London close: Stocks weaker as data keeps recession fears alive

The FTSE 100 ended the session down 1.27% at 7,332.12, and the FTSE 250 was off 1.62% at 18,588.48.

Sterling was in a mixed state, and was last down 0.01% on the dollar at $1.2177, while it strengthened 0.06% against the euro to trade at €1.1467.

“If there is going to be a Santa rally then investors need to think very hard over the weekend about where to find it, since at the moment sentiment points towards a very Scrooge-like Christmas,” said IG senior market analyst Chris Beauchamp.

“Central banks have sent a clear message again this week to equities, telling them that they are very much on their own, and that there is no jolly fat man in a red suit turning up to hand out presents.

“At this point, traders might settle for Jerome Powell handing out an orange or two, but even this seems too much to hope for.”

In data, the downturn in UK economic activity eased in December, but output in the manufacturing sector fell to a four-month low according to a survey released earlier.

The S&P Global/CIPS flash composite purchasing managers' index, which measures activity in both the services and manufacturing sectors, rose to a three-month high of 49.0 from 48.2 in November.

That was ahead of expectations for a reading of 48.0.

A reading above 50 indicates expansion, while a reading below signals contraction.

The services sector was behind most of the improvement, with the flash PMI business activity index rising to 50.0 this month from 48.8 in November, hitting a three-month high.

However, the manufacturing output index fell to 43.9 in December from 44.7 a month earlier, while the flash UK manufacturing PMI fell to 44.7 from 46.5.

The survey also showed that companies took a more cautious stance when it came to staffing levels, with overall employment falling for the first time since early 2021.

“The December data add to the likelihood that the UK is in recession, with the PMI indicating a 0.3% GDP contraction in the fourth quarter after the 0.2% decline seen in the three months to September,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

“For now, the downturn looks to be relatively mild, and the easing in the rate of decline in December is encouraging news, as is the further marked cooling of inflationary pressures.

“However, the fact that the downturn has moderated compared to the turmoil created in the immediate aftermath of the botched ‘mini budget’, most notably in financial services, is no real cause for cheer.”

Elsewhere, a survey from GfK revealed that consumer confidence remained at historic lows, as the poor economic climate continued to weigh heavily

The latest GfK consumer confidence index was -42, up two points on November but still only seven points off September’s record low of -49.

UK retail sales, meanwhile, unexpectedly fell last month, with the Office for National Statistics reporting that sales declined 0.4% in November following a 0.9% increase in October, missing expectations for a 0.3% jump.

Sales in October bounced back from the impact of the additional bank holiday in September for the Queen’s funeral.

Excluding fuel, retail sales were down 0.3% on the month in November.

ONS director of economic statistics Darren Morgan said that sales during Black Friday had failed "to provide their usual lift in this sector".

"However, department stores and household goods shops did report increased sales, with these retailers telling us a longer period of Black Friday discounting helped boost sales," he said.

"Food and alcohol sales were also up, with consumers stocking up early to try to spread the cost of Christmas festivities."

Finally in UK data, the average UK house price rose £12,801 to £285,579 in November, according to lender Halifax, while annual house price growth was up 4.7% in the year.

Halifax said the UK housing market was "buoyant" in the first half of 2022, with pandemic-driven shifts in housing preferences and low interest rates keeping transaction demand elevated and leading to annual house price growth peaking at 12.5% in June.

That was the strongest rate of annual growth since January 2005.

Average property prices were 19.4% higher than at the onset of the Covid-19 pandemic, after hitting a new record high average property price of £293,992 in August.

The typical UK house price increased 71% over the last decade, meanwhile, for a rise of £118,953.

On the continent, the fall in eurozone business activity slowed in December, indicating that any recession in the single currency bloc could be milder than expected.

The downturn in the common currency area was seen easing in December, helped by an improvement in economic conditions in Germany, according to S&P Global.

December's flash composite PMI came in at 48.8 versus expectations of 48.0.

The services PMI index was 49.1 against expectations of 48.5, and the manufacturing PMI came in at 47.8 against an expected 47.1.

The euro area's trade deficit narrowed to €26.5bn in October, meanwhile, down from €37.7bn in September, as rising energy prices continued to weigh on the bloc.

According to Eurostat, imports surged by 30.7% to €279.3bn, while exports expanded at a softer 18% clip to €252.8bn.

The European Union also posted a trade deficit of €395.3bn in the first 10 months of the year, compared to a surplus of €80.1bn in 2021.

Imports rose by 47.7% to €2.51trn, led by a 137.2% surge for energy products, while exports rose 18.8% to €2.11trn.

Finally on data, economic activity in the United States slowed sharply at the end of 2022, according to two surveys.

