Stocks in London retreated on Monday, after downgrades to the UK’s economic growth estimates, while automotive weakness continued.
The FTSE 100 index ended down 83.81 points, 1.0%, at 8,236.95. The FTSE 250 closed 187.37 points lower, 0.9%, at 21,053.19, and the AIM All-Share shed 5.22 points, 0.7%, at 740.43.
The Cboe UK 100 ended 1.0% lower at 824.66 on Monday. The Cboe UK 250 fell 1.0% to 18,506.33, and the Cboe Small Companies slid 0.5% to 16,866.28.
In European equities on Monday, the CAC 40 in Paris declined 2.0%, while the DAX 40 in Frankfurt ended down 0.7%.
In Europe, car manufacturers were under pressure. Stellantis tumbled 15% as it announced it was lowering its margin guidance for the current year, as 2024 transpired to be a weaker year than expected.
The Hoofddorp, Netherlands-based automotive company now expects its adjusted operating income margin to be between 5.5% and 7.0% for 2024. It had previously guided for a ‘double digit’ margin.
Meanwhile, Volkswagen was down 4.6%, after a profit warning late Friday. Peers BMW and Mercedes-Benz have warned in recent weeks.
‘This is further evidence that the auto industry is going through one of its toughest patches in years. Vehicle manufacturers have ploughed millions of dollars into developing electric vehicles as the industry experiences its biggest transformation in decades. Unfortunately, buyers haven‘t come out in force, leaving the manufacturers in a tricky spot,’ commented Russ Mould at AJ Bell.
In London, figures from the Office for National Statistics, showed 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, the 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%.
Rob Wood at Pantheon Macroeconomics said while growth was revised down it remains ‘above potential, while downward saving rate revisions point to slightly less cautious consumer’.
‘All told, we think the GDP revisions will have little effect on the [Monetary Policy Committee},’ he added.
The pound was quoted at $1.3397 at the time of the London equities close, just lower compared to $1.3399 on Friday. The euro stood at $1.1142, down against $1.1166. Against the yen, the dollar was trading at JP¥143.31, up compared to JP¥142.81.
In New York at the time of the London market close, the DJIA was down 0.4% while the S&P 500 and Nasdaq Composite were both 0.1% lower.
On London’s FTSE 100, Rightmove fell 8.4% after Australia’s REA withdrew its possible bid for the UK listed firm.
Melbourne-based REA said the lack of ‘meaningful engagement and the consistent lack of information provided by Rightmove impeded the ability to progress discussions and work together towards a recommended transaction, within the timetable permitted’.
Chief Executive Owen Wilson said: ‘We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available. They had nothing to lose by engaging with us.’
Rightmove had earlier rejected the fourth bid approach from REA and turned down a request to extend the bid deadline.
The Milton Keynes-based online property portal 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’.
Elsewhere, shares in 3i eased 2.6% after the Times reported short-seller ShadowFall Capital and Research has taken out a multimillion-pound bet against the private equity group on the basis that the star company in its portfolio, the European discount retail chain Action, is significantly overvalued.
ShadowFall, which shot to prominence for its role in exposing fraud at payments processor Wirecard, believes 3i’s investors have failed to appreciate the extent to which Action‘s margins have been boosted by inflation, which is now receding, the report said.
On London’s FTSE 250, Aston Martin spun into reverse, sliding 23%.
The luxury carmaker cut annual guidance, as it grapples with tepid demand in China and the late arrival of components from ‘several’ of its suppliers.
The company expects its 2024 adjusted earnings before interest, tax, depreciation and amortisation to be ‘slightly below’ the £305.9 million it achieved last year. The Warwickshire, England-based firm no longer expects to be free cash flow positive for the second half of 2024.
An adjusted Ebitda margin in the high teens is now expected for the year, its outlook cut from the ‘low 20s’. Its adjusted Ebitda margin in 2023 was 18.7%.
Analysts at Citi said: ‘As ever, execution and the sustainability of demand remain looming questions for [Aston Martin]. Longer term, [Aston] still needs to find a stable sustainable level of sales performance that can provide sustainable positive [free cash flow]. This remains a risk for now.’
Among London’s small caps, Petrofac tumbled 23%.
The services provider to the energy industry reported a pretax loss for the six months ended June 30 of $202 million, widened from $136 million a year prior. Revenue came to $1.24 billion, down slightly from $1.3 billion the year before.
Reflecting on the period, Petrofac said that its performance in the first half ‘reflected initial progress made on the new contracts awarded in 2023 in both E&C and Asset Solutions as the group transitions from the legacy E&C portfolio, offset by the impact from the limited access to guarantees for E&C contracts and adverse operating leverage.’
More optimistically, Applied Nutrition, the Liverpool-based sports health brand, said it is planning to float on the London Stock Exchange.
The company, founded in 2014 by its Chief Executive Thomas Ryder, is backed by FTSE 100 listed JD Sports Fashion PLC, which holds a 32% interest.
A potential listing has been estimated to value the firm at around £500 million, according to reports.
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.’
‘We are excited at the prospect of widening our shareholder base and we are confident that a London-listing would further enhance our brand awareness and provide a platform for continued growth,’ he added.
Brent oil was quoted at $72.30 a barrel late on Monday afternoon in London, up from $71.20 late Friday.
Gold fell to $2,633.76 an ounce against $2,653.93 on Friday. The fall in the price of the yellow metal hit Endeavour Mining, down 3.0%.
Tuesday’s UK corporate calendar sees a trading statement from hot snacks seller Greggs.
The economic calendar has a slew of manufacturing PMIs in Europe, the UK and the US, including the ISM manufacturing survey at 1445 BST.
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