London close: Stocks mixed on manufacturing data, Middle East tensions

1st Oct 2024 16:58

(Sharecast News) - London markets ended Tuesday with mixed results, as investors reacted to manufacturing data from both sides of the Atlantic, as well as Middle East developments.

The FTSE 100 index gained 0.48%, closing at 8,276.65 points, while the FTSE 250 fell 0.66% to 20,914.70 points.

In currency markets, sterling was last down 0.72% on the dollar, trading at $1.3279, as it slipped 0.1% against the euro, changing hands at €1.20.

"'A relatively quiet session turned into full risk off mode amid unconfirmed threats of an imminent missile attack by Iran on Israel," said IG senior analyst Axel Rudolph.

"The bullish tone following a week of China stimulus ahead of this week's National holiday, and 8% rally of the Shanghai stock index, was initially followed by lacklustre trading in Europe and the US ahead of more Fed member speeches and US non-farm payrolls on Friday.

"A US military official saying anonymously that US White House officials believed that Iran would launch a ballistic missile attack on Israel overnight, provoked a sell-off in global stock indices later in the day and led to a rally in the gold and oil price."

Rudolph added that eurozone inflation falling to 1.8% - the lowest since April 2021 - led to a sell-off in the German Bund yield.

"Given heightened tensions in the Middle East, US factory activity remaining subdued and job openings beating expectations only played second fiddle on Tuesday."

Manufacturing data paints wary picture on both sides of Atlantic

In economic news, the Institute of Supply Management's manufacturing index for September remained unchanged at 47.2, continuing to signal contraction in the US manufacturing sector.

The reading fell short of expectations and marked ongoing declines in new orders, inventories, and production, highlighting weak demand.

While supplier deliveries slowed, prices eased, suggesting inflationary pressures in the supply chain may be subsiding.

"Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy and election uncertainty," said Timothy Fiore, chairman of the ISM manufacturing business survey committee.

"Production execution stabilised in September.

"Suppliers continue to have capacity, with lead times improving and shortages reappearing."

At the same time, S&P Global's manufacturing PMI was revised slightly higher to 47.3 for September, up from a preliminary reading of 47, but still the lowest since June 2023.

On home shores, the UK saw a slowdown in manufacturing growth, with the S&P Global PMI registering 51.5 in September, down from 52.5 in August.

Although the sector maintained expansion for the fifth consecutive month, business confidence dipped to a nine-month low as concerns over the upcoming Budget and geopolitical uncertainties weighed on sentiment.

Many manufacturers adopted a cautious approach, delaying key decisions.

Rob Dobson, director at S&P Global Market Intelligence, said the UK manufacturing sector was underpinned by a resilient domestic market.

"However, manufacturers have become more nervous about the outlook, suggesting that the current spell of impressive growth is fading, with business optimism about the year-ahead slumping to a nine-month low," he said.

"The extent of the drop in confidence was striking, beaten only by that seen in March 2020 prior to Covid lockdowns.

"Uncertainty about the direction of government policy ahead of the coming Autumn Budget was a clear cause of the loss of confidence, especially given recent gloomy messaging, though firms are also worried about wider global geopolitical issues and economic growth risks."

Meanwhile, shop prices in the UK fell deeper into deflation, according to the British Retail Consortium.

Prices declined 0.6% year-on-year in September, with non-food items seeing the sharpest drop since March 2021, reflecting subdued consumer demand.

However, food inflation edged higher to 2.3%, driven by rising fresh food prices.

Elsewhere, business confidence in the UK hit its lowest level in nearly two years, according to the Institute of Directors.

The IoD's economic confidence index plunged to -38 in September from -12 in August, as firms held back on investment ahead of the Autumn Budget.

Headcount and investment intentions both declined sharply, signalling a more cautious outlook among UK businesses.

On the continent, the eurozone manufacturing sector saw its sharpest contraction this year, as the final PMI reading for September came in at 45, the lowest since December 2023.

Both new orders and output fell at their fastest rates in nine months, while inventories and employment also declined.

