Stocks in London were lower at midday on Wednesday, despite upbeat domestic data, as heavy falls on Wall Street dented the mood.
The FTSE 100 index was down 51.37 points, or 0.6%, at 8,247.25. The FTSE 250 was down 132.10 points, or 0.6%, at 20,676.05, and the AIM All-Share was down 4.94 points, or 0.7%, at 757.45.
The Cboe UK 100, the Cboe UK 250, and the Cboe Small Companies were all down 0.6% at 825.38, 18,200.77, and 16,850.72 respectively.
‘The latest US manufacturing figures weren’t as good as expected, acting like a gust of wind to topple the house of cards and once again put markets into reverse amid fears about the strength of the economy,’ explained AJ Bell’s Russ Mould.
He added: ‘While it’s always alarming to see share prices flash red, it’s perfectly normal to see further market pullbacks after you get the type of wobble seen over the summer...The latest market sell-off means investors will have a laser-sharp focus on labour market figures scheduled for release on Friday as these could play a key role in the Federal Reserve’s decision-making on interest rates.’
More locally, the seasonally adjusted services UK PMI business activity index registered 53.7 in August, up from 52.5 in July, and higher than an initial flash estimate of 53.3.
According to S&P Global, survey respondents said this rise in business activity was in part down to an ‘improving economic backdrop’, and an associated rise in ‘willingness to spend’.
The seasonally adjusted UK PMI composite output index rose to 53.8 in August, from 52.8 in July. This was higher than the initial flash estimate of 53.4.
Higher levels of output were seen in both the manufacturing and service sectors, with data also revealing ‘a sustained upturn in private sector employment’.
In European equities on Wednesday, the CAC 40 in Paris was down 0.9%, while the DAX 40 in Frankfurt was down 0.7%.
Eurozone industrial producer prices rose at a greater rate in July from June, Eurostat reported on Wednesday.
Industrial producer prices in the euro area rose 0.8% in July from June, following a 0.6% increase in June from May, according to Eurostat figures. On-year, in July, industrial producer prices fell 2.1% in the eurozone, easing from a 3.3% annual decline in June.
Meanwhile, the service economy in the eurozone accelerated by less than expected last month, despite an Olympics boost.
The HCOB eurozone services purchasing managers’ business activity index rose to 52.9 points in August from 51.9 in July, but was short of the flash estimate of 53.3 points.
The composite PMI output index improved to 51.0 in August from 50.2 in July, weaker than the flash estimate of 51.2.
‘The Olympic Games in Paris brought plenty of victories, and the French service sector was certainly among the winners. The latter helped drive accelerated growth in the eurozone’s service sector for August. But the big question is whether this boost is sustainable. The positive vibes from the Games and the ongoing Paralympics might carry through into September in part, but we expect the slowdown in growth, which started in May, to likely resume in the coming months,’ said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
The pound was quoted at $1.3115 at midday on Wednesday in London, up compared to $1.3089 at the equities close on Tuesday. The euro stood at $1.1053, up against $1.1037. Against the yen, the dollar was trading at JP¥145.07, down compared to JP¥145.85.
On the FTSE 100, Rolls-Royce, Melrose Industries, and BT Group were among the top performers at midday, up 1.0%, 0.8%, and 0.7% respectively. By contrast, Airtel, ConvaTec, and Centrica were the three biggest losers, down 6.7%, 4.1%, and 2.8% each.
Also suffering was Segro, down 2.5%.
The London-based property investment company has reached agreement on a takeover offer for Tritax EuroBox, which will be implemented via a scheme of arrangement.
Tritax EuroBox investors will receive 0.0765 new Segro shares per Tritax share, as well as a 1.25 euro cents quarterly dividend. The deal values Tritax EuroBox at £1.10 billion, including net debt.
M&G lost 2.0%, worsened from 0.5% at the open.
The London-based investment manager posted a half-year pretax loss of £57 million, swung from profit of £101 million a year prior. Adjusted operating pretax profit came down to £375 million from £390 million, while the loss from short-term valuations in investment returns was £284 million, widened from £177 million.
In the FTSE 250, Hilton Food Group lost 5.5%.
The food packaging group posted interim pretax profit of £25.4 million, up from £11.3 million a year prior. Revenue was down 8.4% to £1.94 billion from £2.12 billion, but up 1.0% on a constant currency basis.
Still performing well was Balanced Commercial Property Trust, up 9.6%.
The group has agreed to a cash takeover offer from Starwood Funds, according to which Starwood will pay 96.00 pence per share in cash for the firm. This offer is at a 22% premium to Balanced Commercial Property Trust’s price in April, and at an 8.7% discount to Balanced Commercial Property Trust’s net asset value on June 30.
On AIM, Rockfire Resources gained 21%.
The Greece and Australia-focused gold, base metal and critical mineral exploration company’s shares jumped, after announcing a six-fold mineral resource upgrade at Molaoi.
The inferred resource estimate is now 15.0 million tonnes at 7.3% zinc, 1.8% lead, and 39.5 grams per tonne of silver. This compares to a maiden resource estimate from May 2022 of 2.3 million tonnes at 11% zinc equivalent, for 250,000 tonnes of zinc equivalent.
By contrast, Shield Therapeutics lost 9.4%.
The Newcastle, England-based commercial-stage pharmaceutical company reported a pretax loss for the six months ended June 30 of $15.5 million, widening from $11.8 million a year prior. This was despite an improvement in revenue, which increased to $12.1 million from $3.7 million.
Shield said that losses were in part driven by the expansion of a US field force supporting the launch of Accrufer, its iron deficiency medication.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.2%, the S&P 500 index down 0.4%, and the Nasdaq Composite down 0.7%.
‘September began on an ugly note, to say the least. The US equities tumbled after the latest ISM data showed a fifth month of contraction in the US manufacturing, and at accelerated pace. The latter revived the recession worries ahead of this week’s critical US jobs data, and sent the S&P 500 more than 2% down. This was the worst sell-off since August 5, when a weak jobs data from the US had boosted the recession worries, the expectation of a 50 basis point cut from the Federal Reserve and resulted in an almost 10% sell-off of the S&P 500,’ said Swissquote Bank’s Ipek Ozkardeskaya.
She added: ‘The slowing US growth and soft data boost the recession worries and rate cut expectations. The rate cut expectations favour a sector rotation from highly valued Big Tech toward the non-tech pockets of the market. But the expectation of a jumbo rate cut is bad for all stocks, regardless of their technology exposure.’
Brent oil was quoted at $74.17 a barrel at midday in London on Wednesday, down slightly from $74.19 late Tuesday.
Gold was quoted at $2,484.00 an ounce, up against $2,482.65.
Still to come on Wednesday’s economic calendar, there is trade balance and factory orders from the US.
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