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London open: Stocks fall amid China concerns
London stocks fell in early trade on Monday amid concerns about China’s growth prospects, and as investors eyed another rate hike by the Bank of England this week.
At 0900 BST, the FTSE 100 was down 0.3% at 7,616.89.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Investors are lacking Monday motivation today as caution returns amid worries about global growth, ahead of the Bank of England decision on interest rates and testimony from the world’s most influential central banker, the Fed’s Jerome Powell.
“European indices have opened lower with the FTSE 100 on the backfoot as investors mull what’s ahead for the path of interest rates, given the stubbornness of inflation, while concerns persist about China’s recovery losing steam.
“Goldman Sachs is the latest big bank to revise forecasts for China’s growth, cutting expectations from 6% to 5.4%. The weaker than expected outlook for the world’s second largest economy has knocked commodity stocks, with miners falling back in early trade. Energy giants BP and Shell also retreated, as recent gains in oil prices receded, amid the lower expectations in demand.”
The People’s Bank of China is due to make its latest policy announcement on Tuesday.
On home shores, investors were digesting the latest survey from Rightmove, which showed that house prices edged lower in June, the first monthly drop so far this year.
According to the Rightmove house price index, the average new seller asking price dipped £82 to £372,812 in June. That compare to May’s 1.8% increase.
Year-on-year, prices were 1.1% higher.
Rightmove said the small downward move – the first fall in June since 2017 – indicated that the usual summer slowdown had started earlier than usual, following a delayed bounce in activity in spring. Over the last decade, on average asking prices rose 0.6% in June.
The survey showed buyer demand had held steady during the month, up 6% on the same period in 2019, despite the recent hikes in mortgage rates.
But the number of agreed sales slipped, and in the last fortnight was 6% below the same period in 2019. In May, it was 3% lower.
Tim Bannister, director of property science at Rightmove, said: “Asking new seller prices, the first and leading indicator of new trends in the market, have dropped slightly this month.
“We expect prices to edge down during the second half of the year, which is the normal seasonal pattern, [and] current trends suggest our forecast for a 2% annual drop in asking prices at the end of 2023 is still valid.”
The Bank of England has now raised the cost of borrowing 12 times in the last 18 months, to 4.5%, but analysts expect further rises, to at least 5.5%, by the end of the year.
Mortgage rates, which surged last autumn in response to the government’s disastrous mini budget, had ease earlier in the year. But they are now moving steeply higher once again, primarily in response to stubbornly high inflation.
Bannister said: “It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find.
“Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises.”
In equity markets, software firm Kainos slumped as it announced the resignation of its chief executive officer after 22 years in charge.
Coca-Cola HBC lost ground after agreeing to buy Brown-Forman Finland, owner of the Finlandia vodka brand, for $220m. The business is being bought from Brown-Forman Corporation’s wholly-owned subsidiary, Brown-Forman Netherlands BV.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Carnival Plc | +1.95% | +21.50 | 1,125.00 |
| 2 |  |
Standard Chartered Plc | +1.66% | +11.20 | 686.40 |
| 3 |  |
Direct Line Insurance Group Plc | +1.46% | +2.25 | 156.05 |
| 4 |  |
Vodafone Group Plc | +1.32% | +0.97 | 74.68 |
| 5 |  |
Rolls-royce Holdings Plc | +1.12% | +1.70 | 152.90 |
| 6 |  |
Easyjet Plc | +0.99% | +5.00 | 512.20 |
| 7 |  |
United Utilities Group Plc | +0.77% | +8.00 | 1,048.00 |
| 8 |  |
Admiral Group Plc | +0.60% | +13.00 | 2,188.00 |
| 9 |  |
Severn Trent Plc | +0.52% | +14.00 | 2,718.00 |
| 10 |  |
Gsk Plc | +0.44% | +6.00 | 1,370.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -2.88% | -13.30 | 448.60 |
| 2 |  |
Spirax-sarco Engineering Plc | -2.47% | -275.00 | 10,840.00 |
| 3 |  |
Croda International Plc | -1.66% | -92.00 | 5,438.00 |
| 4 |  |
Johnson Matthey Plc | -1.58% | -27.50 | 1,712.50 |
| 5 |  |
Hikma Pharmaceuticals Plc | -1.55% | -30.00 | 1,900.00 |
| 6 |  |
Crh Plc | -1.53% | -64.00 | 4,129.00 |
| 7 |  |
Taylor Wimpey Plc | -1.50% | -1.65 | 108.25 |
| 8 |  |
Anglo American Plc | -1.43% | -36.50 | 2,508.50 |
| 9 |  |
Antofagasta Plc | -1.39% | -21.50 | 1,528.00 |
| 10 |  |
Burberry Group Plc | -1.35% | -31.00 | 2,258.00 |
Monday newspaper round-up: B&Q, Airbus, Intel
EU exports of electric cars to the UK worth €30bn a year will be put at risk unless the Brexit trade deal is tweaked, representatives of the sector in Brussels have said. Three of the world’s biggest car manufacturers have already called on the British government to open talks over new rules that will see 10% tariffs put on exports to the EU, if 45% of an electric vehicle by value does not originate in the EU or the UK. – Guardian
One of Britain’s largest pension schemes has slashed its holding of UK stocks in a blow to Jeremy Hunt’s hopes of triggering a ‘Big Bang 2.0’. BT’s £39bn pension fund has cut back its exposure of London-listed stocks to just £100m – or 0.3pc of assets – new figures have revealed. Investment has fallen from £300m last year and £3.6bn in 2010. The BT scheme is the largest on London’s blue-chip FTSE 100 index, with around 270,000 members. – Telegraph
B&Q is lowering the temperature of its stores and dimming the lights in a push to cut costs and avoid price rises as inflation runs rampant. Kingfisher, which also runs the Screwfix chain, has lowered the temperature of heaters in stores by between 1 and 2 degrees celsius. It has started switching on the heating later in the morning and turning it off earlier in the evening. – Telegraph
Airbus is promising Britain’s first new helicopter factory in decades, bringing hundreds of new jobs and billions of pounds of exports if the Ministry of Defence chooses it to build a new generation of helicopters to replace the UK’s ageing fleet of Pumas. The European aerospace company is competing with the Italian group Leonardo, formerly AgustaWestland, and the American multinational Lockheed Martin to win a £1.1 billion deal to build at least 25 Puma replacements. – The Times
Intel is to spend $25 billion building a new computer chip factory in Israel, the latest in a string of recent investments that have shone a light on the UK’s more limited microchip ambitions. Binyamin Netanyahu, the Israeli prime minister, confirmed the deal yesterday and described it as the largest ever international investment in the country. “[It is] a tremendous achievement for the Israeli economy: 90 billion shekels [$25 billion],” he said. – The Times
