FTSE 100 climbs 46 points
Burberry leads fallers
China's economic growth slows sharply
London's mid caps are outdoing their larger peers this morning, led by Aston Martin Lagonda despite it announcing a discounted £653mln fundraising.
AML shares are up over 20% to 447.5p, which is close to the level at which the rumours emerged two weeks ago that the sportscar maker was planning a rights issue.
It has confirmed plans for a £575mln rights issue and a £78mln strategic investment from Saudi Arabia's sovereign wealth fund, which will become its second-largest investor and get a seat on the board. (Read more on the Aston Martin fundraising here.)
Also on the FTSE 250 leaderboard this morning are Ferrexpo PLC (LSE:FXPO), Darktrace (LON:DARK) PLC, Micro Focus International (LON:MCRO) PLC, Marks & Spencer Group PLC and index newcomer ASOS (LON:ASOS) PLC.
Fallers are led by Britvic (LON:BVIC) PLC ahead of a trading update scheduled for next week, precious metals miner Hochschild Mining (LON:HOCM) PLC (LSE:HOC, OTCQX:HCHDF) and budget airline Wizz Air (LON:WIZZ) Holdings PLC - even though airline-related names Rolls Royce (LON:RR) Holdings PLC and Melrose Industries PLC (LSE:MRO, OTC:MLSPF) are now topping the blue-chip index.
The FTSE 250 index is up 159 points, or 0.9% at 18,639.67, while the Footsie is up 49 points or 0.7% at just over 7088.
10.20am: Rio dances lower
Rio Tinto PLC (LSE:LON:RIO) was the second biggest faller this morning, down 2.6% to 4,450p, following a warning that "headwinds are considerable" due to labour shortages, muted Chinese demand, falling commodity prices and the threat of recession.
The FTSE 100-listed miner noted that copper, aluminium and iron prices were declining while the economic outlook weakens.
The aluminium LME price dropped 32% to US$2,397 per tonne at the end of the second quarter, while the copper LME price was down by 20% at the end of the second quarter to US$3.74/lb.
In a production report for the second quarter, the mining giant revealed iron ore output and deliveries were up 10% and 12% respectively compared to the first quarter of this year, with mined copper up 1%, but aluminium production was down 1%.
Full-year guidance for iron ore and copper was maintained, as for most metals, but aluminium, alumina and diamond guidance was trimmed slightly.
Fellow blue-chip miners Anglo American (LON:AAL) and BHP Group declined 1.7% and 0.9% respectively.
9.42am: Burberry plummets
Burberry Group PLC (LSE:LON:BRBY) sunk 6.8% to 1537p as it reported a 35% drop in sales to mainland China in the 13 weeks to 2 July due to restrictions and store closures designed to control Covid-19 outbreaks.
Although the British luxury fashion house grew its global turnover by 5% in the first quarter despite “significant disruption from lockdowns in mainland China.”
Burberry chief executive Jonathan Akeroyd commented: "Our focus categories, leather goods and outerwear, continued to perform well outside of mainland China and our programme of brand activations boosted customer engagement.
“While the current macroeconomic environment creates some near-term uncertainty, we are confident we can build on our platform for growth."
The designer brand is continuing to target high single-digit revenue growth and 20% margins in the medium term, it said in a trading statement.
However, it expects to take a £190mln revenue hit and a £90mln knock to operating profits for the full year due to currency effects.
The retailer grew its Europe, the Middle East, India and Africa business by 47%, where it reported “an increase in spending” to above pre-pandemic levels.
Alex Smith, senior analyst for luxury goods at Third Bridge, said: “Burberry should remain resilient during a recession but it is more exposed than some other luxury brands.”
9.08am: Further rail strikes in August announced
Workers at Network Rail and 14 train operators announced they intend to walk out for a further two days in August following an unresolved pay dispute and conditions, the RMT union said.
As well as the union’s workers striking on 27 July, approximately 40,000 workers will also walk out on 18 and 20 August.
Mick Lynch, RMT general secretary, said the government and rail industry must understand the "dispute will not simply vanish", urging for a pay offer that "helps deal with the cost-of-living crisis, job security for our members and provides good conditions at work."
This follows the largest rail strike in decades in June.
Earlier this week, drivers from eight rail companies agreed to strike on 30 July in a similar dispute, the trade union Aslef confirmed (read more).
8.26am: British American Tobacco (LON:BATS) and DS Smith lead risers
The FTSE 100 is making a laboured effort in early trading to try and recover some of the losses from the past two days, up 20 points or 0.3% so far to 7,060.47.
Top risers include British American Tobacco PLC (LSE:BATS) and cardboard box maker DS Smith PLC (LSE:SMDS).
Leading the fallers is Burberry Group PLC (LSE:BRBY), down 4.3%, after reporting sales in the past quarter were badly marred by the impact of the recent lockdowns in China.
Market analyst Richard Hunter at interactive investor said: “The group must now hope that pent-up demand is now building again in China, and the early signs are tentatively encouraging. Even so, until such time as that economy can resume firing on all cylinders, the clouds will inevitably linger.”
Miners are also dragging on the index's recovery attempts as Rio Tinto PLC (LSE:RIO) warned that "headwinds are considerable" due to labour shortages, muted Chinese demand, falling commodity prices and the threat of recession.
Rio shares are down 1.75%, while rivals Anglo American and BHP Group are down 1.35% and 0.47% respectively.
7.10am: FTSE tipped for recovery
The FTSE 100 was tipped to recover some of Thursday’s losses as two members of the US Federal Reserve suggested talk of a super aggressive rise in interest rates was premature.
Financial spread betters had Footsie rising by around 25 points an hour before the start of trading, with the mood helped by the Fed comments.
"Fed governor Christopher Waller, and St Louis Fed President Jamie Bullard both indicated they were erring towards a 0.75% hike at the 28 July FOMC meeting, and not the dreaded 1.0%,” noted Jeffery Halley, senior market analyst at Oanda.
Elsewhere, China's economic growth slowed sharply in the second quarter as the impact of Covid restrictions took a toll.
GDP in the April-June quarter grew 0.4%, which was the worst showing since 1992, bar a 6.9% contraction in the first quarter of 2020 due to the initial outbreak of Covid.
Economists had forecast a 1% gain after 4.8% growth in the first quarter.
Asian markets were mixed in response with Hong Kong lower and Japan higher towards the close of trading.
Burberry this morning also gave an indication of the mood in Asia with its first quarter trading update.
"Our performance in the quarter continued to be impacted by lockdowns in Mainland China but I was pleased to see our more localised approach drive recovery in EMEIA, where spending by local clients was above pre-pandemic levels,” said Jonathan Akeroyd, chief executive.
On a constant exchange rate basis, revenues were flat and up 1% on a like-for-like basis.
Mainland China saw a 35% decline due to Covid restrictions and store closures.