Stock prices in London remained in the red at midday on Monday after data showed UK’s economy grew milder than expected in the second quarter, while China continued its stimulus efforts.
The FTSE 100 index was down 64.56 points, or 0.8%, at 8,256.20. The FTSE 250 was down 227.22 points, or 1.1%, at 21,013.34, and the AIM All-Share was down 3.66 points, or 0.5%, at 741.99.
The Cboe UK 100 was down 0.7% at 826.63, the Cboe UK 250 was down 1.0% at 18,502.37, and the Cboe Small Companies was down 0.9% at 16,794.48.
‘The week kicked off with another bull run in Chinese stocks on further stimulus news. This time, three major cities announced to ease homebuying rules to prop up their housing market. The Chinese Communications Constructions surged another 7% following a stellar week, the CSI 300 added another 6% and is up by 25% since the mid-September dip, and the HIS index gained another 3%. The Chinese will be going on national holiday in an excellent mood, and investors – though skeptical that the measures will help lifting the EM giant in the long run – could give some time to the measures to show in the economic data,’ explained Swissquote Bank’s Ipek Ozkardeskaya.
As AJ Bell’s Russ Mould added: ‘The continuing excitement about the impact of Beijing’s stimulus efforts helped the index to a steady start on Monday, despite the downgrade to UK GDP.’
According to data from the Office for National Statistics, the UK’s gross domestic product expanded by 0.5% in the second quarter compared to the first, slower than the ONS’s first estimate of 0.6%. This also was slower than 0.7% in the first quarter.
Year-on-year, UK’s GDP increased by 0.7% in the second quarter, weaker than the FXStreet-cited market consensus, which had anticipated annual economic growth of 0.9%.
In European equities on Monday, the CAC 40 in Paris was down 1.6%, while the DAX 40 in Frankfurt was down 0.6%.
Import prices in Germany were slightly higher in August but the export price growth rate was unchanged, the Federal Statistical Office, or Destatis, reported on Monday morning.
Destatis said that in August import prices rose 0.2% compared to August 2023, but fell 0.4% compared with July. In July, import prices had risen 0.9% on an annual basis.
Destatis said the annual rise in August was mainly due to prices for consumer goods rising by 2.4% annually, with consumer goods imports becoming 2.7% more expensive. Export prices in August rose 0.8% on-year, unchanged from the annual growth rate in July, and were flat on a monthly basis.
Also on Monday, the ifo Institute reported that ‘fewer and fewer companies in Germany are looking to raise their prices’.
The seasonally adjusted ifo price expectations balance dropped to 13.8 points in September from 16.1 points in August, its lowest level since February 2021.
Price expectations in consumer-related sectors of the economy ‘fell noticeably’ to 18.2 points, from 25.0 points in August. They also fell in the construction industry, dropping to minus 0.3 points from 2.3 points. However the manufacturing balance edged up to 6.1 from 5.1 points.
The pound was quoted at $1.3409 at midday on Monday in London, compared to $1.3399 at the equities close on Friday. The euro stood at $1.1194, against $1.1166. Against the yen, the dollar was trading at JP¥142.48, down compared to JP¥142.81.
In London, Rightmove fell 8.5%.
Australia’s REA Group withdrew its possible takeover offer for the Milton Keynes-based online property portal after Rightmove rejected a fourth bid.
Rightmove said the decision had been reached after taking soundings from shareholders and considering representations from REA management.
In a statement, Rightmove said it has concluded the latest proposal ‘remains unattractive and continues to materially undervalue Rightmove and its future prospects’.
REA responded, announcing that it does not intend to make a takeover offer for Rightmove.
Vodafone lost 0.5%.
Shareholder approval will no longer be required for its merger of Vodafone UK and Three UK, as the move now classifies as a ‘significant transaction’ under new UK rules. According to the deal, Vodafone will own 51% of the merged UK business, while CK Hutchison will own 49%.
The merged business will be consolidated in Vodafone financial statements, it explained, with initial debt financing provided. The UK merger is however still subject to regulatory approval, and approval from CK Hutchison shareholders.
Additionally, Vodafone’s Italy business sale does not need shareholder approval either under new UK rules. The Italy business sale is expected to have a broadly neutral impact on net assets.
QinetiQ lost 0.7%.
The group has signed an agreement for the sale of its 407 acre freehold site at Cody Technology Park, Farnborough, to a fund managed by Tristan Capital Partners for £112 million.
QinetiQ occupies approximately a third of the space at CTP with the remaining two thirds occupied by 96 other tenants, vacant, or used as common areas. Prior to this transaction, QinetiQ was responsible for the investment and maintenance of the whole site.
Elsewhere, Applied Nutrition, a sports nutrition, health and wellness brand, said it is considering an initial public offering, and intends to publish on Monday a registration document.
The company is considering applying for admission of its ordinary shares to the equity shares category of the official list of the FCA and to trading on the main market of London Stock Exchange.
Chief Executive Officer Thomas Ryder said: ‘We are only scratching the surface of our growth opportunity, and this IPO positions us ideally for the next step of our development. With an exciting new product roadmap and opportunities to grow with new and existing customers, we are confident it will enable us to build the world’s most trusted and innovative sports nutrition, health & wellness brand.’ In 2021, JD Sports Fashion acquired a 32% stake in Applied Nutrition.
JD Sports Fashion lost 1.1% following the news.
On AIM, Surface Transforms plummeted 70%.
The producer of carbon‐ceramic automotive brake discs reported a loss before tax of £7.6 million for the six months ended June 30, widened from £5.6 million a year prior.
Revenue rose 58% to £4.7 million from £2.9 million, while cost of sales increases to £2.1 million from £1.1 million.
However, for the fourth quarter, the firm expects revenue of £3.5 million, 40% lower than planned. Expected revenue for the full-year is £11 million, which is ‘significantly’ under current market guidance of £17.5 million.
Stocks in New York were called lower. The Dow Jones Industrial Average, the S&P 500 index, and the Nasdaq Composite were all seen down 0.1%.
Tens of thousands of US dockworkers plan to strike this week if there is no breakthrough on contract talks, just a month before November’s closely contested presidential election.
A walkout affecting 14 large ports on the East and Gulf Coast could start at midnight on Tuesday, posing a potentially significant headwind to the US economy.
Negotiations on a new contract began in May but have stalled in recent weeks.
Elsewhere, rescuers struggled over the weekend with washed-out bridges and debris-strewn roads in the search for survivors of devastating Storm Helene, which killed at least 63 people across five US states and caused massive power outages.
Helene slammed into Florida on Thursday as a Category 4 hurricane and surged north, gradually weakening but leaving in its wake toppled trees, downed power lines and mudslide-wrecked homes.
Brent oil was quoted at $71.35 a barrel at midday in London on Monday, up from $71.20 late Friday.
‘Increased negative pressure on oil prices weighed on the index last week, after the news that Saudi Arabia was looking to change strategy and focus on increasing its market share rather than trying to prop up oil prices by restricting output. The good news is, even oil seems to be boosted by the Chinese stimulus news since last Friday. Support is building near the $67pb level in WTI,’ said Swissquote’s Ozkardeskaya.
Gold was quoted at $2,637.80 an ounce, lower against $2,653.93.
Still to come on Monday’s economic calendar, there is a speech from US Federal Reserve Governor Michelle Bowman, followed by Chicago PMI and the Dallas Fed manufacturing index.
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