(Alliance News) - A string of disappointing manufacturing read-outs on Tuesday saw London stocks end the session in the red, as worries over the health of the global economy were re-kindled.
The FTSE 100 index closed down 47.89 points, or 0.7%, at 7,360.32. The FTSE 250 ended down 62.10 points, or 0.3%, at 19,874.57, while the AIM All-Share closed up 2.49 points, or 0.3%, at 875.46.
The Cboe UK 100 ended down 0.8% at 12,490.03, the Cboe UK 250 closed down 0.3% at 17,773.30, and the Cboe Small Companies ended up 0.5% at 10,949.38.
In European equities on Tuesday, the CAC 40 in Paris ended down 1.4%, while the DAX 30 in Frankfurt ended 1.3% lower.
"Central banks are cutting rates, and are it seems keen to cut more, while data continues to point towards economic weakness. That is perhaps the over-riding message from today, as Europe woke up to an Aussie rate cut, then confronted poorer eurozone PMI figures, and then, as the US joined the fray, faced a surprisingly-negative ISM manufacturing figure from the US," said Chris Beauchamp, chief market analyst at IG.
First up was manufacturing data from the eurozone, which showed sector output at the lowest level since October 2012.
The final September eurozone manufacturing PMI was 45.7, slightly higher than the flash PMI of 45.6, but behind August's final PMI of 47.0.
Germany's "rapidly deteriorating operating conditions" were blamed for the slip in eurozone PMI.
The headline BME German PMI registered 41.7 in September, down from 43.5 in August and its lowest reading since June 2009. The seasonally adjusted France manufacturing PMI fell to 50.1 in September, from 51.1 in August.
The euro stood at USD1.0930 at the European equities close Tuesday, slightly higher against USD1.0902 at the same time on Monday.
This was then followed by the UK's reading, which rose rose slightly to 48.3 in September from August's six-and-a-half year low of 47.4 but still marked the fifth month of contraction for the sector.
The pound was quoted at USD1.2251 at the London equities close Tuesday following the PMI reading, down compared to USD1.2297 at the close on Monday.
Then, compounding the morning's weak prints, the the Institute for Supply Management showed the US manufacturing sector contracted for the sector month in a row to its worst level since 2009.
The ISM's monthly manufacturing index fell to 47.8, a sharp drop from 49.1 in August. The decline was a surprise to economists who forecast a slight uptick last month following the decline in August.
Many of the comments from survey participants cited US President Donald Trump's trade war with China, noting that the retaliatory tariffs are hurting business and undermining confidence, despite comments from officials claiming Americans have not been impacted by the dispute.
Capital Economics said it thinks that some of the weakness in the ISM data is due to a strike at General Motors, which began in mid-September.
"Nevertheless, it reinforces our belief that, despite the hawkish protestations of some officials in recent days, the Fed will still cut interest rates by a further 25bp at December's FOMC meeting," said Paul Ashworth, chief US economist at Capital Economics.
Trump, meanwhile, cast the blame for the weak manufacturing reading on the US Federal Reserve.
"As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high," he tweeted.
Stocks in New York were firmly lower at the London equities close, with the Dow Jones down 0.7%, the S&P 500 index down 0.6%, and the Nasdaq Composite 0.4% lower.
Tugging on the FTSE 100 on Tuesday was Hargreaves Lansdown, finishing the session down 3.7% after Credit Suisse started the fund supermarket at Underperform.
Momentum looks challenging for Hargreaves, said Credit Suisse.
"Hargreaves Lansdown missed its performance targets for fund flows, new clients and pretax profit in FY19, and we estimate underlying net fund flows slowed from GBP6.9 billion in FY17 to GBP6.6 billion in FY18 and GBP6.1 billion in FY19," the bank said.
Another faller on some ratings action was Royal Bank of Scotland, shedding 2.8% after Barclays cut the firm to Equal Weight from Overweight.
Meanwhile, Hong Kong-exposed Burberry and Standard Chartered both finished 2.3%, with HSBC closing down 0.7%, as tensions once again ramped up in the city on a holiday for the 70th anniversary of Communist China's founding.
Thousands marched through the streets of Hong Kong island on Tuesday afternoon, despite authorities rejecting an application to hold a rally there as police warned people "to leave the scene as soon as possible".
As tensions flared, a Hong Kong police officer shot a protester in the chest with a live round after his unit was attacked by demonstrators during sustained clashes in the city, a police source said.
The protests came as lavish celebrations were taking place in Beijing, including a huge military parade through Tiananmen Square under the gaze of China's strongman President Xi Jinping.
At the top of the index ended Ferguson up 4.4% after the plumbing and heating firm reported a solid set of annual results.
Trading profit, which excludes exceptional items and the amortisation of acquired intangible assets, increased by 7.5% year-on-year to USD1.60 billion from USD1.49 billion. This was on revenue that grew 6.1% to USD22.01 billion from USD20.75 billion.
Consensus expectations for Ferguson's 2019 financial year had trading profit at USD1.58 billion, on revenue of USD21.87 billion.
Regionally, Ferguson's US business continued to perform well, with trading profit rising by 7.3% to USD1.40 billion on revenue increasing by 10% to USD18.36 billion, making up 83% of group revenue.
In the FTSE 250, there was a lack of appetite for shares in baker Greggs as the firm saw sales momentum slow.
For the 13 weeks ended September 28, total sales rose by 12%, while like-for-like sales in company-managed shops increased by 7.4%. For the same period a year before, total sales grew by 7.3%, and like-for-like sales by 3.2%.
For the nine months ended September 28, total sales rose by 14%, and like-for-like sales by 9.4%, implying a slower third quarter.
Looking ahead, Greggs expects annual sales growth in the balance of the year to reflect "strengthening comparatives" from 2018, though forecasts for the full-year remain unchanged.
The stock closed down 12%, though remains 46% higher since the start of 2019.
In commodities on Tuesday, Brent oil was quoted at USD59.28 a barrel at the London equities close Tuesday, down from USD60.20 late Monday.
Gold was higher, quoted at USD1,483.01 an ounce at the London equities close Tuesday against USD1,470.11 at the close on Monday.
"Gold saw major volatility today as it initially pushed lower, keeping in step with its recent downtrend. The metal's fortune turned around in the wake of the poor ISM manufacturing report from the US. Traders scrambled to buy up assets that are deemed to be safe havens like gold," said David Madden at CMC Markets.
In Wednesday's economic calendar, the British Retail Consortium shop price index is out at 0001 BST, while the UK construction PMI is at 0930 BST. In the US, ADP employment change is out at 1315 BST ahead of Friday's eagerly-awaited non-farm payrolls report.
Markets in Germany will be closed for the day of German Unity on Wednesday, while Chinese markets also remain shut for the National Day Golden Week holiday.
In the UK corporate calendar on Wednesday, there are half-year results from grocer Tesco and a trading statement from Topps Tiles.
By Lucy Heming; lucyheming@alliancenews.com
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