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Wall Street and FTSE lower as China data disappoints

A look at how the major markets are performing on Tuesday

FTSE Wall Street opened lower on Tuesday as investors digested the latest economic data from China. Photo: Getty.
Wall Street opened lower on Tuesday as investors digested the latest economic data from China. The FTSE was down. Photo: Getty (Nikada via Getty Images)

Wall Street, European stocks and the FTSE 100 were all lower on Tuesday as investors digested the latest economic data from the US, China, and the UK.

In China, data showed retail sales and industrial production increased in July. However, the figures fell below market expectations. The weaker-than-expected data sent oil prices lower on demand concerns.

The US retail sales report showed spending is picking up, while British wage growth reached a record level in the three months to the end of June 2023.

Meanwhile, annual growth in regular pay, excluding bonuses, was 7.8% over the period — the highest rate seen since records began in 2001.

Read more: Pound up as UK unemployment and wages rise

However, the UK unemployment rate for June increased by 0.2 percentage points to 4.2%, the Office for National Statistics (ONS) said.

FTSE and European stocks

The FTSE 100 (^FTSE) was down 1.79% to 7,371.75 points in afternoon London trade, while the CAC 40 (^FCHI) in Paris fell 1.30% to 7,253.64 points. In Germany, the DAX (^GDAXI) declined further, by 1.09% to 15,730.07 points.

The FTSE 100 is leading the declines amid a lacklustre start to trade in Germany and France. Marks and Spencer (MKS.L) is staging impressive gains up over 8% after raising its outlook, lifting other retailers like Next (NXT.L) and B&M (BME.L) to the top of the FTSE 100,” Victoria Scholar, head of investment at Interactive Investor, said.

US and Asia

In the US, the Dow Jones (^DJI) was down 0.53% to 35,120.85 points. The S&P 500 (^GSPC) fell by 0.45% to 4,469.42 points, and the tech-heavy NASDAQ (^IXIC) shed 0.29% to open at 13,748.82.

On the data front, US retail sales for July were also published on Tuesday and the results were better than expected with sales increasing 0.7% month-over-month.

In Asia, the markets were mixed overnight following the latest retail data from China. Fixed asset investment also rose at a slower rate than expected, while urban unemployment increased.

Meanwhile, Japan’s economy posted its third straight quarterly expansion with GDP growing 6% in the second quarter, beating market expectations.

Japan’s Nikkei 225 (^N225) rose 0.56% to 32,238.89 points, while the Hang Seng (^HSI) in Hong Kong lost 0.68% to 18,651.89. In mainland China, the Shanghai Composite (000001.SS) also declined, by 0.24% to 3,171.41 points.

Pound

The pound to dollar exchange rate (GBPUSD=X) was trading higher at 1.27, meaning £1 will get you $1.27. Meanwhile the pound to euro exchange rate (GBPEUR=X) was up slightly at 1.16.

“Alarm bells are ringing on UK inflation once more as the latest figures from the Office for National Statistics show record wage growth,” AJ Bell investment director Russ Mould said.

“This builds pressure on the Bank of England and has prompted an increase in sterling and gilt yields, as well as a big fall in UK stocks, as it suggests inflation is becoming increasingly entrenched in the economy.”

Oil prices

In commodities, oil prices reversed gains on Tuesday with US crude oil, or West Texas Intermediate (CL=F), down 1.28% to trade at $81.45 a barrel, while Brent crude (BZ=F) fell 0.96% to $85.37 a barrel.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, told Yahoo Finance UK: “Concerns swirling about the health of the world’s second largest economy are putting pressure on commodity stocks amid expectations of weakening demand for crude, oil metals and minerals. China’s increasingly sluggish growth indicators are a nagging worry with retail sales numbers, industrial output and investment data coming in lower than expected.

Read more: China economy concerns weigh on oil prices

“The triple disappointment immediately prompted the People’s Bank of China to cut a key medium term loan rate, but it failed to stem a fresh weakening of sentiment. Policy action overall has underwhelmed, and investors are looking for a lot more welly before being more confident that the economy may have more insulated from the downturn.”

Corporate highlights

Legal & General (LGEN.L) and Just Group (JUST.L) are among the companies reporting their latest results on Tuesday.

On Wednesday, it will be the turn of Balfour Betty (BBY.L), Admiral (ADM.L), Aviva (AV.L), Target (TGT), and Cisco (CSCO). On Thursday, Walmart (WMT) will report its latest financials.

Legal & General posted a first-half operating profit of £941m ($1.2bn), down 2% year-on-year but beating consensus analyst expectations of £834m.

The firm said it was on track to meet its five-year targets and had been “bolstered” by growing annuity sales.

Shares in Just Group rose 3.66% on the FTSE 250 after the British insurer reported a 154% jump in first-half profit, beating market estimates and cheering investors.

It said its underlying operating profit rose to £173m in the six months to 30 June, from £68m a year earlier.

Bumper sales of its retirement income products and higher new business income helped to boost the company’s balance sheet.

Read more: Trending tickers: Nvidia l Marks & Spencer l Just Group l Taysha Gene Therapies

Meanwhile, shares in UK retailer Marks & Spencer (MKS.L) surged nearly 9% on Tuesday after the company raised its outlook for the year.

In an unscheduled trading update, Marks and Spencer said that due to better-than-expected trading, profit for the year is expected to be above its previous guidance.

M&S now expects profit to grow versus last year and the interim results to show a significant improvement against previous expectations.

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said: "Following on the heels from Next’s recent profit upgrade, M&S has also announced that it expects profit for the year to be above expectations. This is evidence that the UK consumer is still spending, despite the gloomy economic headlines."

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