London close: Stocks fall ahead of US Fed decision

(Sharecast News) - London markets closed lower on Wednesday, as investors digested the latest UK manufacturing data and anticipated an impending policy announcement from the US Federal Reserve.

The FTSE 100 dipped 0.28% to 8,121.24 points, while the FTSE 250 saw a decline of 0.19% to 19,926.59 points.

In currency markets, sterling was last down 0.03% on the dollar to trade at $1.2488, while it decreased 0.16% against the euro, changing hands at €1.1693.

"Britain's FTSE 100 slipped slightly on Wednesday after two consecutive months of gains, with investors awaiting the Federal Reserve's policy decision for clues on when the US central bank will begin cutting interest rates," said TickMill market analyst Patrick Munnelly.

"Market activity was subdued as several European stock exchanges are closed for Labour Day.

"Investors are anticipating a new statement and comments from Fed chair Jerome Powell, which could provide a better understanding of how recent disappointing US inflation figures have impacted expectations for interest rate cuts this year."

UK manufacturing sector contracts, house prices fall

In economic news, the UK's manufacturing sector contracted in April, according to the latest S&P Global UK manufacturing purchasing managers' index (PMI).

The index dropped to 49.1 from March's 20-month high of 50.3, signalling a slowdown in output and new orders.

Factors such as uncertain market conditions, client destocking, and supply chain disruptions, partly due to the Red Sea crisis, contributed to the decline.

Additionally, input price inflation rose to a 14-month high, adding pressure to the sector.

"Output and new orders contracted following short-lived rebounds in March," said Rob Dobson, director of S&P Global Market Intelligence.

"The downtown is also sustaining cost caution at manufacturers, leading to lower employment, stock holdings and cutbacks in purchasing activity.

"The news on the prices front is also worrisome for those looking for a sustainable path back to target consumer price inflation, with cost pressures growing in industry and feeding through to higher selling prices at the factory gate."

Elsewhere, house prices in the UK unexpectedly fell for the second consecutive month in April, as borrowing rates increased, according to data from lender Nationwide.

Prices dropped 0.4% compared to March, contrary to economists' expectations of a 0.2% rise.

On an annual basis, house price growth slowed to 0.6% in April from 1.6% in March.

"The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year," commented Nationwide chief economist Robert Gardner.

"House prices are now around 4% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects."

Across the pond, the number of job openings declined slightly in the US in March, reaching their lowest level in over three years, according to the Department of Labor.

Job openings dropped to 8.488 million, below economists' projections of around 8.69 million.

However, the number of hires also decreased by 3.5% to 5.5 million, and the proportion of voluntary quits fell to 2.1%, the lowest since August 2020.

"The Federal Reserve will welcome signs of cooler labour market conditions, but the JOLTS data do not change our view that the central bank will be content to keep interest rates at current levels until September," said Nancy Vanden Houten, lead US economist at Oxford Economics.

"The Fed will need to see several months of lower inflation readings to be confident inflation is on a sustainable path to 2%."

On a more positive note, private sector employment in the US exceeded expectations in April, with ADP reporting an increase of 192,000 jobs from March.

Small, medium, and large businesses all contributed to the growth, with the service sector adding 145,000 jobs and the goods-producing sector seeing a 47,000 increase.

However, US factory sector activity unexpectedly declined in March, according to the Institute for Supply Management's PMI.

The index slipped to 49.2 from February's reading of 50.3, defying consensus expectations of a slight increase to 50.1.

Despite the downturn in activity, price pressures in the sector intensified during the period.

GSK in the green, Aston Martin slides on lower revenue

On London's equity markets, pharmaceuticals giant GSK rose 1.58% after lifting its annual profit guidance, banking on strong demand for its respiratory virus and shingles treatments.

Fashion retailer Next rebounded, gaining 0.38% by the close after it reported first-quarter sales ahead of forecasts, although it cautioned about weaker performance in the upcoming months due to unfavourable spring weather.

Standard Chartered closed 1.22% ahead of its first-quarter results scheduled for Thursday.

On the downside, Haleon declined 3.11% as its first-quarter revenue fell short of expectations.

Smith & Nephew, despite reporting a 2.9% increase in first-quarter revenue, experienced a marginal decline of 0.25% by the end of the day, with its orthopaedics business still in recovery mode.

Computacenter lost 1.63% amid warnings of lower first-half profits, attributed to tough market conditions in the UK and strong comparatives from the previous year.

Luxury carmaker Aston Martin Lagonda took a significant hit, sliding 6.75% after reporting a double-digit drop in revenues and adjusted profits for the first quarter.

However, it expressed optimism about future growth driven by the launch of four new models.

Reporting by Josh White for Shareceast.com.

Market Movers

FTSE 100 (UKX) 8,121.24 -0.28% FTSE 250 (MCX) 19,926.59 -0.19% techMARK (TASX) 4,586.56 -0.07%

FTSE 100 - Risers

GSK (GSK) 1,705.00p 1.91% Unite Group (UTG) 940.00p 1.29% DCC (CDI) (DCC) 5,555.00p 1.28% Severn Trent (SVT) 2,498.00p 1.26% Tesco (TSCO) 300.00p 1.25% BT Group (BT.A) 103.85p 1.22% Smith (DS) (SMDS) 354.20p 1.08% United Utilities Group (UU.) 1,054.00p 0.91% Airtel Africa (AAF) 111.80p 0.90% AstraZeneca (AZN) 12,170.00p 0.90%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 112.15p -2.98% Ashtead Group (AHT) 5,674.00p -2.88% Ocado Group (OCDO) 343.10p -2.83% Haleon (HLN) 331.00p -2.50% Whitbread (WTB) 3,099.00p -2.15% BP (BP.) 509.40p -2.11% Antofagasta (ANTO) 2,168.00p -1.90% Melrose Industries (MRO) 621.20p -1.68% Convatec Group (CTEC) 246.00p -1.60% Shell (SHEL) 2,819.00p -1.54%

FTSE 250 - Risers

AJ Bell (AJB) 334.00p 3.55% W.A.G Payment Solutions (WPS) 66.80p 3.41% Chemring Group (CHG) 383.00p 3.33% Oxford Instruments (OXIG) 2,265.00p 3.10% Baltic Classifieds Group (BCG) 239.00p 2.80% Investec (INVP) 524.00p 2.44% Ninety One (N91) 172.80p 2.43% Hammerson (HMSO) 27.88p 2.35% Foresight Solar Fund Limited (FSFL) 89.90p 2.28% Travis Perkins (TPK) 769.00p 2.12%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 138.20p -6.75% Playtech (PTEC) 504.00p -4.91% Games Workshop Group (GAW) 9,440.00p -4.74% Carnival (CCL) 1,039.50p -4.19% Diversified Energy Company (DEC) 1,081.00p -4.00% Genus (GNS) 1,736.00p -3.77% Syncona Limited NPV (SYNC) 122.00p -2.71% Dunelm Group (DNLM) 996.50p -2.61% Ferrexpo (FXPO) 49.70p -2.36% IP Group (IPO) 46.90p -2.19%