London close: Stocks finish lower on China stimulus disappointment

8th Oct 2024 16:06

(Sharecast News) - London markets ended Tuesday on a weaker note, weighed down by investor disappointment over the absence of new stimulus measures from China.

The FTSE 100 index fell 1.36% to close at 8,190.61 points, and the FTSE 250 declined by 1.06% to 20,631.20 points.

In currency markets, sterling was last up 0.09% on the dollar to trade at $1.3095, as it gained 0.07% against the euro, changing hands at €1.1929.

"After a much awaited news conference by China's National Development and Reform Commission fell short of hopes for greater stimulus, UK markets dropped on Tuesday," said Patrick Munnelly at TickMill Group.

"Rising borrowing rates in the United Kingdom in recent days also presented difficulties for the government, which plans to present its budget at the end of the month.

"Reaching 4.2%, the yield on 10-year UK government gilts is the highest level since the July general election."

German industrial production beats expectations, US small business sentiment subdued

Tuesday's economic news was largely focused on developments outside the UK, with no domestic data releases of note.

In Germany, industrial production saw a stronger-than-expected rebound in August, driven by a significant boost in the auto industry.

Output increased by 2.9% month-on-month, surpassing analysts' forecasts of a 0.8% rise, according to the federal statistics office, Destatis.

The positive data followed a revised 2.9% decline in July, previously reported as a 2.4% drop.

"Currently, production in the automotive industry fluctuates considerably from month to month and this has an impact on the monthly development of production in industry as a whole," Destatis said in a statement.

"The seasonally and calendar adjusted production of motor vehicles, trailers and semi-trailers rose by 19.3% compared with the previous month, following a decline of 8.2% in July 2024."

Across the Atlantic, US, small business sentiment remained subdued in September.

The National Federation of Independent Business reported an increase in its optimism index to 91.5, slightly below expectations of 91.7, marking the 33rd consecutive month the index has stayed below the 50-year average of 98.

The uncertainty index surged to a record 103, while capital outlays and inventory gains saw declines, pointing to continued caution among business owners.

"Small business owners are feeling more uncertain than ever," said NFIB chief economist Bill Dunkelberg.

"Uncertainty makes owners hesitant to invest in capital spending and inventory, especially as inflation and financing costs continue to put pressure on their bottom lines.

"Although some hope lies ahead in the holiday sales season, many Main Street owners are left questioning whether future business conditions will improve."

Elsewhere, China announced provisional anti-dumping tariffs on EU-imported brandy.

The Ministry of Commerce revealed that customs would collect deposits ranging from 30.6% to 39% of the total value, further straining trade relations between China and the European Union.

"Anti-dumping is an import duty charged in addition to normal customs duty and can be levied when a foreign company sells an item significantly below their normal price," said Russ Mould, investment director at AJ Bell.

"Importers of brandy coming to China from the EU will now have to put down security deposits of up to 39% of the import value, with it unclear as to when the deposits will be returned.

"That could push up the price of such products for drinkers, and potentially lead to reduced sales of EU-originated brandy if the consumer seeks cheaper alternatives."

Miners and China-exposed stocks fall further in London

On London's equity markets, miners took a heavy hit, with Anglo American dropping 6.69%, Rio Tinto falling 4.83%, and Antofagasta down 4.95%.

The sell-off came after China's National Development and Reform Commission held a press conference without announcing additional economic support, intensifying concerns over demand for commodities.

Luxury fashion brand Burberry, which has significant exposure to China, also saw a sharp decline, losing 4.42%.

In the housebuilding sector, Vistry Group plummeted 24.31% after issuing a profit warning.

The company revealed it had underestimated build costs in its southern division, leading to an expected £80m reduction in full-year 2024 pre-tax profit, with further hits projected for 2025 and 2026.

Engineering solutions provider Senior fell 12.81% after warning that ongoing supply chain challenges in the aerospace sector would weigh on its full-year results.

The firm noted that aerospace results in the second half of the year would be lower than in the first half due to "temporary near-term customer-related headwinds".

Oil producer Ithaca Energy slid 9.93% as crude prices pulled back sharply after recent gains.

On the upside, Imperial Brands rose 1.96% after announcing a £400m expansion of its shareholder returns programme, supported by in-line full-year results and growth in both tobacco and next-generation products.

Convenience food maker Greencore Group surged 8.77% after lifting its full-year profit guidance, driven by strong performance in the fourth quarter.

PRS REIT gained 1.11% after reporting solid full-year results, with revenue up 17% and net income rising 18%, bolstered by strong asset performance and rental demand.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,190.61 -1.36%

FTSE 250 (MCX) 20,631.20 -1.06%

techMARK (TASX) 4,765.96 -0.99%

FTSE 100 - Risers

Imperial Brands (IMB) 2,236.00p 4.10%

International Consolidated Airlines Group SA (CDI) (IAG) 196.00p 2.14%

Ashtead Group (AHT) 5,724.00p 1.35%

Hikma Pharmaceuticals (HIK) 1,900.00p 1.12%

Marks & Spencer Group (MKS) 371.90p 1.11%

Reckitt Benckiser Group (RKT) 4,600.00p 1.03%

Next (NXT) 9,906.00p 0.75%

Smith (DS) (SMDS) 459.40p 0.75%

Relx plc (REL) 3,537.00p 0.71%

Haleon (HLN) 379.50p 0.66%

FTSE 100 - Fallers

Vistry Group (VTY) 963.50p -24.31%

Anglo American (AAL) 2,281.50p -6.69%

Antofagasta (ANTO) 1,888.00p -5.15%

Rio Tinto (RIO) 5,044.00p -4.83%

Glencore (GLEN) 417.50p -4.57%

Prudential (PRU) 687.00p -4.50%

HSBC Holdings (HSBA) 666.00p -4.20%

BP (BP.) 406.45p -3.71%

Melrose Industries (MRO) 434.70p -2.77%

DCC (CDI) (DCC) 5,040.00p -2.42%

FTSE 250 - Risers

PRS Reit (The) (PRSR) 106.00p 7.18%

Carnival (CCL) 1,294.50p 2.25%

CMC Markets (CMCX) 305.00p 1.50%

Baillie Gifford US Growth Trust (USA) 208.50p 1.46%

SSP Group (SSPG) 160.20p 1.26%

Tritax Eurobox (GBP) (EBOX) 69.10p 1.02%

AO World (AO.) 108.80p 0.93%

ICG Enterprise Trust (ICGT) 1,186.00p 0.84%

Plus500 Ltd (DI) (PLUS) 2,466.00p 0.82%

Hammerson (HMSO) 308.40p 0.78%

FTSE 250 - Fallers

Senior (SNR) 127.40p -12.81%

Ithaca Energy (ITH) 105.20p -9.93%

Fidelity China Special Situations (FCSS) 224.00p -8.38%

Crest Nicholson Holdings (CRST) 181.00p -6.46%

W.A.G Payment Solutions (WPS) 78.00p -5.80%

Indivior (INDV) 749.00p -4.46%

Burberry Group (BRBY) 643.80p -4.42%

International Workplace Group (IWG) 171.80p -3.65%

Harbour Energy (HBR) 272.20p -3.36%

Close Brothers Group (CBG) 369.40p -3.25%