,650.00p -1.79%
WH Smith (SMWH) 1,628.50p -1.78%
Mitchells & Butlers (MAB) 235.20p -1.75%