London close: Stocks mixed after dump of manufacturing data

The FTSE 100 ended the session up 0.49% at 7,914.93, while the FTSE 250 was down 0.16% at 19,870.60.

Sterling was also in a mixed state, last strengthening 0.17% on the dollar to $1.2042, while it weakened 0.84% against the euro to trade at €1.1273.

“While European and US futures came into the day looking stronger thanks to Chinese factory data, they have found the going harder throughout the rest of the session,” said IG chief market analyst Chris Beauchamp.

“After a miserable second half of February, hopes were high that new month flows might help stocks find their footing, even as worries about the path of interest rates remained.

“US stocks have steadied after a weaker open, though we are yet to see an enthusiastic wave of buying.”

In economic news, UK shop price inflation hit a fresh high according to new industry data, as the cost of food continued to soar.

According to the latest BRC-NielsenIQ shop price index, annual inflation was a record 8.4% in February, compared to 8% in January.

Within that, non-food inflation was 5.3%, up from 5.1% in January, while food surged to 14.5%, the highest inflation rate in the food category on record.

By comparison, it was 13.8% in January.

Helen Dickinson, chief executive of the British Retail Consortium, said retailers were reacting to soaring energy bills, higher running costs and "tougher trading conditions brought about by the war in Ukraine".

“Fresh food prices, especially vegetables, were also affected by the weaker pound, making produce imports from Europe more expensive,” she explained.

“While we expect to see the annual inflation rate reduce in the second half of this year, retail prices will remain high over the coming months.”

Elsewhere, the downturn in the UK's manufacturing sector abated somewhat in February, according to a closely-followed survey.

S&P Global's UK factory sector purchasing managers' index (PMI) improved to 49.3 in February, from a reading of 47.0 for January.

That was also slightly better than a preliminary reading of 49.2.

Output levels rose for the first time in eight months, as demand stabilised and supply chains improved, while price pressures continued to moderate with costs increasing at their slowest pace since July 2020.

The overall level of new work fell for a ninth month in a row, with some companies citing the cost of living crisis and others weaker export order intakes, but the trend showed additional signs of stabilisation.

At the same time, the rate of decline in new export business was the weakest since March 2022, although lower intakes from key markets including the US, mainland Europe and China were reported.

“Manufacturers' confidence also strengthened, with 60% of companies forecasting production will expand during the coming year,” said Rob Dobson, director at S&P Global Market Intelligence.

“Manufacturers benefited from growing signs of a global economic recovery and the easing of COVID restrictions by China.

“This process of economic revival, alongside signs of inflation peaking and reduced recession fears, should hopefully help UK manufacturers eke out further growth in the coming months.”

UK house prices were also on the agenda, with lender Nationwide reporting a 1.1% fall year-on-year in February, making for the first annual decline since June 2020.

Prices also fell 0.5% month-on-month, marking the sixth consecutive monthly drop and the longest period of successive falls since February 2009 when banks caused the financial crash, according to the building society’s key index.

Across the UK, the average house price in February was £257,406.

Prices were now 3.7% lower than their peak last August, and February’s negative annual price growth was the weakest since November 2012, Nationwide added.

“The recent run of weak house price data began with the financial market turbulence in response to the mini-budget at the end of September last year,” said Nationwide’s chief economist Robert Gardner.

“While financial market conditions normalised some time ago, housing market activity has remained subdued.

“This likely reflects the lingering impact on confidence as well as the cumulative impact of the financial pressures that have been weighing on households for some time.”

Similarly, the number of mortgage approvals fell sharply in January according to official data, as higher mortgage rates weighed on demand.

According to the Bank of England, net mortgage approvals fell to 39,637 from an upwardly-revised 40,540 in December.

Although slightly above forecasts for around 38,500, it remained the fifth consecutive monthly decrease in approvals.

It was also the lowest level, excluding lockdown-affected months, since January 2009.

On the continent, the eurozone's manufacturing sector strengthened in February as supplier bottlenecks eased, with the final S&P Global eurozone manufacturing PMI reading 48.5 for February, compared to 48.8 a month previously, in line with estimates.

The manufacturing output index nudged above the neutral mark to reach 50.1, up from 48.9 in January.

It was the first time in eight months that output did not contract.

Inflation in Germany meanwhile unexpectedly ticked higher in February as food prices rose, with Destatis reporting that its harmonised index of consumer prices rose to 9.3% from 9.2% in January, versus consensus expectations for a fall to 9%.

Germany’s headline national inflation rate was unchanged from January at 8.7% and in line with consensus expectations.

The data showed that food inflation edged up to 21.8% in February from 20.2% the month before, while energy inflation fell to 19.1% from 23.1%.

Across the pond, the downturn in American manufacturing eased somewhat last month alongside price pressures, with the Institute for Supply Management's factory sector PMI rising to 47.7 in February from a January reading of 47.4, against consensus expectations for 47.8.

