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(Alliance News) - Stocks in London are called lower on Monday, after the latest data from China pointed to a slowing economic recovery.
China's economy grew 6.3% year-on-year in the second quarter, a figure that belies the country's slowing post-pandemic recovery and one that analysts warn is inflated given the low base of comparison with lockdown-wracked 2022. Beijing's National Bureau of Statistics released the growth data, saying in a statement that the economy "showed a good momentum of recovery".
"By quarter, the GDP grew by 4.5% year-on-year in the first quarter and 6.3% in the second quarter," NBS spokesman Fu Linghui said. While faster than the first quarter, the reading was below FXStreet-cited market consensus of 7.3%.
In quarter-on-quarter terms, Monday's data showed the world's second-largest economy only grew 0.8% in April through June, slowing from the 2.2% growth seen in the first three months of 2023.
Further data from China also pointed to a slowing in retail sales growth in June, while youth unemployment hit a record high.
US earnings season had kicked off on Friday with mixed results from big US banks. On Tuesday, there will be half-year results from Bank of America, with Goldman Sachs, IBM, Netflix and Tesla reporting on Wednesday.
In early UK company news, Entain said it has acquired a sports modelling, forecasting and data analytics company. Unbound Group suspended its shares from trading as it placed its main operating subsidiary into administration. Gresham House said it has agreed a takeover offer at a 63% premium to its Friday closing price.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 42.5 points, 0.6%, at 7,392.07
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Hang Seng: trading in Hong Kong halted due to Typhoon Talim
Nikkei 225: financial markets closed in Japan for Marine Day
S&P/ASX 200: closed down 0.1% at 7,298.50
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DJIA: closed up 113.89 points, 0.3%, at 34,509.03
S&P 500: closed down 0.1% at 4,505.42
Nasdaq Composite: closed down 0.2% at 14,113.70
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EUR: down at USD1.1227 (USD1.1240)
GBP: down at USD1.3072 (USD1.3117)
USD: down at JPY138.50 (JPY138.55)
Gold: down at USD1,954.66 per ounce (USD1,957.56)
Oil (Brent): down at USD78.90 a barrel (USD80.12)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
no events scheduled
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UK house prices in July fell faster than normal for the time of year, according to data from Rightmove. Property prices dropped by 0.2%, or GBP905, in June, despite usually treading water this time of year. The fall was driven by rising mortgage costs placing larger constraints on buyers. The average house price in July was GBP371,907, Rightmove said. House prices remain 2.6% higher than in January, however, proving more resilient than many expected. On an annual basis, house prices rose 0.5% in July, easing from a 1.1% rise in June.
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UK Business & Trade Secretary Kemi Badenoch signed off UK membership to a major Indo-Pacific trade bloc, bringing British businesses a step closer to being able to sell to a market of 500 million people with fewer barriers. Badenoch signed the accession protocol to the Comprehensive & Progressive Agreement for Trans-Pacific Partnership in New Zealand on Sunday. Britain is the first new member and first European nation to join the bloc – comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – since its formation in 2018. It represents Britain's biggest trade deal since leaving the EU, cutting tariffs for UK exporters to a group of nations which – with UK accession – will have a combined gross domestic product of GBP12 trillion, accounting for 15% of global GDP, according to officials.
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Price pressures and rising interest rates have hit the confidence of finance chiefs at UK firms in the second quarter, a survey from Deloitte showed. The Deloitte CFO Survey - conducted between June 15 and June 27 - showed that only 10% of chief financial officers are more optimistic about the current financial prospects for their firm compared with three months ago, down from 25% in the first quarter. The survey sampled 69 CFOs, including those of 13 FTSE 100 companies and 21 FTSE 250 companies. According to the survey, almost half of respondents, 45%, said the levels of external economic uncertainty they are facing is high or very high, up from 39% in the first quarter.
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BROKER RATING CHANGES
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Goldman reinitiates National Grid with 'neutral' - price target 1,068 pence
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Berenberg cuts Kenmare Resources to 'hold' (buy) - price target 540 (760) pence
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Berenberg raises Victrex to 'buy' (hold) - price target 2,090 (1,750) pence
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COMPANIES - FTSE 100
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Gambling firm Entain said it has agreed to acquire Angstrom Sports, a specialist provider of next generation sports modelling, forecasting and data analytics. It will pay a total consideration of GBP81 million, plus contingent payments of up to GBP122 million over the next three years. It will help to accelerate the development of the Entain Platform, according to CEO Jette Nygaard-Andersen. "This acquisition will provide our customers with an unrivalled sports betting experience underpinned by enhanced in-house data-analytics, a global platform and market leading brand," she added.
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COMPANIES - FTSE 250
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Diversified Energy Co announced the sale of certain undeveloped acreage within its Central Region to an undisclosed buyer for around USD16 million. The assets include some 22,000 net acres in Oklahoma, which is a small portion of the firm's undeveloped acreage in the region. "Consistent with prior acquisitions, the company ascribed no value to the leasehold in its purchase price allocation. Accordingly, 100% of the proceeds from this sale represent additional value to shareholders," the company said.
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OTHER COMPANIES
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Gresham House said it has reached an agreement on a recommended final takeover offer in cash with Searchlight Capital. Gresham shareholders will be entitled to receive 1,105 pence per share, which is a 63% premium to its Friday closing price of 680.00p. The offer values the AIM-listed asset manager at around GBP469.8 million on a fully diluted basis, or GBP440.6 million on an enterprise value basis. "Searchlight is attracted by Gresham House's position as one of the UK's leading asset managers in sustainable alternative asset classes, which show strong investor interest and allocation," the release said. Gresham's board of directors said they intend to unanimously recommend the offer at the court and general meetings to come in due course.
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Trustpilot named Adrian Blair as its new chief executive officer. Blair was previously COO at Just Eat from 2011 through 2018, and most recently chief business officer at Cera, a digital-first healthcare-at-home company. He will join the reviews platform on September 13.
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Unbound Group requested the suspension of its ordinary shares on AIM, as it placed its main operating subsidiary, Beaconsfield Footwear, into administration. The move was in order to preserve value for its creditors and avoid Beaconsfield trading insolvently. The administrators are expected to sell off the trade and assets of the subsidiary to a third-party purchaser shortly. Unbound said it has minimal cash balances and known creditors of around GBP900,000. It has investments that the board believes may be in excess of the amount due, but these assets will take "some time" to realise. It is uncertain whether the company can pay the debts as they fall due, and consequently asked for its shares to be suspended.
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By Elizabeth Winter, Alliance News senior markets reporter
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