London open: Stocks nudge lower amid China worries, after Moody's US warning

London stocks were a touch weaker in early trade on Tuesday as worries about the Chinese economy and elevated interest rates, and a warning from Moody’s over the US credit rating weighed on sentiment.

At 0840 BST, the FTSE 100 was down 0.1% at 7,616.28, but off opening lows.

Moody’s cautioned overnight that a US government shutdown could threaten the country’s triple-A credit rating. The agency said that while a shutdown wouldn't affect debt service payments, "it would underscore the weakness of US institutional and governance strength relative to other Aaa-rated sovereigns that we have highlighted in recent years".

China’s economic woes were also in focus after Evergrande shares plunged for the second day in a row, as the real estate groups’ mainland unit missed a debt payment.

The prospect of lingering high interest rates was also causing nervousness among investors.

Susannah Streeter head of money and markets at Hargreaves Lansdown, said: "With little data expected to blow away worries about the impact on high interest rates, concerns are set to linger, holding back gains for stocks.

"Nervousness is setting in about restrictive monetary policy in major economies, particularly the US, reducing appetite for goods and services, as consumers and companies keep their belts tightened."

In equity markets, luxury fashion brand Burberry, which is particularly exposed to China, was the biggest loser on the FTSE 100.

Close Brothers slid after the merchant bank said profit halved in the second half of the year due to provisions related to Novitas.

Smiths Group nudged lower even as the engineer reported a 20% rise in annual operating profit, driven by volume growth and higher prices, which offset the impact of inflation.

PZ Cussons was a touch lower as the Imperial Leather maker held annual guidance despite a fall in full-year profits as cost inflation and issues at its Nigerian operation continued to weigh.

On the upside, Barclays rallied after an upgrade to ‘overweight’ by Morgan Stanley.

Outside the FTSE 350, fast fashion giant Asos was trading down as it revealed that operating profits for the full year will come in at the bottom end of expectations and free cash flow will be significantly lower than guidance.

Market Movers

FTSE 100 (UKX) 7,616.28 -0.10%
FTSE 250 (MCX) 18,346.44 -0.37%
techMARK (TASX) 4,348.38 0.09%

FTSE 100 - Risers

Barclays (BARC) 157.20p 2.32%
GSK (GSK) 1,553.00p 1.12%
Imperial Brands (IMB) 1,652.50p 0.79%
Phoenix Group Holdings (PHNX) 514.40p 0.67%
Aviva (AV.) 396.70p 0.66%
Pearson (PSON) 870.00p 0.62%
CRH (CDI) (CRH) 4,590.00p 0.59%
Admiral Group (ADM) 2,415.00p 0.50%
British American Tobacco (BATS) 2,635.00p 0.50%
B&M European Value Retail S.A. (DI) (BME) 579.00p 0.49%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,872.00p -2.22%
Whitbread (WTB) 3,504.00p -2.01%
Berkeley Group Holdings (The) (BKG) 4,152.00p -1.38%
Antofagasta (ANTO) 1,373.50p -1.36%
RS Group (RS1) 700.60p -1.32%
Anglo American (AAL) 2,192.50p -1.17%
Weir Group (WEIR) 1,891.50p -0.99%
WPP (WPP) 727.00p -0.95%
Diploma (DPLM) 2,986.00p -0.93%
IMI (IMI) 1,487.00p -0.87%

FTSE 250 - Risers

Target Healthcare Reit Ltd (THRL) 79.40p 3.52%
Barr (A.G.) (BAG) 498.00p 2.68%
Pagegroup (PAGE) 424.40p 2.27%
PZ Cussons (PZC) 163.00p 1.87%
Britvic (BVIC) 885.00p 1.67%
BlackRock Greater Europe Inv Trust (BRGE) 510.00p 1.59%
IG Group Holdings (IGG) 645.50p 1.10%
JPMorgan American Inv Trust (JAM) 808.00p 1.00%
Bytes Technology Group (BYIT) 503.00p 0.96%
Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 271.00p 0.93%

FTSE 250 - Fallers

Close Brothers Group (CBG) 814.00p -4.52%
TUI AG Reg Shs (DI) (TUI) 432.00p -4.51%
Johnson Matthey (JMAT) 1,606.00p -2.46%
TI Fluid Systems (TIFS) 119.40p -2.29%
Me Group International (MEGP) 156.00p -2.26%
Drax Group (DRX) 438.40p -2.25%
Ithaca Energy (ITH) 161.60p -2.06%
Currys (CURY) 47.54p -1.98%
Great Portland Estates (GPE) 429.80p -1.92%
Tritax Eurobox (GBP) (EBOX) 52.10p -1.88%