- FTSE 100 slips back after making a bright start
- Chinese retail sales, output numbers below forecast
- UK house prices fall in August - Rightmove
FTSE 100 failed to hold strong early gains and slipped back close to parity as disappointing economic data in China took the shine off further gains in the US on Friday.
At 9.00am the lead index was trading 11.42 points to the good at 7,512.31.
Richard Hunter, head of markets at interactive investor, said “Economic news from China threatened to spoil the party after US markets staged a strong rally at the end of last week.”
“Amid geopolitical tensions as a delegation of US lawmakers arrive for a further trip to Taiwan, Chinese economic data revealed the ongoing impact of Covid-19 lockdowns and an escalating property crisis.”
“Retail sales and industrial output both rose, but by less than expected in July, alongside a disappointing showing from bank lending.”
But he said “the UK market chose to take its lead from Wall Street, notwithstanding the fact that the Bank of England is set to maintain its aggressive interest rate stance in the face of persistent inflation in the UK.”
AstraZeneca PLC (LSE:NASDAQ:AZN) shares rose 2.1% to 10,931p as the pharmaceuticals group said that positive high-level results from a new trial of its Enhertu breast cancer drug had demonstrated a "statistically significant and clinically meaningful improvement" in progression-free survival.
AstraZeneca said the DESTINY-Breast02 Phase III trial on Enhertu, jointly developed and commercialised with Daiichi Sankyo, also met its key secondary endpoint of improved overall survival.
But housebuilders, Berkeley Group Holdings PLC (LSE:BKG) (down 1.35%), Bellway (LON:BWY) (down 1%), Taylor Wimpey (LON:TW) (down 0.5%) and Barratt Developments (LON:BDEV) (down 0.5%) all fell following a report from Rightmove that house prices slipped in August.8.15am: Positive start to proceedings in London
8.15am: London upbeat in early trading
FTSE 100 makes a positive start to trading boosted by gains in the US on Friday and despite mixed performances in Asia overnight following disappointing Chinese retail sales and industrial output figures.
At 8.15am the lead index was trading 35.03 points higher at 7,535.92 with the broader FTSE 250 up 47.07 points at 20.386.03.
Latest data from online property website Rightmove showed the first fall in UK house prices this year with the average price of property coming to market down to £365,173 – down 1.3%.
However, Tim Bannister, Rightmove’s director of property science, says: “A drop in asking prices is to be expected this month after a frenzied two years and many would-be home movers become distracted by the summer holidays.”
“Indeed, for those that can, this may be their first summer holiday abroad since before the pandemic.”
Bannister also pointed out that price growth for the year would still be 7%.
The number of properties currently on the market to buy is down 39% on pre-pandemic levels but despite the lack of instructions new listings rose 12% compared to the same time last year but were down 6% compared to 2019.
Bannister also said the recent interest rate increases by the Bank of England were “not having a significant impact on the number of people wanting to move.”
7.30am: FTSE 100 seen higher
London markets are expected to open higher on Monday following gains in the US on Friday and following the surprise news that China has cut a key interest rate, in a bid to boost its stuttering economy, following weaker than expected retail sales and industrial output figures.
Investors will also have one eye on UK jobs and inflation reports due out later this week to see whether there are signs of a slowdown in the jobs market or in prices growth.
Spread betting companies are calling the FTSE 100 up by around 35 points.
Michael Hewson chief market analyst at CMC Markets UK said: “Despite the slow drip feed of negative headlines of rising gas prices, and the supply chain challenges thrown up by the heatwave in Europe, there’s been little appetite to drive stocks lower in recent weeks.”
“Asia markets have got off to a positive start to the week, with the latest retail sales and industrial production numbers for China showing an economy that still appears low on confidence when it comes to consumer spending, and economic activity more broadly.”
“This weakness in the Chinese economy comes against the struggle to adapt to a zero-covid policy, which the government shows little sign of relaxing, against a backdrop of rising cases.”
“Problems in the property sector also aren’t helping, where many home buyers are halting mortgage payments in protest at delays to the completion of new homes.”
“In June we saw the effects the zero-covid policy has had on the Chinese economy, with a -2.6% contraction for Q2, although we have started to see some signs of a pick-up in economic activity, albeit from a very low base.”
“This morning’s retail sales numbers for July have confirmed how fragile this confidence still is, rising 2.7% well below expectations of 5%, and weaker than in June.”
“Industrial production has been more robust and recovered much better, however even here economic activity disappointed in July, slipping back from 3.9% in June, to 3.8%.”
In London, on a quieter day for company results, Phoenix Group announced half year figures which showed strong cash generation of £950mln against £872mln in the six months to June 2021.
The FTSE 100-listed closed book life insurer, said it was now confident of delivering at the top-end of its £1.3bn-to-£1.4bn target range for the year.
New business long-term cash generation was a record £430mln in the period and more than double the first half of 2021 at £206mln.
7.00am: FTSE 100 set to open higher
FTSE 100 set to start the week in positive fashion following gains in the US on Friday.
Spread betting companies are calling the blue chip index up by around 32 points.
The Dow closed Friday up 424 points, 1.3%, at 33,761, the Nasdaq Composite jumped 267 points, 2.1%, to 13,047 and the S&P 500 added 73 points, 1.7%, to reach 4,280.
The benchmarks ended the week on a high note, clinching the fourth-straight winning week for the Nasdaq Composite and S&P 500. Investors have reacted positively to CPI and PPI data released this week that suggested inflation may have already peaked.