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FTSE 100 Live: China trade figures disappoint, mining shares fall

·14-min read
 (Evening Standard)
(Evening Standard)

Stock markets are under pressure after China reported disappointing trade figures today.

Amid the ongoing impact of Covid lockdowns in several major cities, the year-on-year figures showing exports growth of 7.1% and imports up by just 0.3% in August were both below expectations.

Asian stock markets fell and Brent crude was below $92 a barrel at one point amid fears over the outlook for China’s economy heading into the winter.

FTSE 100 Live Wednesday

  • Weak trade figures add to China worries

  • Average house price up 0.4% in August

  • Retailers fall in weak session for London market

Investors react favourably to latest Apple’s iPhone unveiling as share price rises 1%

20:14 , Simon Hunt

Shares in Apple rose 1.1% today as investors reacted positively to the unveiling of its latest iPhone.

The new iPhone 14 Pro will go on sale on September 16 and with prices starting at $999.

Investors are hoping the tougher economic conditions won’t stop consumers upgrading to the new device.

Acording to reports in the Financial Times, the tech giant has plans to double its digital advertising business workforce.

The two-trillion dollar tech company also unveiled a new version of its smart watch.

Energy stocks limit fall for FTSE 100 as Truss rules out windfall tax to pay for price freeze on bills

15:02 , Michael Hunter

London’s main stock index was down in line with losses for equities markets across Europe and Asia on a stubborn sense of forboding for world economic growth, but some of the most eye-catching moves were among its biggest risers.

Energy stocks lit up the leaderboard after Liz Truss used her first appearance at prime ministers’ questions to rule out a windfall tax on the sector. SSE took top slot, up by over 5% at 1773p. Centrica was 4% higher at 85.1p.

Overall, the FTSE 100 was down by around 70 points at 7229.52, a fall of almost 1%. Mining and resource stocks led the falls after weak economic data from Asia stoked concern about the outlook for metals demand. Commodities trader Glencore fell by over 3% to 471p, with Anglo American down 2.8% at 272p. Asian-focused bank Standard Chartered made the biggest single fall, down by over 4% at 577p.

New York stocks cheer up helped by well-received corporate news

14:50 , Michael Hunter

Wall Street’s S&P 500 made some progress in opening trade, helped by some well-received corporate news ahead of the publication of a report into the economy from the Federal Reserve.

The opening rise of around 17 points took the broad New York stock index t to 3924.58, a rise of 0.4%. It was a turn around for the mood on global markets after further falls in Asia and Europe.

Coupa Software rose almost 15% after its earnings beat forecasts. Netflix gained over 1% after a broker upgrade for the stock from Macquarie.

The Fed’s Beige Book, which surveys current economic conditions and is part of the Fed’s decision making process on rates, comes out after the close of European markets at 2 p.m. New York time.

US stock futures turn lower as Wall Street gets caught up in global economic gloom

14:11 , Michael Hunter

New York stocks are eyeing modest opening falls with a glum mood across global markets reaching the US and turning futures trade around from a positive showing earlier on

The S&P 500 is expected to slip by around 9 points, a fall of just 0.2%, with European share indices all lower by between 0.6% and 0.9%. The declines from London to Madrid via Frankfurt and Milan came after losses in Asia, where weak Chinese trade data set the tone.

Worries about the extent of global inflation rates sparked by Vladimir Putin’s invasion of Ukraine via soaring energy prices continued to stoke concern about global economic growth rates.

Attention will turn to the Federal Reserve’s report into current economic conditions in the US, which will inform the central bank’s outlook on the extent and pace of rate hikes as it fights inflation. The so-called Biege Book is due later in the US trading day.

Governor of the Bank of England repeats prediction of UK recession

13:18 , Michael Hunter

The man in charge of setting UK interest rates has said once again that a recession is the most likely outcome for the country’s economy, as it faces soaring inflation and tighter monetary policy.

Andrew Bailey, the governor of the Bank of England, told the Treasury Select Committee repeated the prediction to the Treasury Select Committee, saying: “the recession, I hope it doesn’t happen, but obviously we have forecast it because we think it is sadly the most likely outcome,” adding “It is overwhelmingly caused by the actions of Russia and the impact on energy prices.”

He denied that the rate-setting Monetary Policy Committee, which has faced criticism over the extent and timing of its decisions, was responsible for the bleak economic outlook.

“The person who’s going to put this economy into recession is Vladimir Putin and not the MPC.”

