London midday: Stocks stay down amid China growth concerns

(Sharecast News) - London stocks were still weaker by midday on Monday amid concerns about China's growth prospects, and as investors eyed another rate hike by the Bank of England this week. The FTSE 100 was down 0.4% at 7,611.86.

Russ Mould, investment director at AJ Bell, said: "The FTSE 100 followed Asian indices lower amid continuing concerns about China's faltering recovery and profit-taking in Japan after a strong rally.

"The post-Covid surge anticipated in China appears to be losing momentum and there is uncertainty around how the authorities in the country might look to get things moving in the right direction. That was reflected in a weak showing from Chinese tech firms."

The latest Chinese GDP projections from Goldman Sachs added to the downbeat mood, as the bank cut its growth forecasts. It argued that after a strong start in the first quarter, the country's post-reopening recovery "appears to have fizzled out in Q2" and that government stimulus won't be enough.

GS downgraded its 2023 full-year real GDP growth forecast to 5.4% from 6.0% and its 2024 forecast to 4.5% from 4.6%.

"Although contact-intensive services sectors continued to heal, May activity data show that the property market, the largest sector in the economy, weakened again," it noted. "Property investment growth declined to -10% year-on-year and property-related products underperformed in detailed industrial production and retail sales data.

"With no 'easy fix' on the horizon, the property market's weakness and its negative impact on the rest of the economy is likely to persist."

Goldman said policymakers face constraints and the upcoming policy easing will not be as large and forceful as during the 2008-09, 2015-16 and 2020 cycles.

On home shores, investors were digesting the latest survey from Rightmove, which showed that house prices edged lower in June, the first monthly drop so far this year.

According to the Rightmove house price index, the average new seller asking price dipped £82 to £372,812 in June. That compare to May's 1.8% increase. Year-on-year, prices were 1.1% higher.

Rightmove said the small downward move - the first fall in June since 2017 - indicated that the usual summer slowdown had started earlier than usual, following a delayed bounce in activity in spring. Over the last decade, on average asking prices rose 0.6% in June.

The survey showed buyer demand had held steady during the month, up 6% on the same period in 2019, despite the recent hikes in mortgage rates.

But the number of agreed sales slipped, and in the last fortnight was 6% below the same period in 2019. In May, it was 3% lower.

Looking ahead to the rest of the week, the People's Bank of China is due to make its latest policy announcement on Tuesday, and the BoE on Thursday.

Susannah Hargreaves, head of money and markets at Hargreaves Lansdown, said: "There is expected to be no let-up in hikes for the UK, with borrowers bracing for another punishing interest rate rise on Thursday, pushing the base rate to 4.75%. This will affect homeowners on variable mortgages, whose payments will ramp up yet again, reducing their spending power. But for those 1.6 million fixed rate mortgage holders who must find a new deal this year, and who are highly anxious about how high rates will go, the Consumer Price Index snapshot due on Wednesday, will be prove more important.

"The current market expectations are for rates to rise as high as 5.75% and if the numbers show inflation is continuing to prove very sticky, those forecasts may be firmed up."

In equity markets, software firm Kainos slumped as it announced the resignation of its chief executive officer after 22 years in charge.

AstraZeneca fell following a Financial Times report that the company plans to spin off its China business and is considering a separate unit listing in Hong Kong.

Coca-Cola HBC was little changed after agreeing to buy Brown-Forman Finland, owner of the Finlandia vodka brand, for $220m.

On the upside, Ladbrokes owner Entain was boosted by an upgrade to 'buy' at HSBC.

Market Movers

FTSE 100 (UKX) 7,611.86 -0.40% FTSE 250 (MCX) 18,895.94 -0.71% techMARK (TASX) 4,571.66 -0.37%

FTSE 100 - Risers

Entain (ENT) 1,242.50p 1.76% Standard Chartered (STAN) 685.60p 1.54% Flutter Entertainment (CDI) (FLTR) 16,075.00p 0.82% Vodafone Group (VOD) 74.31p 0.81% Rolls-Royce Holdings (RR.) 152.35p 0.76% United Utilities Group (UU.) 1,046.50p 0.63% Severn Trent (SVT) 2,717.00p 0.48% HSBC Holdings (HSBA) 614.00p 0.36% British American Tobacco (BATS) 2,589.50p 0.35% Imperial Brands (IMB) 1,765.50p 0.34%

FTSE 100 - Fallers

Spirax-Sarco Engineering (SPX) 10,705.00p -3.69% JD Sports Fashion (JD.) 145.00p -2.75% Ocado Group (OCDO) 450.20p -2.53% Johnson Matthey (JMAT) 1,706.50p -1.93% Antofagasta (ANTO) 1,521.50p -1.81% Hargreaves Lansdown (HL.) 807.00p -1.80% Taylor Wimpey (TW.) 107.95p -1.77% Experian (EXPN) 2,933.00p -1.74% Anglo American (AAL) 2,501.50p -1.71% Croda International (CRDA) 5,442.00p -1.59%

FTSE 250 - Risers

Ferrexpo (FXPO) 92.40p 5.66% Currys (CURY) 53.35p 4.30% Target Healthcare Reit Ltd (THRL) 74.20p 2.20% Babcock International Group (BAB) 315.20p 2.07% Telecom Plus (TEP) 1,568.00p 1.95% FirstGroup (FGP) 138.80p 1.91% Carnival (CCL) 1,121.50p 1.63% Digital 9 Infrastructure NPV (DGI9) 70.60p 1.29% Direct Line Insurance Group (DLG) 155.45p 1.07% RHI Magnesita N.V. (DI) (RHIM) 2,678.00p 1.06%

FTSE 250 - Fallers

Kainos Group (KNOS) 1,344.00p -5.15% Darktrace (DARK) 329.80p -5.04% Auction Technology Group (ATG) 742.00p -4.26% Genuit Group (GEN) 307.50p -4.06% Molten Ventures (GROW) 276.00p -3.97% SDCL Energy Efficiency Income Trust (SEIT) 78.30p -3.45% Bytes Technology Group (BYIT) 523.00p -3.42% Helios Towers (HTWS) 95.90p -3.33% Me Group International (MEGP) 165.40p -3.27% Tyman (TYMN) 267.00p -3.09%