London open: Stocks track declines in Asia

UK stocks tracked declines in Asia after Standard & Poor’s cut the outlook for China’s credit rating to negative from stable.

S&P said China’s economic rebalancing is likely to take longer than the ratings agency had expected, giving the nation a credit rating of AA-.

“We revised the outlook to reflect our expectation that the economic and financial risks to the Chinese government’s creditworthiness are gradually increasing,” S&P said in a statement.

“This follows from our belief that, over the next five years, China will show modest progress in economic rebalancing and credit growth deceleration.”

In more bad news for the market, a survey showed business sentiment among Japan’s big manufacturers fell to the lowest in nearly three years in the first quarter.

The headline index gauging big manufacturers' sentiment stood at +6 in March, half the level seen three months ago and worse than a median market forecast of +8, the Tankan survey showed.

On a brighter note, official data revealed Chinese manufacturing activity moved into expansion in March. The purchasing mangers’ index rose to 50.2 in March from 49.0 the previous month, beating expectations for a reading of 49.3. A reading above 50 signals an expansion in activity while a level below that indicates a contraction.

The non-manufacturing PMI also edged higher in March to 53.8 from 52.7 a month earlier.

Caixin’s private PMI on China manufacturing increased to 49.7 in March from 48 in February, exceeding forecasts of 48.3.

In the Eurozone, Markit’s PMI was revised higher to 51.6 in March from a previous estimate of 51.4, surprising analysts who had expected no change.

Still to come, Markit’s UK PMI will be released at 0930 BST, the Eurozone unemployment rate is due at 1000 BST.

The day’s main event, however, is the US non-farm payrolls report at 1330 BST. Analysts predict the US added 205,000 jobs in March and the unemployment rate held at 4.9%.

Meanwhile, oil prices continued to slide on concerns about a supply glut. Brent crude fell 0.67% to $40.06 per barrel and West Texas Intermediate slipped 0.76% to $38.05 per barrel at 0914 BST.

In company news, RSA Insurance Group’s shares fell after it completed the sale of its operations in Colombia to Suramericana SA, the insurance subsidiary of Grupo de Inversiones Suramericana.

Home Retail dropped after its board agreed to recommend Sainsbury’s takeover offer. Sainsbury's, which still expects the transaction to complete in the third quarter of this year, has offered Home Retail shareholders 0.321 new shares in the supermarket group and 55p cash, plus 27.8p in dividends.

Power company Drax gained as it said 2016 earnings would be at the top end of expectations after winning a new 12 month contract from National Grid.

Standard Life declined as it said it had obtained regulatory approvals to increase its stake in HDFC Life to 35% from 26% for £179m.

Market Movers

FTSE 100 (UKX) 6,108.08 -1.08%
FTSE 250 (MCX) 16,797.23 -0.76%
techMARK (TASX) 3,097.51 -0.88%

FTSE 100 - Risers

BHP Billiton (BLT) 789.90p 0.91%
Shire Plc (SHP) 3,993.00p 0.86%
Rio Tinto (RIO) 1,969.50p 0.72%
Anglo American (AAL) 555.40p 0.60%
Ashtead Group (AHT) 866.50p 0.29%
Antofagasta (ANTO) 470.50p 0.23%
Glencore (GLEN) 157.65p 0.22%
Royal Bank of Scotland Group (RBS) 223.10p 0.18%
Inmarsat (ISAT) 985.50p 0.10%
Wolseley (WOS) 3,940.00p 0.03%

FTSE 100 - Fallers

Standard Chartered (STAN) 456.85p -3.32%
Royal Mail (RMG) 465.20p -3.22%
Sky (SKY) 997.00p -2.64%
United Utilities Group (UU.) 900.00p -2.49%
Burberry Group (BRBY) 1,336.00p -2.12%
Informa (INF) 679.50p -2.09%
Admiral Group (ADM) 1,942.00p -2.07%
Pearson (PSON) 857.00p -2.06%
Tesco (TSCO) 187.90p -2.03%
BP (BP.) 343.05p -2.03%

FTSE 250 - Risers

Aggreko (AGK) 1,127.00p 4.64%
Kaz Minerals (KAZ) 177.90p 4.40%
Cairn Energy (CNE) 204.20p 2.10%
Ophir Energy (OPHR) 77.90p 1.17%
Drax Group (DRX) 274.90p 1.03%
Cineworld Group (CINE) 543.00p 1.02%
Evraz (EVR) 90.90p 1.00%
AO World (AO.) 180.40p 0.78%
Ocado Group (OCDO) 292.00p 0.65%
Serco Group (SRP) 103.10p 0.59%

FTSE 250 - Fallers

Fidessa Group (FDSA) 2,364.00p -3.19%
Cobham (COB) 210.20p -3.18%
Inchcape (INCH) 702.00p -2.97%
AA (AA.) 257.00p -2.95%
Petrofac Ltd. (PFC) 895.50p -2.77%
Ted Baker (TED) 2,650.00p -2.68%
JD Sports Fashion (JD.) 1,097.00p -2.58%
Fidelity European Values (FEV) 160.10p -2.32%
Hastings Group Holdings (HSTG) 167.60p -2.27%
PZ Cussons (PZC) 295.40p -2.22%