Business growth expectations reached a 10-month low as economic headwinds continued to mount.

WPP climbs on Unilever account wins, Greggs falls amid weaker demand

On London's equity markets, WPP climbed 2.25% after securing a significant portion of Unilever's global media account.

Despite losing five southeast Asian markets to Publicis Media, WPP's Mindshare retained major accounts in the UK, US, and China, and gained sub-saharan Africa from Omnicom Media Group.

Unilever itself edged up by 0.27%.

Miners saw gains amid geopolitical tensions, with Hochschild Mining rising 2.29%, Centamin up 2.95%, Harbour Energy advancing 1.92%, and Endeavour Mining gaining 1.47%.

The sector was boosted by a spike in oil and gold prices following reports that Iran could launch a missile strike on Israel, increasing demand for safe-haven assets.

Luxury brand Mulberry surged 8.06% after rejecting an £83m takeover bid from Frasers Group, itself down 1.48%.

Mulberry argued that the offer undervalued its future growth potential.

Elsewhere on the downside, Greggs dropped 5.25% as the bakery chain reported slower third-quarter sales growth, although it maintained its full-year guidance.

3i Group fell 2.39%, continuing its decline after short-seller ShadowFall Capital targeted its largest holding, Action, as overvalued on Monday.

JD Sports Fashion slipped 2.95% ahead of its half-year results, while Aston Martin Lagonda fell 2.74%, extending losses from the prior session following a warning of lower full-year profits due to supply chain disruptions and weak demand in China.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,276.65 0.48%

FTSE 250 (MCX) 20,914.70 -0.66%

techMARK (TASX) 4,848.26 0.28%

FTSE 100 - Risers

BAE Systems (BA.) 1,279.00p 3.35%

BP (BP.) 401.00p 2.37%

WPP (WPP) 780.40p 2.25%

Shell (SHEL) 2,478.00p 2.19%

Rightmove (RMV) 629.80p 2.01%

AstraZeneca (AZN) 11,800.00p 1.83%

Severn Trent (SVT) 2,690.00p 1.82%

United Utilities Group (UU.) 1,064.00p 1.77%

Fresnillo (FRES) 622.00p 1.72%

National Grid (NG.) 1,047.50p 1.70%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 195.20p -4.97%

easyJet (EZJ) 501.60p -3.54%

Intermediate Capital Group (ICG) 2,150.00p -3.50%

JD Sports Fashion (JD.) 149.50p -2.95%

3i Group (III) 3,226.00p -2.39%

Barclays (BARC) 219.70p -2.16%

Sage Group (SGE) 1,006.00p -1.81%

BT Group (BT.A) 145.30p -1.76%

Standard Chartered (STAN) 779.20p -1.74%

Frasers Group (FRAS) 819.50p -1.68%

FTSE 250 - Risers

Ocado Group (OCDO) 397.80p 3.51%

Man Group (EMG) 218.60p 3.21%

Centamin (DI) (CEY) 150.90p 2.65%

Hochschild Mining (HOC) 187.80p 2.29%

Harbour Energy (HBR) 271.30p 1.92%

QinetiQ Group (QQ.) 457.60p 1.82%

Big Yellow Group (BYG) 1,290.00p 1.74%

Endeavour Mining (EDV) 1,797.00p 1.47%

Tritax Eurobox (GBP) (EBOX) 71.60p 1.42%

Hammerson (HMSO) 322.45p 1.42%

FTSE 250 - Fallers

Elementis (ELM) 150.00p -7.86%

Raspberry PI Holdings (RPI) 362.60p -6.21%

Greggs (GRG) 2,942.00p -5.83%

Wizz Air Holdings (WIZZ) 1,367.00p -5.72%

W.A.G Payment Solutions (WPS) 80.40p -5.19%

Burberry Group (BRBY) 667.40p -4.14%

Volution Group (FAN) 590.00p -3.75%

PureTech Health (PRTC) 141.40p -3.68%

NCC Group (NCC) 171.80p -3.59%

Bank of Georgia Group (BGEO) 3,560.00p -3.13%