London open: Stocks fall amid China concerns

London stocks fell in early trade on Monday amid concerns about China’s growth prospects, and as investors eyed another rate hike by the Bank of England this week.

At 0900 BST, the FTSE 100 was down 0.3% at 7,616.89.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Investors are lacking Monday motivation today as caution returns amid worries about global growth, ahead of the Bank of England decision on interest rates and testimony from the world’s most influential central banker, the Fed’s Jerome Powell.

"European indices have opened lower with the FTSE 100 on the backfoot as investors mull what’s ahead for the path of interest rates, given the stubbornness of inflation, while concerns persist about China’s recovery losing steam.

"Goldman Sachs is the latest big bank to revise forecasts for China’s growth, cutting expectations from 6% to 5.4%. The weaker than expected outlook for the world’s second largest economy has knocked commodity stocks, with miners falling back in early trade. Energy giants BP and Shell also retreated, as recent gains in oil prices receded, amid the lower expectations in demand."

The People’s Bank of China is due to make its latest policy announcement on Tuesday.

On home shores, investors were digesting the latest survey from Rightmove, which showed that house prices edged lower in June, the first monthly drop so far this year.

According to the Rightmove house price index, the average new seller asking price dipped £82 to £372,812 in June. That compare to May’s 1.8% increase.

Year-on-year, prices were 1.1% higher.

Rightmove said the small downward move - the first fall in June since 2017 - indicated that the usual summer slowdown had started earlier than usual, following a delayed bounce in activity in spring. Over the last decade, on average asking prices rose 0.6% in June.

The survey showed buyer demand had held steady during the month, up 6% on the same period in 2019, despite the recent hikes in mortgage rates.

But the number of agreed sales slipped, and in the last fortnight was 6% below the same period in 2019. In May, it was 3% lower.

Tim Bannister, director of property science at Rightmove, said: "Asking new seller prices, the first and leading indicator of new trends in the market, have dropped slightly this month.

"We expect prices to edge down during the second half of the year, which is the normal seasonal pattern, [and] current trends suggest our forecast for a 2% annual drop in asking prices at the end of 2023 is still valid."

The Bank of England has now raised the cost of borrowing 12 times in the last 18 months, to 4.5%, but analysts expect further rises, to at least 5.5%, by the end of the year.

Mortgage rates, which surged last autumn in response to the government’s disastrous mini budget, had ease earlier in the year. But they are now moving steeply higher once again, primarily in response to stubbornly high inflation.

Bannister said: "It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find.

"Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises."

In equity markets, software firm Kainos slumped as it announced the resignation of its chief executive officer after 22 years in charge.

Coca-Cola HBC lost ground after agreeing to buy Brown-Forman Finland, owner of the Finlandia vodka brand, for $220m. The business is being bought from Brown-Forman Corporation's wholly-owned subsidiary, Brown-Forman Netherlands BV.

AstraZeneca retreated following a Financial Times report the pharmaceuticals giant is planning to spin off its China business and considering a separate unit listing in Hong Kong.

Market Movers

FTSE 100 (UKX) 7,616.89 -0.34%
FTSE 250 (MCX) 18,958.61 -0.38%
techMARK (TASX) 4,578.24 -0.23%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 153.70p 1.65%
Entain (ENT) 1,240.50p 1.60%
Aviva (AV.) 399.60p 0.91%
GSK (GSK) 1,375.40p 0.79%
Barclays (BARC) 155.14p 0.78%
Vodafone Group (VOD) 74.28p 0.77%
M&G (MNG) 198.75p 0.76%
Severn Trent (SVT) 2,724.00p 0.74%
Standard Chartered (STAN) 679.80p 0.68%
United Utilities Group (UU.) 1,047.00p 0.67%

FTSE 100 - Fallers

Ocado Group (OCDO) 447.60p -3.10%
Spirax-Sarco Engineering (SPX) 10,845.00p -2.43%
Antofagasta (ANTO) 1,519.50p -1.94%
Croda International (CRDA) 5,424.00p -1.92%
Anglo American (AAL) 2,498.50p -1.83%
JD Sports Fashion (JD.) 146.65p -1.64%
Johnson Matthey (JMAT) 1,711.50p -1.64%
Endeavour Mining (EDV) 1,992.00p -1.58%
Hargreaves Lansdown (HL.) 809.40p -1.51%
Experian (EXPN) 2,941.00p -1.47%

FTSE 250 - Risers

Babcock International Group (BAB) 316.00p 2.33%
FirstGroup (FGP) 139.20p 2.20%
NextEnergy Solar Fund Limited Red (NESF) 102.30p 2.10%
RHI Magnesita N.V. (DI) (RHIM) 2,700.00p 1.89%
C&C Group (CDI) (CCR) 135.60p 1.80%
Senior (SNR) 173.40p 1.52%
Quilter (QLT) 85.00p 1.19%
Marshalls (MSLH) 265.00p 1.15%
SDCL Energy Efficiency Income Trust (SEIT) 82.00p 1.11%
easyJet (EZJ) 512.80p 1.10%

FTSE 250 - Fallers

Kainos Group (KNOS) 1,383.00p -2.40%
Synthomer (SYNT) 81.70p -2.27%
Empiric Student Property (ESP) 90.00p -2.07%
Darktrace (DARK) 340.30p -2.02%
Me Group International (MEGP) 167.60p -1.99%
Aston Martin Lagonda Global Holdings (AML) 301.20p -1.95%
TP Icap Group (TCAP) 156.60p -1.94%
Molten Ventures (GROW) 282.00p -1.88%
Genuit Group (GEN) 314.50p -1.87%
Diploma (DPLM) 3,062.00p -1.86%