S&P Global's PMI for US manufacturing fell to 46.2 in December from a reading of 47.7 in November.

At the same time, the services PMI plummeted to 44.4 from 46.2.

Both prints missed economist forecasts for a respective 47.9 and 46.5, with faster declines in new business the main driver.

A separate PMI tracking output from both sectors also declined significantly, to 44.6 from 46.4.

On London’s equity markets, miniature wargames manufacturer Games Workshop Group surged 16.16% after it struck an agreement in principle with Amazon, for the American conglomerate to develop its intellectual property into film and television productions.

In a brief statement, Games Workshop said its intended that rights would initially be granted to develop the ‘Warhammer 40,000’ universe.

The agreement would also see the company grant Amazon associated merchandising rights.

Elsewhere, banks Standard Chartered and NatWest Group were in the green, adding a respective 2.02% and 0.24%.

“The idea that interest rates will keep going up has shifted investors’ attention back to the banking sector,” said Russ Mould, investment director at AJ Bell.

“It is one of the few industries whose earnings should benefit from the higher cost of borrowing.”

On the downside, BT Group lost 1.27% after saying it was combining its global and enterprise units into a single division to be called BT Business, in a move designed to save £100m a year by the end of 2025.

RS Group - formerly Electrocomponents - was down 1.13% after it said Lindsley Ruth was stepping down as chief executive with immediate effect, for personal reasons.

Gambling operator Rank Group tumbled 9.84% as it issued another profit warning.

Property stocks were also under pressure, with Segro down 4.43%, Land Securities Group losing 4.22%, and British Land 3.07% lower.

In broker note action, National Express Group was off 1.74% after a downgrade to ‘hold’ at Liberum, while John Wood Group and Bunzl were 3.24% and 2.99% lower, respectively, after downgrades at Barclays.

Bodycote slid 5.34% after a downgrade to ‘hold’ at Numis, but Helios Towers rose 2.38% after an initiation at ‘overweight’ by Morgan Stanley.

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

Market Movers

FTSE 100 (UKX) 7,332.12 -1.27%
FTSE 250 (MCX) 18,588.48 -1.62%
techMARK (TASX) 4,341.23 -1.25%

FTSE 100 - Risers

Standard Chartered (STAN) 616.80p 2.02%
Imperial Brands (IMB) 2,050.00p 0.44%
BAE Systems (BA.) 840.80p 0.41%
British American Tobacco (BATS) 3,293.50p 0.26%
NATWEST GROUP (NWG) 259.00p 0.19%
Pershing Square Holdings Ltd NPV (PSH) 2,860.00p 0.18%
Fresnillo (FRES) 854.40p 0.14%
Unilever (ULVR) 4,141.00p 0.10%
Antofagasta (ANTO) 1,458.00p 0.00%
Aveva Group (AVV) 3,208.00p -0.03%

FTSE 100 - Fallers

Unite Group (UTG) 893.00p -4.64%
Ocado Group (OCDO) 629.60p -4.61%
3i Group (III) 1,276.50p -4.49%
Intermediate Capital Group (ICP) 1,143.50p -4.47%
SEGRO (SGRO) 759.80p -4.43%
DCC (CDI) (DCC) 4,068.00p -4.28%
Land Securities Group (LAND) 612.40p -4.22%
Schroders (SDR) 438.80p -3.71%
Persimmon (PSN) 1,213.00p -3.69%
Halma (HLMA) 2,067.00p -3.41%

FTSE 250 - Risers

Games Workshop Group (GAW) 8,480.00p 16.16%
Premier Foods (PFD) 109.40p 3.01%
Helios Towers (HTWS) 103.30p 2.38%
Aston Martin Lagonda Global Holdings (AML) 173.50p 2.27%
NB Private Equity Partners Ltd. (NBPE) 1,605.00p 1.90%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,175.00p 1.87%
Investec (INVP) 483.40p 1.45%
Templeton Emerging Markets Inv Trust (TEM) 144.40p 1.40%
Ferrexpo (FXPO) 159.50p 1.27%
Close Brothers Group (CBG) 1,032.00p 1.18%

FTSE 250 - Fallers

Sirius Real Estate Ltd. (SRE) 70.40p -9.40%
Trainline (TRN) 269.00p -8.16%
Currys (CURY) 56.90p -7.55%
Tritax Big Box Reit (BBOX) 139.00p -7.27%
ITV (ITV) 69.44p -6.77%
Home Reit (HOME) 35.90p -6.75%
TR Property Inv Trust (TRY) 294.00p -6.67%
Hammerson (HMSO) 22.72p -6.43%
Balanced Commercial Property Trust Limited (BCPT) 89.70p -6.17%
Target Healthcare Reit Ltd (THRL) 76.10p -6.05%