London open: Banks, miners lead the rebound early on

The FTSE 100 was up 0.7% at 7,577.74 by 0854 BST.

The UK benchmark index declined 0.4% on Tuesday after weaker-than-expected trade data from China dented share prices in the mining sector, while banking stocks fell on the back of concerns about a windfall tax levied against their Italian counterparts.

“A disappointing set of China trade numbers for July saw European and US markets sell off sharply yesterday, reinforcing concerns that the Chinese economy is struggling, undermining hopes that the slowdown in Q2, was simply a one-off,” said Michael Hewson, chief market analyst at CMC Markets UK.

Overnight, official government figures revealed that China fell into deflation in July, with consumer prices falling 0.3% year-on-year (after a 0.2% gain in June) on the back of a sharp drop in food inflation from +2.3% to -1.7%,.

“Consensus expected this outcome, but it is still a striking development,” said analysts at Danske Bank. “It is rare that consumer prices decline in China. It happened [during] global crises in 2020 and 2009. It also comes at a time when many other large countries are still battling high inflation.”

Coca-Cola HBC pops as guidance lifted

As for corporate announcements, Coca-Cola Hellenic Bottling Company was trading 3% higher after lifting its full-year forecasts. The company said it was on track for organic growth of 6-7% for the year, up from previous guidance of 5-6%.

Mining stocks were clawing back losses after a poor showing on Tuesday. Glencore, which disappointed the market yesterday with its first-half results, was among the best performers early on. Anglo American, Fresnillo and Antofagasta also made gains.

Banks were also higher, rebounding after the Italian government came out to clarify details of its windfall tax on domestic bank profits. Monday evening’s surprise announcement by the government to slap a 40% tax on banks’ net interest margin sent tremors across the continent, but it has now been clarified that the levy won’t exceed 0.1% of an institution’s assets. Concerns rose yesterday that other nations would join in on introducing windfall taxes on bank profits, like they already have done in Spain and Hungary.

Hewson said the prospect of a UK following suit is lower “given that the banking sector here already pays a higher rate due to the 3% banking levy, on top of the 25% corporation tax rate”. Barclays, Lloyds and HSBC were also making ground this morning.

The market had a negative reaction to gambling giant Flutter Entertainment’s first-half results, despite reporting 38% revenue growth and a swing to profitability, in line with expectations. Profit after tax totalled £128m for the period, compared to a loss of £112m in the first six months of 2022.

On the FTSE 250, TP Icap impressed after beating expectations with its half-year report. The liquidity and data specialist reported an underlying operating profit of £163m, compared with consensus estimates of £158m.

Hill and Smith, the infrastructure and transport group, also surpassed analysts’ estimates with its interim results, while office space firm CLS Holdings disappointed after swinging to a big loss in the first half due to a decline in property valuations.

Market Movers

FTSE 100 (UKX) 7,575.58 0.64%
FTSE 250 (MCX) 18,964.63 0.65%
techMARK (TASX) 4,336.48 -0.22%

FTSE 100 - Risers

InterContinental Hotels Group (IHG) 6,004.00p 3.70%
Glencore (GLEN) 454.35p 2.19%
BP (BP.) 489.10p 1.90%
BT Group (BT.A) 114.35p 1.78%
Barclays (BARC) 149.60p 1.71%
Prudential (PRU) 1,027.50p 1.68%
Rightmove (RMV) 584.00p 1.49%
Antofagasta (ANTO) 1,606.00p 1.48%
Weir Group (WEIR) 1,826.00p 1.47%
Auto Trader Group (AUTO) 630.60p 1.45%

FTSE 100 - Fallers

Hiscox Limited (DI) (HSX) 1,039.00p -6.65%
Flutter Entertainment (CDI) (FLTR) 14,105.00p -5.37%
Entain (ENT) 1,346.00p -1.82%
Convatec Group (CTEC) 225.40p -0.79%
United Utilities Group (UU.) 968.80p -0.62%
Severn Trent (SVT) 2,460.00p -0.61%
London Stock Exchange Group (LSEG) 8,230.00p -0.53%
Persimmon (PSN) 1,130.00p -0.31%
WPP (WPP) 790.60p -0.28%
St James's Place (STJ) 918.00p -0.22%

FTSE 250 - Risers

TP Icap Group (TCAP) 174.80p 13.14%
IWG (IWG) 162.90p 7.52%
Hill and Smith (HILS) 1,678.00p 6.88%
IP Group (IPO) 62.00p 5.62%
W.A.G Payment Solutions (WPS) 98.00p 4.26%
Bakkavor Group (BAKK) 104.00p 4.00%
Jupiter Fund Management (JUP) 104.50p 3.26%
Wizz Air Holdings (WIZZ) 2,393.00p 3.19%
Future (FUTR) 767.00p 2.95%
Edinburgh Worldwide Inv Trust (EWI) 150.60p 2.45%

FTSE 250 - Fallers

CLS Holdings (CLI) 135.20p -5.72%
FDM Group (Holdings) (FDM) 518.00p -2.26%
Lancashire Holdings Limited (LRE) 590.00p -1.58%
Just Group (JUST) 85.50p -1.38%
Bellway (BWY) 2,186.00p -1.35%
CMC Markets (CMCX) 131.80p -1.35%
TI Fluid Systems (TIFS) 148.40p -0.93%
Virgin Money UK (VMUK) 166.75p -0.92%
Pets at Home Group (PETS) 366.80p -0.86%
ICG Enterprise Trust (ICGT) 1,150.00p -0.69%