London open: Stocks steady as investors mull China PMIs

London stocks were little changed in early trade on Tuesday as traders returned to their desks after the Bank Holiday weekend.

At 0840 BST, the FTSE 100 was flat at 7,147.44.

Richard Hunter, head of markets at Interactive Investor, said: "Early exchanges after the market opening included some weakness in the banks and also airline and related stocks, given the ongoing uncertainties around a full resumption of international travel.

"Nonetheless UK markets also remain in positive territory in the year to date, albeit at more sedate levels of growth than their US counterparts, with the FTSE 100 ahead by 10.8% and the FTSE 250 by 17.4%."

Investors were digesting the latest data out of China. The official manufacturing purchasing managers’ index ticked down to 50.1 in August from 50.4 in July, coming in just a touch below consensus expectations of 50.2. Meanwhile, the official non-manufacturing PMI tumbled to 47.5 from 53.3 in July, coming in well below consensus expectations for a reading of 52.0.

Oanda analyst Jeffrey Halley said: "Several factors are at work here. Covid-19 lockdowns in various cities and critical ports sapped domestic consumption, and consumers postponed travel as a result.

"However, it is likely that the ongoing government clampdowns in multiple sectors, notably student tuition and technology, are impacting both employment concerns in those affected and broader consumer confidence as fears of wider interventions rise. The latter is a fair point, with China announcing more limits on online game time for children and investigating brokerage margin policies."

In equity markets, Computacenter gained after saying it continues to expect annual adjusted profit to be ahead of market views. In an unscheduled trading statement, the IT group said its performance has continued to be robust across all of its regions in July and August.

Computacenter said that even with a flat performance in the second half of 2021 compared to the second half of last year, adjusted pre-tax profit would finish the year 10% ahead of current market expectations.

Reach was a high riser after an initiation at ‘buy’ at Liberum, which said the company is approaching an inflection point where digital could offset print faster than consensus is expecting.

On the downside, travel stocks retreated after the EU recommended a pause on all non-essential travel from the US due to rising Covid cases. British Airways and Iberia parent IAG and budget airlines Wizz Air and easyJet were all weaker.

Banks were also on the decline, with HSBC, NatWest, Barclays and Lloyds all trading lower.

Engine maker Rolls-Royce fell after its biggest shareholder, Causeway Capital Management, called on the company’s incoming chair to "refresh" the board as it emerges from a downturn. Jonathan Eng, portfolio manager at the California-based investment group, told the Financial Times that he would like Anita Frew, who takes over as chair in October, to consider whether it had the right expertise at the top.

Bunzl lost ground even as it reported first-half adjusted profit up almost 15% as a recovery in its core business more than offset declining sales of Covid-19 related products.

Market Movers

FTSE 100 (UKX) 7,147.44 -0.01%
FTSE 250 (MCX) 24,065.54 0.02%
techMARK (TASX) 4,850.79 0.08%

FTSE 100 - Risers

Melrose Industries (MRO) 171.36p 13.03%
Weir Group (WEIR) 1,734.50p 2.79%
Smiths Group (SMIN) 1,460.50p 2.53%
Antofagasta (ANTO) 1,497.50p 2.43%
Ferguson (FERG) 10,445.00p 2.15%
Evraz (EVR) 606.80p 1.85%
BHP Group (BHP) 2,313.50p 1.47%
Rio Tinto (RIO) 5,482.00p 1.44%
Ashtead Group (AHT) 5,694.00p 1.43%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,498.00p 1.42%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 159.26p -2.61%
Bunzl (BNZL) 2,624.00p -2.09%
HSBC Holdings (HSBA) 387.05p -2.00%
Rolls-Royce Holdings (RR.) 114.44p -1.97%
NATWEST GROUP PLC ORD 100P (NWG) 215.00p -1.69%
Barclays (BARC) 183.10p -1.45%
Prudential (PRU) 1,506.50p -1.34%
Standard Chartered (STAN) 451.70p -1.33%
Lloyds Banking Group (LLOY) 43.58p -1.16%
Abrdn (ABDN) 264.40p -1.05%

FTSE 250 - Risers

Computacenter (CCC) 2,956.00p 2.50%
Hochschild Mining (HOC) 156.10p 2.36%
Network International Holdings (NETW) 387.10p 2.11%
Indivior (INDV) 194.90p 2.10%
Redde Northgate (REDD) 443.50p 2.07%
Chrysalis Investments Limited NPV (CHRY) 266.00p 1.92%
Ferrexpo (FXPO) 394.00p 1.91%
Allianz Technology Trust (ATT) 313.00p 1.79%
Inchcape (INCH) 905.00p 1.74%
Discoverie Group (DSCV) 1,012.00p 1.71%

FTSE 250 - Fallers

easyJet (EZJ) 781.20p -3.44%
Wizz Air Holdings (WIZZ) 4,845.00p -2.81%
Wood Group (John) (WG.) 250.70p -2.26%
Babcock International Group (BAB) 361.20p -2.25%
The Renewables Infrastructure Group Limited (TRIG) 126.00p -2.02%
Carnival (CCL) 1,555.60p -1.88%
SSP Group (SSPG) 269.80p -1.86%
Virgin Money UK (VMUK) 207.40p -1.85%
National Express Group (NEX) 257.60p -1.83%
PureTech Health (PRTC) 346.50p -1.56%