London open: Stocks fall after China data; travel sector hit

London stocks fell in early trade on Friday following the release of disappointing Chinese data, with travel shares under pressure as the UK added more countries to its quarantine list.

At 0820 BST, the FTSE 100 was down 0.6% at 6,151.16.

Data released earlier by China’s National Bureau of Statistics showed retail sales fell 1.1% on the year in July following a 1.8% drop in June, missing expectations of a 0.1% increase. This marked the seven month in a row that sales have fallen.

Meanwhile, industrial output rose 4.8% on the year in July, matching June’s expansion rate and coming in below expectations of a 5.1% jump.

CMC Markets analyst Michael Hewson said the latest retail sales and industrial production numbers from China "continue to point to a weak recovery in the region".

"Retail sales growth in China hasn’t been the same since the country came out of lockdown at the end of February, though optimism over the July numbers had been increasing given recent positive data from the auto sector in July, as well as reports from the likes of Daimler, and Apple talking of some decent rebounds in their Chinese markets."

He said the decline in retail sales shows the Chinese consumer remains "quite nervous about coming out of hibernation", with the last positive reading being at the end of 2019.

Trade issues were still very much in focus, with officials from the US and China due to meet on Saturday for a review of their deal.

"At the same time, markets will be keeping an eye on whether the stalemate surrounding the next round of US fiscal stimulus can be broken, even though the better-than-expected readings on the US economy could buy Congress more time," said Han Tan, market analyst at FXTM.

There was a dearth of corporate news, but travel-related stocks were under the cosh after the UK government added more countries - including France, the Netherlands, Malta and Monaco - to its 14-day quarantine list.

British Airways and Iberia parent IAG, budget airline easyJet, travel company TUI, engine maker Rolls-Royce, WH Smith, InterContinental Hotels and Premier Inn owner Whitbread were all trading lower.

Neil Wilson, chief market analyst at Markets.com, said: "The move will force a large swathe of cancellations right at the peak of the summer holiday season for one of the largest markets for UK tourists. Half a million Brits are thought to be in France right now.

"Apart from the immediate damage this will do at the height of the school holidays and peak summer season, the quarantine decision also underlines the inherent risk you take in booking a holiday abroad right now, which will do nothing for consumer confidence."

Elsewhere, Domino’s Pizza was dented by a downgrade to ‘sell’ at Citi.

On the upside, gambling company Rank Group surged to the top of the FTSE 250, with casinos due to reopen on Saturday as restrictions in England are eased further.

Market Movers

FTSE 100 (UKX) 6,151.16 -0.56%
FTSE 250 (MCX) 17,837.21 -0.49%
techMARK (TASX) 3,895.76 -0.52%

FTSE 100 - Risers

Antofagasta (ANTO) 1,119.00p 0.99%
Just Eat Takeaway.Com N.V. (CDI) (JET) 9,204.00p 0.90%
Admiral Group (ADM) 2,712.00p 0.86%
Land Securities Group (LAND) 571.20p 0.60%
Barratt Developments (BDEV) 513.40p 0.51%
Morrison (Wm) Supermarkets (MRW) 197.20p 0.48%
Persimmon (PSN) 2,525.00p 0.44%
Pennon Group (PNN) 1,078.00p 0.37%
Associated British Foods (ABF) 1,987.50p 0.23%
Smurfit Kappa Group (SKG) 2,706.00p 0.22%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 196.80p -3.72%
Rolls-Royce Holdings (RR.) 261.50p -2.32%
Fresnillo (FRES) 1,230.00p -2.26%
Glencore (GLEN) 173.00p -1.78%
Compass Group (CPG) 1,193.00p -1.69%
Aviva (AV.) 288.50p -1.54%
BP (BP.) 296.65p -1.51%
Royal Dutch Shell 'B' (RDSB) 1,143.00p -1.50%
ITV (ITV) 61.80p -1.47%
Pearson (PSON) 616.40p -1.44%

FTSE 250 - Risers

Rank Group (RNK) 145.40p 6.91%
Oxford Instruments (OXIG) 1,550.00p 2.65%
Airtel Africa (AAF) 61.40p 2.50%
RHI Magnesita N.V. (DI) (RHIM) 2,830.00p 2.17%
Balfour Beatty (BBY) 249.80p 1.96%
Hammerson (HMSO) 52.20p 1.91%
Sabre Insurance Group (SBRE) 285.00p 1.79%
BMO Commercial Property Trust Limited (BCPT) 68.00p 1.49%
Scottish American Inv Company (SAIN) 432.00p 1.41%
Games Workshop Group (GAW) 9,320.00p 1.25%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 343.40p -3.97%
WH Smith (SMWH) 970.50p -3.62%
easyJet (EZJ) 589.80p -3.44%
TUI AG Reg Shs (DI) (TUI) 333.50p -3.25%
Watches of Switzerland Group (WOSG) 314.50p -3.08%
Renishaw (RSW) 4,734.00p -2.95%
TBC Bank Group (TBCG) 876.00p -2.88%
Sanne Group (SNN) 665.00p -2.64%
Go-Ahead Group (GOG) 633.00p -2.62%
Pantheon International (PIN) 2,160.00p -2.48%