A combination of factors including sagging US consumer confidence, a spate of downgrades to China's economic growth forecasts and renewed inflationary concerns weighed on UK stocks towards the end of Tuesday’s trading session.
The FTSE 100 Index closed 0.4% lower at 7031 and the FTSE 250 Index finished the session 1.6% lower at 23,233 points.
Economists have cut their growth forecasts for the Chinese economy following power cuts across several states as the country struggles to keep the lights on due to an energy shortage.
In the US, consumer confidence unexpectedly fell to its lowest level since February prompting renewed concerns over GDP growth, with consumer spending accounting for 70% of the US economy.
These concerns were compounded by a sharp rise in US Treasury yields as investors prepare for the Fed to taper its support for the bond market. By the London close the S&P 500 index was down 1.9% while the Nasdaq Composite was down 2.5%.
COMPANY NEWS
Broker upgrades failed to inspire buying interest in either industrial products distributor Electrocomponents (ECM), or Sports betting and gaming company Flutter Entertainment (FLTR). Both drifted lower despite upgrades to buy from RBC Capital Markets and HSBC respectively.
Oil majors British Petroleum (BP), and Royal Dutch Shell (RDSA) continued to attract buying interest given the robust oil price. The former was trading 2.1% higher at 338.5p, and the latter was trading 2.7% higher at 1641p.
Pennon Group (PNN), which supplies water to South West England, issued a trading update saying it continued to expect a doubling of base returns with costs being offset by higher revenues.
Echoing comments yesterday from United Utilities (UU.), the firm said it had experienced record demand due to a sustained increase in usage by households and latterly by businesses due to the ‘return to work’. Pennon shares eased 2.5% to £11.47
Shares in bus and rail operator Go-Ahead Group (GOG) careered 24.9% lower to 769p after the company announced that the Department for Transport had decided not to renew its Southeastern rail franchise when it expires next month due to the mis-calculation of profits, handing it instead to the Operator of Last Resort.
As a result, the firm said it would delay the publication of its full year results and chief financial officer Elodie Brian would resign with immediate effect after 13 years’ service.
Plumbing supplies group Ferguson (FERG), which is now totally focused on the US after the disposal of its UK business in January, posted a 14% increase in revenues to $22.8 billion for the year to July driven by market share gains.
The firm continued to consolidate its presence in the US with another $355 million of acquisitions during the period and will ask shareholders to vote on shifting its primary listing to New York early next year. Shares drifted 2.6% lower to £102.35.
Shares in Smiths Group (SMIN) rallied 3.4% to £14.11 after the industrial technology firm posted a 2% fall in underlying revenues for the year to July but said it saw a return to growth in the final quarter along with an acceleration in margin improvement.
The company also announced it had signed a binding deal to sell its medical division to ICU Medical for an enterprise value of $2.8 billion including $100m related to ICU’s future share price performance.
Soft drinks maker AG Barr (BAG) reported a 19% jump in first half revenues to the beginning of August thanks to strong volume growth as on-the-go sales recovered with the return to work.
As well as positive momentum in its soft drinks business the firm reported strong growth in its Funkin cocktail brand due to the reopening of the on-trade. Shares drifted 3.3% lower to 521p
Low-cost airline Easyjet (EZJ) revealed its 31 for 47 rights issue at 410p was only 93% subscribed, leaving the underwriters including Credit Suisse and Goldman Sachs to find buyers for the remaining 21 million shares, or if all else fails take them onto their own books. Shares dropped 3.3% to 686p.
SMALL-CAP NEWS
Motor and property finance provider S & U (SUS) posted a trebling of pre-tax profits to £19.9 million for the half-year to July driven by a 35% increase in net new vehicle loans backed by record second-quarter payment collections. Shares fell 1% to £28.20
Specialist textiles maker HeiQ (HEIQ) reported a disappointing drop in revenues and gross margins for the first half to June against a strong comparable period last year, and a sharp fall in operating earnings due to a much higher cost base. Shares tanked 24% to 133p.
Shares in building materials distributor Lords Group (LORD:AIM) fell 7.7% to 130.5p despite the firm posting a sharp jump in underlying revenues to £179 million for the six months to June and pre-tax profits of £4.5 million against a loss of £0.3 million last year.
Online greetings card and gift seller Moonpig (MOON) reported strong trading over the summer with a continued ‘elevated’ level of orders, leading it to raise its full year revenue guidance to £270 million to £285 million, the shares drifted 5.5% lower to 340p.
Bricks and mortar card retailer Card Factory (CARD) also posted an increase in revenues in the six months to July despite footfall being below pre-pandemic levels as customers increased their spend per visit. Shares traded 8% lower at 55p.
Goldman Sachs-owned private equity firm Petershill Partners (PHLL) announced it would price its shares at 350p in a £1.2 billion float, valuing the business at £4 billion.
Investor interest is expected to be strong following the 25% surge in shares in rival private equity firm Bridgepoint (BPT) on its first day of trading in July.
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