A subindex for production eased to 47.3 from 48.0, while that for new orders improved to 47.0 from 42.5.

That data was backed up by another survey showing factory sector activity in the US declining less than initially thought last month, with S&P Global's factory sector PMI rising to 47.3 in February from a reading of 46.9 for January.

That was, however, down from a preliminary print of 47.8.

Finally on data, factory sector activity in China ramped up more quickly than expected in February, with the PMI from private sector compiler Caixin rising to 51.6 from January's level of 49.2, above the 51.3 pencilled in by the market.

At the same time, Beijing’s official manufacturing PMI jumped to 52.6 from 50.1, well above forecasts for 50.7.

On London’s equity markets, miners were among the top performers after the Chinese data, with Rio Tinto Group up 4.55%, Antofagasta ahead 4.2%, Anglo American rising 3.31%, and Glencore adding 3.54%.

Weir Group jumped 6.27%, after the engineering group posted a rise in annual profits on the back of a booming mining industry.

Aston Martin Lagonda advanced 3.23% after it reported a sharp jump in full-year revenues amid increasing output and record total average selling prices.

Dettol and Nurofen maker Reckitt Benckiser Group gained 1.53% after it swung to a full-year profit as it benefited from higher prices.

On the downside, housebuilders slid after a profit warning from Persimmon, which said it was hit by a spike in mortgage rates.

The company said completions would likely be down "markedly" in the current year, which would hit both margin and profits.

Persimmon tumbled 12.05%, while Taylor Wimpey lost 4.1%, Barratt Developments was off 4.18%, Berkeley Group slipped 2.05%, Redrow was down 3.36%, and Bellway was behind by 3.61%.

“Welcome to a new era of chaos for the housebuilders,” quipped Russ Mould, investment director at AJ Bell.

“Falling property prices and rising costs means profits are being squeezed and that will cause earnings in the sector to slump.

“Persimmon has already refined its dividend policy in preparation for a housing market downturn and now it provides a crystal-clear message that margins are set to fall which will lead to a decline in profits.”

The sector was also hit by the Nationwide survey.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti, Abigail Townsend and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,914.93 0.49%
FTSE 250 (MCX) 19,870.60 -0.16%
techMARK (TASX) 4,639.39 0.73%

FTSE 100 - Risers

Weir Group (WEIR) 2,018.00p 6.27%
Rio Tinto (RIO) 5,972.00p 4.55%
Antofagasta (ANTO) 1,636.00p 4.20%
Endeavour Mining (EDV) 1,764.00p 3.95%
Glencore (GLEN) 512.90p 3.54%
Anglo American (AAL) 2,980.00p 3.31%
Abrdn (ABDN) 231.60p 3.12%
Melrose Industries (MRO) 154.00p 2.77%
Smurfit Kappa Group (CDI) (SKG) 3,168.00p 2.65%
Rolls-Royce Holdings (RR.) 148.42p 2.40%

FTSE 100 - Fallers

Persimmon (PSN) 1,277.50p -12.05%
Barratt Developments (BDEV) 449.50p -4.18%
Taylor Wimpey (TW.) 118.15p -4.10%
Ocado Group (OCDO) 529.60p -3.50%
Unite Group (UTG) 951.50p -3.20%
Severn Trent (SVT) 2,664.00p -3.16%
National Grid (NG.) 1,017.00p -2.96%
United Utilities Group (UU.) 991.20p -2.63%
SEGRO (SGRO) 802.80p -2.50%
Admiral Group (ADM) 2,148.00p -2.41%

FTSE 250 - Risers

Telecom Plus (TEP) 1,880.00p 6.82%
Man Group (EMG) 279.00p 5.05%
Serco Group (SRP) 163.70p 4.94%
Fidelity China Special Situations (FCSS) 262.00p 4.16%
Oxford Instruments (OXIG) 2,580.00p 3.61%
RHI Magnesita N.V. (DI) (RHIM) 2,668.00p 3.25%
Aston Martin Lagonda Global Holdings (AML) 207.60p 3.23%
Bank of Georgia Group (BGEO) 2,870.00p 2.87%
BlackRock World Mining Trust (BRWM) 717.00p 2.72%
FDM Group (Holdings) (FDM) 847.00p 2.67%

FTSE 250 - Fallers

Future (FUTR) 1,329.00p -5.21%
Abrdn Private Equity Opportunities Trust (APEO) 462.00p -4.20%
Moonpig Group (MOON) 113.40p -4.17%
Shaftesbury (SHB) 402.20p -3.87%
Vistry Group (VTY) 788.50p -3.78%
UK Commercial Property Reit Limited (UKCM) 54.70p -3.70%
Bellway (BWY) 2,137.00p -3.61%
TUI AG Reg Shs (DI) (TUI) 1,570.50p -3.60%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 148.40p -3.51%
Discoverie Group (DSCV) 825.00p -3.51%