London open: Stocks drop after China disappointment; Vistry tanks on profit warning
London stocks fell sharply in early trade on Tuesday as investors were left disappointed by a lack of new stimulus measures from China, and with housebuilder Vistry in freefall after a profit warning.
At 0845 BST, the FTSE 100 was down 1% at 8,218.07.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said European stocks were under pressure as markets took their cues from a soft session in the US and "a major cashing out" from Chinese investors.
"After reopening from their week-long break, Chinese stocks had a wild ride, as investors continued to weigh up the impact of recent stimulus measures," he said. "After opening over 10% higher, the large-cap Chinese stock index CSI 300 saw a big chunk of those gains dwindle as investors took the opportunity to cash out. Hong Kong’s Hang Seng index briefly dropped over 10% before recovering to a loss of around 7%.
"The key issue for investors is whether a broader range of initiatives will back up the largest stimulus package since the pandemic, and a briefing by China’s National Development and Reform Commission that failed to deliver anything new wasn’t well received."
In equity markets, Vistry shares tumbled as the housebuilder warned on profits after underestimating build costs on nine schemes in its Southern Division. The company now expects FY24 adjusted pre-tax profit to be £80m lower, while profit for FY25 will take a hit of around £30m and £5m for FY26.
The revisions mean that adjusted pre-tax profit for FY24 is now expected to be around £350m, a hit of about 20%.
Senior also tanked after the engineering solutions provider announced that the ongoing supply and logistical challenges hitting the wider aerospace sector will have an impact on full-year results.
The company, which makes high-tech components and systems for OEM manufacturers in the aerospace, defence, land vehicle, power and energy markets, now expects aerospace results in the second half to be lower than the first due to "temporary near-term customer related headwinds".
On the upside, Imperial Brands was the top gainer on the FTSE 100 as it beefed up its shareholder returns programme by £400m after confirming it finished the fiscal year with in-line results, with growth in both tobacco and next generation products.
Group adjusted operating profit growth over the 12 months to 30 September was "close to the middle" of the mid-single digit range guidance, the company said.
For the current fiscal year, Imperial is targeting £2.8bn of returns, up from a £2.4bn commitment in the year just gone, comprising a 13.6% enlarged share buyback plan of £1.25bn and £1.5bn in cash dividends.
Convenience food producer Greencore rallied after it lifted full-year profit guidance following a strong fourth-quarter performance.
Market Movers
FTSE 100 (UKX) 8,218.07 -1.03%
FTSE 250 (MCX) 20,700.22 -0.73%
techMARK (TASX) 4,781.76 -0.66%
FTSE 100 - Risers
Imperial Brands (IMB) 2,237.00p 4.14%
Ashtead Group (AHT) 5,742.00p 1.66%
Reckitt Benckiser Group (RKT) 4,585.00p 0.70%
Tesco (TSCO) 362.30p 0.69%
Marks & Spencer Group (MKS) 369.90p 0.57%
Relx plc (REL) 3,528.00p 0.46%
Diploma (DPLM) 4,262.00p 0.38%
SSE (SSE) 1,828.50p 0.33%
Unilever (ULVR) 4,783.00p 0.27%
London Stock Exchange Group (LSEG) 10,150.00p 0.25%
FTSE 100 - Fallers
Vistry Group (VTY) 860.00p -32.44%
Antofagasta (ANTO) 1,878.00p -5.65%
Prudential (PRU) 680.60p -5.39%
Anglo American (AAL) 2,314.00p -5.36%
Rio Tinto (RIO) 5,031.00p -5.08%
Glencore (GLEN) 417.55p -4.56%
Melrose Industries (MRO) 431.70p -3.44%
HSBC Holdings (HSBA) 673.50p -3.12%
JD Sports Fashion (JD.) 130.45p -2.87%
Persimmon (PSN) 1,589.00p -2.49%
FTSE 250 - Risers
Workspace Group (WKP) 642.00p 1.90%
Baltic Classifieds Group (BCG) 307.00p 1.66%
Dunelm Group (DNLM) 1,177.00p 0.77%
PRS Reit (The) (PRSR) 99.60p 0.71%
Plus500 Ltd (DI) (PLUS) 2,462.00p 0.65%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,320.00p 0.65%
IG Group Holdings (IGG) 912.00p 0.61%
RIT Capital Partners (RCP) 1,816.00p 0.55%
Drax Group (DRX) 645.00p 0.47%
Tritax Eurobox (GBP) (EBOX) 68.70p 0.44%
FTSE 250 - Fallers
Senior (SNR) 123.00p -16.21%
Fidelity China Special Situations (FCSS) 227.50p -6.95%
Burberry Group (BRBY) 632.20p -6.15%
Bodycote (BOY) 556.00p -3.81%
Crest Nicholson Holdings (CRST) 186.40p -3.67%
Watches of Switzerland Group (WOSG) 457.80p -3.25%
Bellway (BWY) 3,006.00p -2.91%
Marshalls (MSLH) 314.50p -2.48%
Essentra (ESNT) 147.80p -2.38%
Close Brothers Group (CBG) 373.00p -2.30%