London close: Stocks finish in the red after raft of global data

The FTSE 100 dropped 0.77% to settle at 7,412.45, while the FTSE 250 fell by 1.05% to close at 17,492.90.

In currency markets, sterling was last up 0.57% on the dollar, trading at $1.2146, while it nudged slightly upwards against the euro, adding 0.12% to change hands at €1.1551.

“Having seen yields spike higher yesterday on the back of a surge in vacancies in August, today’s US ADP employment report showed a different story as jobs growth slowed to its lowest levels since January 2021,” said CMC Markets chief market analyst Michael Hewson.

“Yields, which had been higher, initially dropped back sharply as the multi-year highs seen in both the 30-year and the 10-year saw a sharp pullback.”

Hewson said the pullback in yields initially helped sustain a rebound in European markets, but that proved short-lived after the latest September ISM services report reinforced a resilient US economy narrative.

“The FTSE 100 and FTSE 250 have both underperformed, with the FTSE 100 sliding to three-week lows on the back of weakness in crude oil as well as metals prices, with copper prices sliding to their lowest levels this year, and Brent crude prices falling to one-month lows.”

Services sector retreats, Sunak confirms cancellation of HS2

In economic news, the UK services sector grappled with its most disheartening performance since January, as the S&P Global/CIPS services PMI business activity index slipped to 49.3 in September from 49.5 in August.

It was the second consecutive month below the 50.0 threshold, which demarcates expansion from contraction.

However, the figure surpassed the preliminary estimate of 47.2, offering a slender silver lining amidst the cloud of economic tension.

“Service sector activity remained on a negative trajectory in September as cutbacks to non-essential business and consumer spending weighed on sales volumes,” said Tim Moore, economics director at S&P Global Market Intelligence.

“Although only modest and slower than indicated by the earlier 'flash' PMI reading, the downturn in UK service sector output was the greatest seen since the beginning of this year and stood in contrast to solid growth during the spring months.”

Moore said survey respondents often suggested that a combination of elevated borrowing costs and subdued economic conditions had led to lower new business intakes.

“A renewed decline in export sales also acted as a headwind to order books during September, led by weaker demand across Europe.”

Elsewhere, Rishi Sunak, addressing the Conservative Party conference, confirmed the cancellation of the second phase of the beleaguered HS2 rail project, intended to link Birmingham to Manchester.

Citing altered “facts” and advocating for directional change in light of new information, the prime minister declared a redirection of the previously allocated funds.

A hefty £36bn would now be earmarked for various transportation projects nationwide, encompassing enhancing train lines, trams, and roadways and initiating a new entity, Network North.

Although the HS2's journey had been mired in escalating costs and ecological concerns, the ongoing first phase of construction from London to Birmingham would proceed as planned, albeit with a shift in management control over the Euston project in the wake of missteps.

Across the channel, the eurozone confronted its economic hurdles, as the HCOB composite PMI output index for September rested at 47.2, maintaining its position below the neutral 50 benchmark for the fourth successive month.

It was, however, a slight uptick from August’s 33-month low of 46.7.

Moreover, retail sales in the common currency area saw a sharper-than-anticipated decline of 1.2% in August, juxtaposed against a modest 0.1% dip in July, with fuel sales taking a particularly notable plunge.

Meanwhile, data from the United States revealed a deceleration in hiring during September, reaching its most languid pace since January 2021.

According to ADP, the private sector welcomed a mere 89,000 new employees to their ranks last month, a figure significantly tempered by a stark reduction of 83,000 positions in larger establishments.

That fell markedly short of the anticipated 158,000 new payrolls, diverging from the increase of 177,000 in August.

Ascential surges on events takeover rumours, Spirent sinks on outlook

On London’s equity markets, Ascential jumped 7.09% in the wake of reports from Sky News that a consortium of private equity-backed exhibitions company Hyve and MediaLink, a media and marketing advisory firm owned by United Talent Agency, had extended a bid for its Cannes Lions and additional events operations.

However, no official commentary was offered by Ascential over the potential acquisition.

