Stocks prices in London were lower on Monday morning after further weakness in Chinese economic data concerned investors.
The FTSE 100 index opened down 7.20 points, 0.1%, at 7,249.74. The FTSE 250 was down 37.29 points, 0.2%, at 17,966.68, and the AIM All-Share was down 0.66 of a point, 0.1%, at 741.05.
The Cboe UK 100 was down 0.1% at 722.59, the Cboe UK 250 was down 0.3% at 15,722.60, and the Cboe Small Companies was up 0.1% at 13,504.87.
In European equities on Monday, the CAC 40 in Paris and DAX 40 in Frankfurt were both down 0.2%.
Trading in Asia was mixed on Monday, as weak Chinese inflation data pointed to weak demand and a faltering economic recovery.
The consumer price index for June was flat, which was down from the 0.2% seen in May, according to the National Bureau of Statistics, and was worse than expected as domestic demand slowed.
A 7.2% annual drop in the cost of pork, the staple meat in China, as well as falling oil prices that made transportation cheap, dragged down the cost of the essential goods basket, the NBS said.
Producer prices – which measure the cost of goods at the factory gate – tumbled 5.4% on-year, following a 4.6% slide in May. Economists polled by Bloomberg had expected prices to sink 5%.
‘The releases of the latest indicators from China did little to quell concerns about the lethargic state of economic activity. CPI and PPI gauges both missed the target and with deflationary troubles brewing for the world‘s second largest economy, one wonders how long it will be before the central bank steps in to provide something more meaningful on the stimulus side,’ said Tim Waterer, chief market analyst at KCM Trade.
The Nikkei 225 index in Tokyo closed down 0.6%. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong was up 0.8% in late dealings. The S&P/ASX 200 in Sydney closed down 0.5%.
However, on a more positive note, there were conciliatory overtures between the world’s two largest economies over the weekend.
US Treasury Secretary Janet Yellen on Sunday said her talks with top Chinese officials last week have helped put ties on ‘surer footing’, as she wrapped up a trip aimed at stabilising fraught relations between the two countries.
While it did not produce specific breakthroughs, Yellen’s trip furthers a push by President Joe Biden’s administration to steady ties with China.
Beijing’s official Xinhua news agency said Saturday that Yellen’s meeting with Vice Premier He Lifeng yielded an agreement to ‘strengthen communication and cooperation on addressing global challenges’.
Both sides also agreed to continue exchanges, the readout added.
In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.6%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.1%, following a softer-than-expected US jobs print.
Non-farm payrolls came in below forecast, falling short of consensus for the first time since March of 2022, but rising average hourly earnings kept inflationary worries firmly on the Federal Reserve’s radar.
‘The sum of the recent data run leaves a July rate hike on the table, but the softer payroll data adds a touch of uncertainty for a follow-up rate hike in 2023,’ said SPI Asset Management’s Stephen Innes.
The dollar was mixed against major currencies in early exchanges in Europe.
Sterling was quoted at $1.2821 early Monday, lower than $1.2832 at the London equities close on Friday. The euro traded at $1.0960, higher than $1.0949. Against the yen, the dollar was quoted at JP¥142.46, up versus JP¥142.27.
After softer-than-expected US jobs data on Friday, a focal point for this week will be the US consumer price inflation print on Wednesday, followed by producer price inflation data on Thursday.
On Friday, earnings season kicks off with second-quarter results from banks JPMorgan, Wells Fargo, Citigroup as well as asset manager Blackrock.
Gold was quoted at $1,924.39 an ounce early Monday, lower than $1,929.07 on Friday.
Brent oil fetched $77.96 a barrel, higher than $77.47, helping lift BP and Shell up 0.6% and 0.8%, respectively.
BT Group fell 0.6%, as the telecoms company announced Chief Executive Philip Jansen will step down in the next 12 months ‘at an appropriate moment’. Its nominations committee has begun a formal succession process.
The announcement confirmed a Sky News report on Saturday. Citing ‘City sources’, Sky reported that Jansen has been considering multiple offers for positions in the US.
BT is working with search firm Spencer Stuart, Sky said, and has already approached a ‘number of external figures’. Frontrunners are thought to include BT consumer business boss Marc Allera, and Non-Executive Director Alison Kirkby, who also heads up Swedish telecoms group Telia Company.
Shares in commercial real estate and storage firms were under pressure, after a downgrade from HSBC.
In the FTSE 100, Segro fell 1.1%, Land Securities fell 1.3%. In the FTSE 250, Hammerson dropped 4.6%, and Safestore fell 2.0%, while Big Yellow and Great Portland Estates dropped 1.5%.
Big Yellow also announced a ‘solid start’ to the year, updating on its first quarter ended June 30. Total revenue rose 6.7% year-on-year to £48.1 million, with store revenue rising 5.4% on a like-for-like basis to £47.0 million.
On AIM, Petro Matad fell 18% on disappointing well results.
The petroleum explorer said the Velociraptor-1 exploration well in the Taats Basin of Block V located in central Mongolia reached a total depth of 1,500 metres with wireline logging completed. However, all the reservoirs encountered were water-bearing, the company said.
The well will now be plugged and abandoned.
The results are ‘obviously disappointing’, said CEO Mike Buck, but ‘such high impact targets, drillable at modest well cost cannot be ignored when exploring frontier area’. The well will serve as a ‘valuable new data point’ to help unlock the potential of the southern Gobi, he added.
In the economic calendar on Monday, UK Chancellor Jeremy Hunt and Bank of England Governor Andrew Bailey speak at the yearly Mansion House event. US President Joe Biden will meet Rishi Sunak for their fifth meeting in recent months.
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