LONDON MARKET CLOSE: Lacklustre session on manufacturing PMI weakness

(Alliance News) - Blue-chip European equities ended lower on Tuesday, with weaker manufacturing data weighing on stock markets, while the dollar was on the up, benefitting from the cautious mood.

The FTSE 100 index fell 33.14 points, 0.4%, at 7,666.27. The FTSE 250 was down 78.10 points, 0.4%, at 19,065.66, and the AIM All-Share inched down just 0.09 of a point to 764.63.

The Cboe UK 100 ended down 0.5% at 764.62, the Cboe UK 250 fell 0.6% to 16,711.05, and the Cboe Small Companies rose 0.6% to 13,871.53.

In European equities on Tuesday, the CAC 40 in Paris slumped 1.2%, while the DAX 40 in Frankfurt plunged 1.3%.

In New York, the Dow Jones Industrial Average was a touch lower, the S&P 500 was down 0.3% and the Nasdaq Composite fell 0.4%.

The pound was quoted at USD1.2742 at late Tuesday in London, markedly lower compared to USD1.2860 at the equities close on Monday. The euro stood at USD1.0961, lower against USD1.1027. Against the yen, the dollar was trading at JPY143.41, higher compared to JPY142.12.

The downturn in the UK's manufacturing sector continued in July. The S&P Global/CIPS manufacturing PMI worsened to 45.3 points in July, from 46.5 in June. The sub-50 reading indicates a continuing contraction in the sector. This was slightly below a previous flash estimate of 46.5.

Meanwhile, the eurozone's manufacturing sector activity hit a 38-month low in July.

The Hamburg Commercial Bank eurozone manufacturing PMI fell to 42.7 points in July from 43.4 points in June. It was in line with the previous flash estimate.

Manufacturing data from the US was similarly uninspiring, though unlike in Europe, the numbers suggested the pace of the sector's decline is abating.

The latest S&P Global purchasing managers' index reading rose to 49.0 points in July, rising from 46.3 in June. The latest ISM manufacturing PMI, meanwhile, remained below the 50.0 point mark in July, but climbed to 46.4, from 46.0 in June.

Stocks in New York were called to open lower. Both the Dow Jones Industrial Average and the Nasdaq Composite are called to open down 0.3%. The S&P 500 index is called to open 0.2% lower.

In London, HSBC shares closed up 1.4%. The Asia-focused lender said pretax profit multiplied to USD21.66 billion from USD8.78 billion a year before.

Thanks to the higher interest rate environment globally, net interest income rose by 36% to USD18.26 billion from USD13.39 billion. This helped to bring overall revenue up by 50% to USD36.88 billion from USD24.55 billion.

The bank announced a second interim dividend of USD0.10 per share, as well as its second share buyback of the year for up to USD2 billion.

Greggs declined 7.2% as the lack of a guidance boost overshadowed stronger half-year results.

The baker said total sales in the six months to July 1 rose 22% to GBP844.0 million from GBP694.5 million a year earlier. Pretax profit was 43% higher at GBP80.0 million from GBP55.8 million. Its bottom line got a GBP16.3 million boost from the settlement of a Covid-19 business interruption insurance claim.

"Whilst uncertainties in the economic outlook remain, we continue to trade in line with our plan and are making good progress against our strategic objective to grow the frequency of customer visits through new channels. As such, the board's expectations for the full year outcome are unchanged," the company said.

Greggs said its "strong trading momentum" in the first half has continued in the second. It said the rate of cost inflation "has started to ease and we expect this trend to continue through the second half".

"Sales, profits and dividends were all up in Greggs' half year results but the lack of any upgrades to forward earnings guidance left investors unhappy," AJ Bell analyst Laith Khalaf commented.

Also falling, Man Group was down 5.4%. It reported "record" assets under management in its first-half, as the hedge fund hailed "broad-based demand".

Net flows in the second-quarter alone painted a more mixed picture, however, with its long-only offering leading the way, but its alternative strategies lagging.

Assets under management at June 30 totalled USD151.7 billion, rising 5.9% from USD143.3 billion at the end of December. It reported net inflows of USD2.6 billion during the half year, and USD1.5 billion for the second quarter alone.

Alongside the USD2.6 billion worth of net flows, Man's asset management increase over the first half was boosted by a USD5.1 billion positive investment performance.

"Pleasingly, we recorded net inflows across alternative and long-only strategies, which highlights the broad-based demand for the range of differentiated investment strategies and solutions that we offer at Man Group," the company said.

In the final three months of the half-year, however, it was Man's long-only offering which outperformed. It recorded net flows of USD1.8 billion for long-only positions, compared to an outflow of USD300 million for alternative.

Flooring distributor Victoria added 8.1%. It said its first quarter went to plan and demand "remains generally stable".

The company also backed its outlook for the year ended April 1.

Back in April, it said it expects to report an outcome in line with market expectations, which it put at a range of GBP1.36 billion to GBP1.52 billion for revenue and GBP196 million to GBP203 million for underlying earnings before interest, tax, depreciation, and amortisation.

Those numbers would represent revenue growth of at least roughly a third, and an underlying Ebitda rise of 20% at a minimum.

The first quarter of the new financial year went "in line with the board's forecast and consistent with consensus expectations for [financial] 2024".

"Demand remains generally stable across the group's markets and margins are improving in line with a fall in input costs. The company's integration projects remain on schedule," Victoria said.

Brent oil was quoted at USD84.79 a barrel late Tuesday afternoon in London, down from USD85.08 late Monday. Gold was quoted at USD1,942.88 an ounce, down against USD1,969.90.

Wednesday economic calendar has the US ADP jobs report at 1315 BST.

The local corporate diary has half-year results from defence firm BAE Systems, packaging company Smurfit Kappa and insurer Direct Line.

By Eric Cunha, Alliance News news editor

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