Miners led the FTSE 100 lower in early trade on Tuesday, as trade data from China underwhelmed, with focus now turning to an inflation reading on Wednesday.
Wednesday’s reading is expected to confirm that the Chinese economy is not enjoying the post-Covid-19 bounce back some had hoped. According to FXStreet cited consensus, consumer prices are expected to have fallen 0.5% on-year, having tread water in June.
The FTSE 100 index opened down 16.38 points, 0.2%, at 7,538.11. The FTSE 250 was up 21.17 points, 0.1%, at 18,882.83, and the AIM All-Share was down 0.58 of a point, 0.1%, at 759.05.
The Cboe UK 100 was down 0.3% at 751.14, the Cboe UK 250 was up marginally at 16,556.93, and the Cboe Small Companies was down 0.6% at 13,662.34.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 0.4%. In China, the Shanghai Composite closed down 0.3%, while the Hang Seng index in Hong Kong was down 2.0% in late trade. The S&P/ASX 200 in Sydney closed up marginally.
Early Tuesday, China’s trade numbers disappointed.
China last month suffered its biggest drop in exports for more than two years.
Sales of Chinese products to foreign markets plunged 14.5% on-year in July, a third consecutive drop, according to the customs authority. The decline was bigger than expected and the heaviest drop since the start of 2020, when the economy came to a standstill in the early weeks of the Covid-19 pandemic.
The data will likely ramp up calls for leaders to do more to revive growth, having laid out a series of stimulus measures in recent weeks.
The news rippled onto China exposed stocks. Asia focused bank Standard Chartered was down 1.3%. Fashion brand Burberry lost 0.2%.
China’s recovery has also weighed on commodity prices and mining stocks.
Brent oil was quoted at $84.62 a barrel early in London on Tuesday, lower from $85.44 late Monday.
Miners Anglo American and Antofagasta shed 1.8% and 1.0%.
Glencore, meanwhile, was down 2.6%.
For the first six months of 2023, the Barr, Switzerland-based miner and commodity trader saw its net income attributable to equity holders plunge by 62% to $4.57 billion from $12.09 billion a year earlier.
Revenue for the period dropped 20% to $107.42 billion from $134.44 billion, hurting profit. Adjusted earnings before interest, tax, depreciation and amortisation halved to $9.39 billion from $18.91 billion.
Despite sharply lower earnings, Glencore declared a special dividend of $0.08 and announced a new $1.2 billion buyback programme intended to run until the release of full year results in February 2024.
Elsewhere in the FTSE 100, abrdn lost 4.9%, making it the worst performer on the index in early trade.
abrdn reported its assets under management shrunk in the first half of the year, with outflows continuing as it grappled with turbulent market conditions. However, it extended its share buyback, and said it has the ‘key management resources on board’ to ensure a promising future.
abrdn said assets under management and administration fell around 0.9% to £495.7 billion on June 30, from £500.0 billion at the end of last year.
The company reported ‘challenging market conditions and net outflows from the ’risk-off’ environment’.
The company maintained its interim dividend at 7.3p per share.
In addition, it upped its share buyback programme by £150 million to £300 million. It eyes returns for 2023 to be at a similar level to 2022.
In the FTSE 250 index, TI Fluid Systems jumped 14%.
TI Fluid Systems is an Oxfordshire-based maker of automotive fluid storage, carrying, delivery, and thermal management systems for light vehicles.
For the six months to June 30, the company reported a pretax profit of €58.9 million, leaping from €19.8 million a year prior. Revenue climbed 13% to €1.77 billion from €1.56 billion.
TI Fluid declared a dividend of 2.30 euro cents per share, more than doubled from 1.00 cents a year prior.
Looking ahead, the company remained cautious about its outlook, expecting the second half of 2023 to be slightly weaker than the first half. It cited modest global economic growth and ongoing uncertainties.
Among London’s small-caps, Zotefoams lost 6.4%.
Zotefoams reported that revenue in the first half of 2023 rose 9% annually to £64.6 million from £59.0 million. Pretax profit climbed by 49% to £9.4 million from £6.3 million.
It upped its interim dividend by 4.6% to 2.28p per share from 2.18p per share, saying that this reflects ‘continuing confidence in the group’s prospects.’
On AIM, PHSC surged 50%.
The company said that in the year ended March 31, it swung to a pretax profit of £304,598 from a loss of £577,798 a year earlier. However, revenue fell to £3.4 million from £3.6 million.
Looking ahead, PHSC said financial 2024 ‘has the potential to be another successful year’.
In European equities on Tuesday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was down 0.5%.
Germany’s yearly inflation rate eased last month, numbers on Tuesday confirmed.
Germany’s annual inflation rate cooled to 6.2% in July from 6.4% in June, Destatis said. The figure confirmed an earlier estimate. Month-on-month, consumer price grew 0.5% in July, picking up speed from a 0.3% rise in June from May.
‘The rate of inflation has fallen slightly but remains at a high level’, said Ruth Brand, president of Destatis.
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.2%, the S&P 500 up 0.9% and the Nasdaq Composite up 0.6%.
The pound was quoted at $1.2746 early on Tuesday in London, down compared to $1.2776 at the equities close on Monday. The euro stood at $1.0977, lower against $1.1004. Against the yen, the dollar was trading at JP¥143.06, up compared to JP¥142.25.
Still to come on Tuesday’s economic calendar, there are US wholesale trade sales at 1500 BST. There is also the US IBD/TIPP economic optimism index at the same time.
Gold was quoted at $1,933.61 an ounce, slightly lower against $1,934.11.
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