Stocks in London were in the red on Monday during midday trading, as downbeat Chinese manufacturing data cast a cloud over equities.
It is likely to be a quieter day, given that US markets will be closed today for the Labor Day holiday.
The FTSE 100 index was down 13.03 points, or 0.2%, at 8,363.46. The FTSE 250 was down 61.15 points, or 0.3%, at 21,025.39, and the AIM All-Share was down 4.31 points, or 0.6%, at 768.20.
The Cboe UK 100 was fractionally lower at 836.87, the Cboe UK 250 was down 0.4% at 18,501.56, and the Cboe Small Companies was up 0.2% at 16,890.85.
The seasonally adjusted S&P Global UK manufacturing purchasing managers’ index rose to a 26-month high of 52.5 in August, up from 52.1 in July, and unchanged from the earlier flash estimate.
The PMI has now signalled expansion in five out of the past six months, above the 50-point neutral mark, with the exception being April. S&P Global Market Intelligence Director Rob Dobson said the ‘upturn continues to be driven by the domestic market, which is helping to compensate for lost export orders’.
But he cautioned the trend in export orders was a ‘key cause for concern’, with new business from overseas having fallen continuously since early in 2022.
‘The FTSE 100 dipped on Monday after weak Chinese manufacturing figures put Asian stocks on the back foot overnight,’ explained AJ Bell investment director, Russ Mould.
Chinese manufacturing contracted for a fourth consecutive month in August, official data showed on Saturday, a worse-than-expected result reflecting the world’s second-largest economy’s struggle to rebound.
In August, the PMI stood at 49.1 points, the National Bureau of Statistics announced. Analysts surveyed by Bloomberg had anticipated a decline in August, but a more moderate one at 49.5 points.
‘The world’s second largest economy may be trying to wean itself off its reliance on export demand by stoking domestic consumption. But this is proving a tricky process and exports were down for the first time in eight months amid weak consumer demand outside of China,’ added Mould.
In European equities on Monday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both down 0.2%.
This downturn was of no surprise, as figures showed continued decline for the eurozone’s manufacturing sector in August.
The HCOB eurozone manufacturing PMI stayed put at 45.8 in August, outperforming the flash reading of 45.6. Meanwhile, the HCOB eurozone manufacturing PMI output index ticked up to 45.8 in August from 45.6 in July, and outperformed the flash estimate of 45.7.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank said: ‘Things are going downhill, and fast. The manufacturing sector has been stuck in a rut, with business conditions worsening at the same solid pace for three straight months, pushing the recession to a gruelling 26 months and counting.’
‘Adding insult to injury, input prices have been creeping up again since June. There is a silver lining insofar as companies managed to pass some of these higher costs onto their customers in August.’
The pound was quoted at $1.3133 at midday on Monday in London, essentially flat compared to $1.3132 at the equities close on Friday. The euro stood at $1.1065, higher against $1.1053. Against the yen, the dollar was trading at JP¥146.74, up compared to JP¥146.12.
Sydney-listed REA Group on Monday confirmed it is considering making a cash and shares takeover offer for Rightmove, saying it was responding to ‘press speculation’.
Both REA and Rightmove provide online property-buying websites.
REA said it has not yet ‘approached, nor had any discussions with, Rightmove regarding any potential offer’. However, the company said it sees a ‘transformational opportunity’ in the combination of the two companies.
Following the news, Rightmove shares jumped 22%.
Elsewhere on the FTSE 100, LondonMetric lost 0.5%, despite transacting on £70 million of warehouse acquisitions, and £50 million of non-core disposals.
The warehouse acquisitions included a regional logistics centre in Avonmouth, a fully-let urban logistics park in Wednesbury, and five trade warehouses in Leeds, Derby, Swindon, Bolton, and Farnham, while the disposals consisted of ten former LXi REIT assets and a former CTPT asset.
On the FTSE 250, Big Yellow Group lost 0.2%.
The Bagshot, England-based self storage company has been granted planning permission for a total of 307,000 square feet at two of its London sites, namely Kensington Olympia and Staples Corner.
Consent for the former has been granted at appeal for a 176,000 square foot scheme, which is expected to open in 2027. For the latter, a resolution to grant planning has been secured for a 131,000 square foot replacement of Big Yellow’s existing leasehold store, expected to complete in 2026.
Elsewhere, Artemis Alpha Trust gained 6.3%.
The London-based investment trust, which is focused on the UK, said that heads of terms have been agreed for a proposed combination of its assets with those of Aurora Investment Trust.
Artemis Alpha’s assets will be rolled into Aurora in exchange for the issue of new ordinary shares in Aurora, with a cash exit option for up to 25% of Artemis Alpha’s existing issued capital also available. The scheme is expected to become effective in the fourth quarter of this year, after which Aurora Investment will change its name to Aurora Alpha.
On AIM, Futura Medical jumped 20%.
The sexual health products company announced that Eroxon is available for pre-order online, and will also be available in US stores from October. Eroxon is a fast-acting gel used to treat erectile dysfunction, which has been available without a prescription in UK pharmacies since March last year. More recently, Futura struck a licensing deal with Haleon PLC for the gel, which has led to its availability in the US.
Later in the week, attention will turn across the pond to the latest jobs report from the US, the last before the US Federal Reserve is due to start cutting rates in September.
‘Sufficiently soft data is good for the Fed cut expectations and risk appetite, but a too soft data and jumbo cut expectations are not supportive of risk appetite. There is a very fine line between optimism due to the expectation of rate cuts and chaos due to expectation of rapid rate cuts on thinking that the Fed may have missed its call at the end of the tightening cycle, as it had missed the turn at the start of it,’ explained Swissquote Bank’s Ipek Ozkardeskaya.
‘Strong data could even boost the expectation that the Fed will cut only 2 times this year, by a total of 50 basis points. I believe that there is a greater chance for a hawkish revision in Fed expectations than a dovish one. As such, the US dollar index – which rebounded last week – has room to extend gains this week, if the jobs data looks strong enough.’
The job openings data is due Wednesday, and wages, nonfarm payrolls and unemployment figures on Friday.
Brent oil was quoted at $76.81 a barrel at midday in London on Monday, down from $76.88 late Friday.
Gold was quoted at $2,499.00 an ounce, down against $2,502.92.
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