European stocks closed lower on Tuesday amid trepidation ahead of new US debt ceiling discussions, and after Chinese retail data proved disappointing.
The China numbers hurt shares in mining companies in London and luxury retail in Paris. Also sliding, meanwhile, was telecommunications firm Vodafone on poorly-received results.
The FTSE 100 index ended down 26.62 points, or 0.3%, at 7,751.08. The FTSE 250 rose 13.97 points, 0.1%, to 19,272.72, while the AIM All-Share closed down 2.81 points, or 0.3%, at 812.04.
The Cboe UK 100 closed down 0.3% at 774.98, the Cboe UK 250 ended flat at 16,832.84, and the Cboe Small Companies added 0.2% at 13,654.88.
In European equities on Tuesday, the CAC 40 in Paris ended down 0.2%, while the DAX 40 in Frankfurt lost 0.1%.
Growth in China’s industrial production and retail sales in April accelerated, though at a slower pace than expected, according to official figures.
The National Bureau of Statistics said industrial production grew 5.6% annually in April, faster than 3.9% in March. However, this was below the market consensus of 11%, as cited by FXStreet.
Retail sales also came in slightly below estimates, growing 18% annually in April, compared to the market consensus of 21%. The growth was stronger than the 11% seen the month before, however.
Tuesday’s data adds to the weaker picture of China’s economic recovery painted by reports last week.
Miners ended lower on Tuesday. Glencore lost 1.2% and Antofagasta shares declined 0.8%. China is a major buyer of minerals.
Luxury retail is also heavily-exposed to the ebbs and flows of the Chinese economy. LVMH and Kering lost 0.5% and 0.8% in Paris, though Burberry rose 0.8% in London.
Stocks in New York were lower ahead of more US debt ceiling talks later. Dow Jones Industrial Average
lost 0.6%, the S&P 500 was down 0.4% and the Nasdaq Composite fell marginally.
President Joe Biden and Republican leaders are set to reconvene for crunch talks on raising US borrowing limits, with a possible debt default now just weeks away.
The two sides have accused each other of failing to take the matter seriously ahead of the talks, which are due to get underway at 1900 GMT in Washington.
The Treasury has warned of ‘catastrophic’ consequences if the US runs out of cash to pay its bills, which would leave it unable to pay federal workers and trigger a likely surge in interest rates with knock-on effects for businesses and mortgage holders – and financial markets around the world.
The pound was quoted at $1.2486 at the time of the equities close in London on Tuesday, down from $1.2515 on Monday. The euro fell to $1.0862 from $1.0871. Against the yen, the dollar was trading at JP¥136.53, higher compared to JP¥136.07.
Back in London, Vodafone slumped 7.2%.
In the financial year ended on March 31, the telecommunications company said revenue was virtually flat year-on-year, up just 0.3% to €45.71 billion from €45.58 billion the year before. This is compared with a maximum expected revenue of €45.86 billion.
Pretax profit jumped to €12.82 billion from €4.10 billion, largely due to a gain on the disposal of Vantage Towers.
The firm also announced it would cut 11,000 jobs in the next three years as part of its ‘action plan’ to focus on ‘customers, simplicity and growth’.
‘The company can adjust, rebase and try to flatter its reported figures all it wants, but the share price fall shows the FTSE 100 firm isn’t fooling anyone,’ AJ Bell analyst Russ Mould commented.
Land Securities added 2.1%. The London-based company swung to a pretax loss of £622 million for the financial year ended March 31 from a profit of £875 million. It reported a £848 million reduction in its portfolio value, due to a softening of valuation yields and less active investment.
Revenue grew by 16% to £791 million from £679 million a year prior, with LandSec noting more normalised consumer demand post-Covid.
Also on the up, online retailer boohoo added 6.8% on a confident medium-term outlook.
Earnings for the financial year just gone worsened, however. boohoo swung to a pretax loss of £90.7 million in the financial year that ended on February 28 from a profit of £7.8 million the previous year.
Revenue sank by 11% to £1.77 billion from £1.98 billion in financial 2022, which boohoo blamed on a weak ‘macro-economic and consumer backdrop’.
Looking ahead, boohoo said it expects revenue to grow in the second half of 2024, although it said that this focus on making profitable sales will initially cause a decline between 10% and 15% in the first half of the next financial year.
Chief Executive Officer John Lyttle said: ‘Our confidence in the medium-term prospects for the group remains unchanged, and as we execute on our key priorities we see a clear path to improved profitability and getting back to double digit revenue growth.’
Elsewhere in the retail space, Shoe Zone slid 13%. The footwear seller reported revenue of £75.4 million for the 26 weeks ended on April 1, up 7.9% from £69.9 million a year before.
Also dropping sharply, tour operator On The Beach also plunged 13%.
However, pretax profit fell to £1.5 million from £3.1 million. In the six months ended March 31, group revenue surged 38% year-on-year to £73.2 million from £52.9 million. Its pretax loss narrowed to £6.0 million from £7.0 million.
Analysts at Davy were unimpressed, however.
‘Market communication is OTB’s Achilles heel, with no FY23 guidance provided,’ the brokerage said.
Brent oil was quoted at $74.84 a barrel late Tuesday in London, down from $75.26 late Monday. Gold traded at $2,001.14 an ounce, lower against $2,015.35.
Wednesday’s economic calendar has a eurozone inflation reading at 1000 BST.
The local corporate calendar has annual results from consumer credit checking firm Experian and athleisure retailer JD Sports.
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