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15 Aug, 2023 12:15 13 Sep, 2023 12:31

London midday: Stocks hit five-week low on BoE, China concerns

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UK stocks slumped to a five-week low on Tuesday on worries that stronger-than-expected wage growth may prompt the Bank of England to continue raising interest rates as it struggles to fight inflation.

Barratt Redrow

410.20p

17:00 14/11/24

1.81%

7.30p

Bellway

2,548.00p

16:39 14/11/24

1.35%

34.00p

BP

379.25p

16:40 14/11/24

2.49%

9.20p

FTSE 100

8,071.19

16:49 14/11/24

n/a

FTSE 250

20,522.81

16:38 14/11/24

n/a

FTSE 350

4,459.02

16:38 14/11/24

n/a

FTSE All-Share

4,417.25

16:54 14/11/24

n/a

General Retailers

4,604.94

16:38 14/11/24

0.23%

10.52

Hammerson

277.20p

16:40 14/11/24

0.87%

2.40p

Household Goods & Home Construction

11,411.74

16:38 14/11/24

1.23%

138.55

Legal & General Group

215.90p

17:10 14/11/24

0.14%

0.30p

Life Insurance

5,374.82

16:38 14/11/24

2.64%

138.30

Marks & Spencer Group

367.50p

16:45 14/11/24

0.91%

3.30p

Oil & Gas Producers

7,938.55

16:38 14/11/24

0.88%

69.09

Real Estate Investment Trusts

2,131.24

16:38 14/11/24

1.34%

28.24

Shell

2,531.50p

16:40 14/11/24

0.26%

6.50p

By midday, the FTSE 100 was down 1.5% at 7,392.47, with just four of the 100 stocks registering small gains. The last time the index closed lower than this was 11 July.

UK average weekly earnings excluding bonuses rose 7.8% year-on-year in the three months to June – the highest since records began in 2001 - the Office for National Statistics said. Economists had pencilled in a slowdown to 7.3% from 7.5% the previous month.

While the unemployment rate increased to 4.2% from 4%, its highest since October 2021 and ahead of expectations, the wage data means that a rate hike at the next policy meeting on 21 September now looks highly likely, according to most economists on Tuesday.

In other news, the People’s Bank of China made a surprise cut to interest rates on Tuesday as it looked to stimulate economic demand amid a sputtering recovery. Defying expectations, the central bank cut the rate on 401 billion yuan ($55.25bn) worth of one-year medium-term lending facility loans to some financial institutions by 15 basis points to 2.50% from 2.65% previously.

Housing stocks sink, M&S jumps

Housebuilders and real estate stocks were among the worst performers of the morning session on fears that higher interest rates may dampen the property market even further. Higher interest rates have already depressed market activity over the past year, with many property companies reporting falling profits and declining portfolio valuations in recent results.

Hammerson, Land Securities, Persimmon, Bellway and Barratt Developments were all trading lower.

The biggest companies by market capitalisation were all in the red in the morning session, with heavyweights AstraZeneca, Shell, HSBC, Unilever and BP providing downward pressure on the FTSE 100. BP and Shell were likely pulled lower by a slump in oil prices too, with Brent crude down 0.9% at $85.45 a barrel.

One bright spark on the FTSE 100 was B&M on rumours that the discount retailer was among a list of companies bidding to take over struggling rival Wilko, which fell into administration last week.

Marks & Spencer was the standout performer on the FTSE 350 with shares jumping 8% after the retailer lifted guidance for half-year profits after strong sales growth in the first 19 weeks of its financial year. "We now expect the outcome for the year to show profit growth on 2022-23, and the interim results to show a significant improvement against previous expectations," M&S said.

Legal & General slipped after reporting an operating profit of £941m for the first half, slightly below the £958m recorded in the first six months of 2022.

Market Movers

FTSE 100 (UKX) 7,392.47 -1.53%
FTSE 250 (MCX) 18,640.15 -0.65%
techMARK (TASX) 4,288.21 -1.17%

FTSE 100 - Risers

B&M European Value Retail S.A. (DI) (BME) 559.20p 0.94%
Frasers Group (FRAS) 806.50p 0.25%
Fresnillo (FRES) 526.40p 0.19%
Convatec Group (CTEC) 221.80p 0.09%