M&C Saatchi blames £4.5m profits slump on hostile bid battle

12:41 , Simon Hunt

Advertising firm M&C Saatchi has blamed a £4.5 million drop in statutory pre-tax profits on its fight against a hostile bid from former deputy chairwoman Vin Murria.

The firm said net sales in the first six months of the year of £129.4 million were nearly 10% higher than the same period in 2021, but that its efforts to avoid being taken over had led to a ramp-up in costs.

This led its first-half pre-tax profits to drop to just £300,000 compared with £4.8 million for the same period in 2021.

Chief executive Moray MacLennan said he would be “proud of the results under any circumstances, but particularly with the distraction of a hostile takeover”.

M&C Saatchi’s board has called the offer from Murria’s ADV “low value and high risk”.

ADV said last month it had received the mandatory regulatory clearances to proceed with an all-share offer of 209.4p per share for the advertising stalwart.

Murria said at the time that the final offer was “notably higher” than that of rival bidder Next Fifteen, which had bid 198.3p per share.

In spite of the drop in statutory pre-tax profits, the firm said its headline pre-tax profits, which ignore one-off costs such as those associated with fending off bids, were up 52.4%.

Halfords hails price cutting after sales rise by over a quarter

12:15 , Simon Hunt

Motoring and cycling firm Halfords has cited its price-cutting efforts as a key factor behind strong sales growth.

CEO Graham Stapleton said the firm had cut prices on nearly 2,000 motoring essentials to support customers in the cost-of-living crisis.

The 500,000 members of its Motoring Loyalty Club, launched in March, have benefited from a free 10-point car health check. Halfords also said it would be offering free MOTs to its more than 10,000 staff.

Its Autocentres revenue rose by 28.2% in the 20 weeks to 19 August, on a like-for-like basis, compared with the same period in 2019.

Halfords shares were up nearly 15% in early trading to 153.3p.

11:31 , Simon Hunt

WH Smith’s transition to an international travel retailer appears to be paying off after the firm posted revenues which soared past pre-pandemic levels.

Sales at the firm’s ‘travel’ stores – which include train stations, service stations and airports – were almost 30% ahead of pre-pandemic levels in the six months to August, led by strong results at its North America stores.

High street stores continue to lag behind pre-pandemic performance, however, with revenues at only 80% of 2019 levels.

The company has been eyeing aggressive expansion in the US, with some 300 stores now open in the country, including its speciality retailer Marshall and technology retailer InMotion.

WH Smith shares fell 3% to 1r,434p in early trading this morning.

read more here

City Comment: Don’t believe the house price gloom

11:07 , Simon English

If you believe some of the gloomsters, house prices are poised to plunge. They have been poised to do that for years.

The trouble with this analysis is that it treats houses like any other asset, like they were just part of a share portfolio.

On that basis, many homes probably are overvalued.

The obvious difference about houses as an asset is this: You get to live in them.

So whatever happens to mortgage costs, consumer confidence and the rest, they will remain the thing people pay for first, before they cut back anywhere else. (Pets are a close second).

Some see Britons obsession with house prices as unhealthy, a curious national affliction that blinds people to other issues.

How can we be so stupid as to feel content just because the bricks we live in are worth more than they were a year ago?

Maybe that obsession is just a reflection of the fact that Britain is a small place with loads of people, which means space to live in is always going to very valuable.

The correct answer to the question when should we buy? – has nearly always been “yesterday”.

Today Halifax says the average cost of a home in London is £554,718. That is up nearly £45,000 on a year ago.

For many people, even in London, that means that once again their house earned more than they did.

Facing the prospect of higher borrowing costs and lower disposable incomes, house hunters in the capital are moving for deals as quickly as possible, rather than delaying.

They figure the affordability question is only going to get worse, while the actual price of houses is unlikely to fall even if the rate of growth slows.

The housing market might cool. It will still be relatively hot.

Retail shares fall back, GB surges 20% after bid interest

10:18 , Graeme Evans

Retail and pub stocks have lost a chunk of yesterday’s big gains as economists tot up the cost of Liz Truss’s planned energy support package.

Ahead of the new PM’s announcement tomorrow, Deutsche Bank now sees a bill as high as £200 billion for the expected business subsidies and freezing of household bills at £2,500.

That’s double its initial estimate and close to half the sum spent during the pandemic at a little over 8% of GDP. The bank warns that resulting medium-term inflation pressures will heighten the chances of further interest rate hikes from the Bank of England.

Investors scaled back their enthusiasm today after speculation over the measures sent consumer-focused stocks sharply higher yesterday.