Tesco was also green, albeit with a more modest uptick of 0.88%.

That was spurred by the company ratcheting up its retail profit and cash flow targets following a robust first half, characterised by an 8.9% year-on-year surge in group sales excluding fuel to £30.7bn in the six months ended 26 August.

Those gains were underpinned by receding inflation, sales volume, and mix trends that surpassed initial forecasts.

On the downside, Spirent Communications plummeted 31.31% following a curtailed near-term outlook.

The company underscored an “extremely challenged” telecommunications market and expenditure and technology investment delays from its significant clients as pivotal factors in this downward revision.

In broker note action, Aviva and National Grid ascended 3.51% and 0.56%, respectively, following an upgrade to 'buy' from 'neutral' at Jefferies for Aviva and positive affirmation from JPMorgan Cazenove for National Grid, which hailed it as a top pick.

Meanwhile, Relx, buoyed by an upgrade to ‘buy’ at Goldman Sachs, enjoyed a 1.88% lift, whereas Severn Trent, despite an upgrade to ‘neutral’ from ‘underweight’ at JPMorgan Cazenove, wavered close to its opening, losing earlier gains and closing at a marginal decline of 0.02%.

Furthermore, Compass Group climbed 1.08% following an upgrade to ‘sector perform’ at RBC Capital Markets, whereas Legal & General experienced a 1.6% decline after a downgrade to ‘hold’ at Jefferies.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,412.45 -0.77%
FTSE 250 (MCX) 17,492.90 -1.05%
techMARK (TASX) 4,082.05 -2.31%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 151.25p 4.45%
Tesco (TSCO) 270.70p 4.28%
Aviva (AV.) 387.70p 3.22%
Smurfit Kappa Group (CDI) (SKG) 2,716.00p 2.41%
Sainsbury (J) (SBRY) 254.10p 2.29%
Relx plc (REL) 2,818.00p 2.10%
Land Securities Group (LAND) 584.40p 1.71%
Rentokil Initial (RTO) 597.00p 1.39%
Mondi (MNDI) 1,350.00p 1.35%
Compass Group (CPG) 2,011.00p 1.28%

FTSE 100 - Fallers

Whitbread (WTB) 3,286.00p -3.78%
Entain (ENT) 902.60p -3.69%
BAE Systems (BA.) 978.00p -3.65%
BP (BP.) 499.45p -3.17%
Fresnillo (FRES) 520.40p -3.06%
Imperial Brands (IMB) 1,580.00p -2.77%
B&M European Value Retail S.A. (DI) (BME) 550.40p -2.76%
Associated British Foods (ABF) 1,977.00p -2.47%
Endeavour Mining (EDV) 1,506.00p -2.27%
Ashtead Group (AHT) 4,732.00p -2.21%

FTSE 250 - Risers

Ascential (ASCL) 217.80p 7.29%
PureTech Health (PRTC) 176.20p 5.63%
Softcat (SCT) 1,447.00p 3.36%
Breedon Group (BREE) 335.00p 2.60%
Wetherspoon (J.D.) (JDW) 677.50p 2.34%
Future (FUTR) 837.00p 2.07%
Petershill Partners (PHLL) 149.60p 2.05%
Hammerson (HMSO) 24.58p 1.74%
Kainos Group (KNOS) 1,130.00p 1.62%
Paragon Banking Group (PAG) 472.60p 1.55%

FTSE 250 - Fallers

Spirent Communications (SPT) 90.10p -31.27%
Vistry Group (VTY) 775.00p -6.79%
Diversified Energy Company (DEC) 67.10p -6.55%
CAB Payments Holdings (CABP) 213.00p -5.87%
Playtech (PTEC) 418.00p -5.04%
Ferrexpo (FXPO) 71.05p -4.69%
Harbour Energy (HBR) 237.40p -4.54%
HGCapital Trust (HGT) 365.00p -4.20%
ICG Enterprise Trust (ICGT) 1,150.00p -4.17%
Apax Global Alpha Limited (APAX) 156.60p -4.04%