London close: Equities close lower as investors weigh disappointing UK, US data

The UK equity market slumped on Monday as worse-than-expected data in the UK and in the US offset a better-than-forecast German business confidence report.

WPP

812.20p

15:45 15/11/24

-3.19%

-26.80p

The CBI Industrial Trends Survey’s headline total orders balance fell from -7 in September to -18 in October, its lowest level in two-and-a-half years and well below the consensus expectation of -9.

The decline was driven by lower exports mainly due to a stronger pound and subdued foreign demand.

The latest figures published by the British Bankers’ Association revealed mortgage approvals for house purchases fell to a four-month low of 44,489 in September from 46,567 in August, although they remained up 14% year-on-year. Analysts had expected 47,400 approvals.

Across the Atlantic, US new home sales tumbled 11.5% to 468,000 in September, more than the 0.6% decrease that was expected and following a 5.2% rise the previous month.

In Germany, the IFO institute’s business confidence index dropped to 108.2 this month from September’s 108.5, compared to analysts’ estimates of 107.8.

The drop came amid the Volkswagen emissions scandal and poor data in China.

“A mild dip from 108.5 to 108.2 month-on-month can be chalked up as a win for the German index, and suggests that, whilst Volkswagen may still be in the gutter, the country’s wider economy may be less-damaged than first thought,” said Connor Campbell, financial analyst at Spreadex.

Meanwhile, investors continued to digest last week’s rate cuts by the People’s Bank of China.

The People’s Bank of China decided to cut its one-year deposit rate and one-year lending rate by 25 basis points each to 1.5% and 4.35%, respectively. The PBoC also cut the reverse requirement ratio for all banks by 50 basis points to 17.5%.

FXTM Research analyst Lukman Otunuga said China’s decision to cut its deposit rate, one-year lending rate and the reverse requirement ratio last week had renewed fears about the pace of growth in the nation’s economy.

However, China Premier Li Keqiang soothed the market on Monday by saying the 7% growth target was never set in stone, Otunuga added.

The European Central Bank also remained in focus after saying it will re-examine its quantitative easing programme and consider extending it past September 2016 if necessary.

“The market reaction may be a little over the top; the ECB has not done anything yet. A statement saying the ECB governing council will ‘re-examine’ the level of monetary accommodation doesn’t mean that the examination will conclude anything needs to be done,” said Jasper Lawler, market analyst at CMC Markets.

Traders are now waiting with baited breath for the Fed’s decision on interest rates on Wednesday. The consensus forecast is that the central bank will keep rates unchanged at 0.25% amid low inflation and concerns about risks from a slowdown in emerging economies.

On the company front, Aberdeen Asset Management was a high riser on reports that the firm might be sounding out possible buyers. However, a spokesman firmly denied the claims, saying "In his 32 years running Aberdeen, Martin Gilbert has never made a formal or informal approach to anyone about buying the business," the Press and Journal reported.

WPP slumped after reporting a third quarter like-for-like sales that missed analysts’ estimates.

AstraZeneca climbed after the US Food and Drug Administration's Arthritis Advisory Committee recommended the approval of lesinurad tablets for the treatment of hyperuricemia with gout.

Anglo American dropped after analysts at Citi lowered their target price to 600p from 650p, citing lower expected volumes for diamonds and iron ore.

TalkTalk was knocked back for the second time since Friday's cyber-heist, after hackers warned over the weekend that they were planning another attack.

Among commodities, metals prices were mostly higher as the dollar weakened, with gold up 0.43% on the Comex, silver up 0.62% and copper up 0.21%.

Oil, on the other hand, was under pressure on concerns about an oversupply in the sector. Goldman Sachs warned in a note on Sunday that crude oil prices could drop sharply as refined product storage sites come close to maximum capacity in the US and Europe, adding to worries about an oversupply.

Brent crude futures fell 0.3% to $47.80 per barrel and West Texas Intermediate dipped 0.9% to $44.17 per barrel at 1532 GMT.

Market Movers

FTSE 100 (UKX) 6,420.77 -0.36%
FTSE 250 (MCX) 17,181.06 -0.35%
techMARK (TASX) 3,106.21 -0.09%

FTSE 100 - Risers

Aberdeen Asset Management (ADN) 362.30p 3.10%
International Consolidated Airlines Group SA (CDI) (IAG) 608.50p 1.67%
TUI AG Reg Shs (DI) (TUI) 1,227.00p 1.57%
Royal Mail (RMG) 453.50p 1.09%
Diageo (DGE) 1,877.00p 1.00%
Sainsbury (J) (SBRY) 271.70p 0.93%
Inmarsat (ISAT) 983.50p 0.77%
St James's Place (STJ) 930.50p 0.76%
Smith & Nephew (SN.) 1,155.00p 0.70%
Morrison (Wm) Supermarkets (MRW) 176.20p 0.69%