Next fell 88p to 6100p in the FTSE 100 index and Marks & Spencer lost 4% or 4.75p to 124.9p, while pubs chain Mitchells & Butlers gave up 5.6p to 159.3p.

The mood wasn’t helped by fresh worries over the outlook for China’s economy, particularly with several cities still subject to Covid lockdowns.

Today’s weaker-than-expected trade figures from Beijing showed year-on-year export growth of 7.1% and imports up by just 0.3% in August, putting pressure on oil and metal prices and causing sharp falls for London’s leading commodity stocks.

The FTSE 100 index weakened 0.8% or 57.96 points to 7242.48, with Anglo American down 59p at 2747.5p and Glencore off 11.5p at 475.35p. The UK-focused FTSE 250 index slipped 68.64 points to 18,752.20.

Sterling remained just below $1.15 today, a level that’s boosted interest in UK stocks from overseas bidders. The tech sector is a particular target, with cyber security firm GB last night in the sights of Chicago-based private equity firm GTCR.

The disclosure sent GB’s AIM-listed shares up by more than 20% or 108.5p to 630.5p and meant peer NCC rose 6% in the FTSE 250 index. AJ Bell’s investment director Russ Mould said: “An already shrinking UK tech sector on the London market can ill-afford another departure.”

FTSE 100 lower, WH Smith down 2% after update

08:35 , Graeme Evans

Pressure on commodities following China’s worse-than-expected trade figures led energy and mining stocks lower, leaving the FTSE 100 index down 78.76 points at 7221.68.

Rio Tinto lost 2.5% and Anglo American fell by just under 2%, while BP retreated 1.5% or 6.5p to 446.15p. AstraZeneca fell 214p to 10,300p after analysts Morgan Stanley downgraded their recommendation on the drugs giant.

Housebuilders featured in the lower part of the risers board after in-line annual results from Barratt Developments and the latest resilient house price figures from Halifax. Other blue-chip risers included Rolls-Royce with a rally of 0.9p to 77.6p.

The UK-focused FTSE 250 index outperformed the top flight after a decline of 0.3% or 47.11 points to 18,773.73. Fallers included WH Smith, which declined 39.5p to 1439.5p despite the retailer sticking by full-year expectations in a trading update today.

House prices steady, London up 8.8% in a year

08:06 , Graeme Evans

House prices are proving to be resilient in the face of economic uncertainty, with the latest average figure from Halifax showing a return to growth in August.

The rise of 0.4% following July’s 0.1% decline resulted in another record high at £294,260, the seventh time in the past eight months that it has hit a new peak.

The annual rate of growth dropped to 11.5% from 11.8% in July, the lowest level in three months, but with London’s rise of 8.8% its highest in six years.

A typical property costs a record £554,718, meaning the capital’s average house price has risen by £44,669 over the last 12 months.

Wales remains at the top of the table for annual house price inflation, up by 16.1%, the strongest level of growth since early 2005.

Markets under pressure after China trade figures

07:45 , Graeme Evans

European markets are pointing lower after US markets came under more pressure last night, with the tech-heavy Nasdaq extending its losses to a seventh straight session.

The impact of a strong dollar and expectations of another aggressive move on interest rates by Federal Reserve policymakers later this month meant the Nasdaq dropped 0.7% and the S&P 500 and Dow Jones Industrial Average lost 0.5% and 0.4% respectively.

The FTSE 100 index is set to fall by 65 points to 7235, according to CMC Markets, with traders in Frankfurt and Paris also braced for a downbeat session.

London’s top flight was marginally higher yesterday after retail, hospitality and banking stocks gained on the back of speculation that new prime minister Liz Truss is planning an energy price freeze for households and businesses.

The biggest gains were seen in the domestic-focused FTSE 250, which climbed 1% or 191.16 points to 18,820.

Today’s weaker session also reflected China’s latest disappointing trade figures, with exports growth of 7.1% below a market forecast of 12.8% and the previous month’s 18% jump. Imports rose by just 0.3%, compared with expectations for 1.1% growth as the country grapples with the impact of Covid lockdowns.

Asia markets including the Hang Seng traded more than 1% lower and demand fears meant a further fall for the oil price to leave Brent crude futures at just above $91 a barrel.

CMC’s chief market analyst Michael Hewson said: “It’s becoming increasingly difficult to feel optimistic about the outlook for the Chinese economy as we head into the winter months.

“With 21.5 million people already locked down in Chengdu, and new restrictions being imposed in places like Guiyang, in Guizhou province, as well as Shenzhen, it’s hard to see a scenario for a significant economic pickup much before next year.”