MARKET REPORT: Fears over health of China economy spook markets

Asian-focused stocks dragged the London stock market into the red on the back of growing fears over the health of China’s economy.

On a disappointing day for investors, the FTSE 100 fell 1 per cent, or 77.62 points, to 7442.10 and the FTSE 250 was down 0.8 per cent, or 140.46 points, to 18,393.33.

The slump was driven by fresh data which showed a sharp slowdown in the service sector of the world’s second-largest economy.

The Caixin China general services purchasing managers’ index fell to 53.9 in June from 57.1 in May, its lowest level since January as the private sector survey increased fears that China’s post-pandemic recovery was faltering.

Russ Mould, investment director at AJ Bell, said: ‘Expectations for China’s economic reopening were arguably too high at the start of the year, with many people expecting the country to effectively flick a switch and everything to run at full power instantly.

China concerns: On a disappointing day for investors, the FTSE 100 fell 1%, or 76.04 points, to 7443.68 and the FTSE 250 was down 0.8%, or 144.48 points, to 18,389.31

‘While there was a strong first quarter, it’s clear this is going to be more of a slow-burner recovery than wads of money suddenly sloshing around.’

Shares in insurer Prudential slid 3.9 per cent, or 43p to 1063p while HSBC bank shed 0.5 per cent, or 2.8p, to 621.9p and luxury retailer Burberry fell 2.1 per cent, or 45p, to 2059p.

Miners were also in retreat amid demand concerns and weaker metal prices. Anglo American slid 2.7 per cent, or 63.5p, to 2268.5p and Antofagasta was down 2.2 per cent, or 32.5p, to 1470p.

Analysts at Jefferies said it expects the second-quarter results season to be ‘difficult’ for the sector following weakness in China’s economy and the threat of further US Fed rate hikes. 

There were more woes in the City as stockbroker Numis warned over a dearth of deals.

The firm, which agreed to be snapped up by Deutsche Bank in April for £410million, said its revenues in the three months to the end of June were lower than expected. Shares were flat at 332.5p.

Stock Watch – Glantus 

Glantus nearly doubled on the news it is in takeover talks with a private equity firm.

The Dublin group, whose technology helps clients recover duplicate payments, has held discussions with Accel-KKR and its investee company Basware Corporation over a cash offer.

Takeover rules mean that a firm offer – or a retreat – must be made by August 16.

Glantus was founded in 2014 and floated at 102p in May 2021. Shares jumped 86.7 per cent, or 9.75p, to 21p.

Traders made a dash for Impellam after the recruiter confirmed it was in talks to be taken over by the human resources provider Headfirst Global. 

The group, which helps professionals such as doctors, lawyers and teachers find work, published an update after the market closed on Tuesday.

Headfirst must announce whether it intends to make a firm offer or not by August 1, according to takeover rules. Impellam added 5.8 per cent, or 40p, to 725p.

Education publisher Pearson climbed 2.5 per cent, or 20p, to 837.4p after UBS raised its rating to ‘buy’ from ‘neutral’ and upped the target price to 970p from 930p. 

The broker dismissed concerns that artificial intelligence poses a risk to it. Building materials firm SIG issued a profit warning as it expected trading to remain weak for the rest of the year. 

Group revenues of £1.4billion in the six months to the end of June were flat on the year before amid a slowdown in demand in Germany and France.

As a result, its profit for 2023 is expected to come in at the lower end of the £65.3million to £84million range expected by analysts. Shares plunged 14.2 per cent, or 4.9p, to 29.6p.

Vehicle hire firm Redde Northgate posted higher revenues and profits in the year to the end of April but warned that a van shortage could last for two more years. Shares slid 6.4 per cent, or 24p, to 354p.

Topps Tiles gained 3.1 per cent, or 1.5p, to 50p after the retailer said sales in the three months to July 2 were 4.4 per cent higher than the same period a year earlier. 

A strong performance in North America meant Keller Group, the engineering contractor, expects record first-half results for the six months to the end of June. It raised its interim dividend by 5 per cent to 13.9p. 

The stock rose 11.2 per cent, or 79p, to 783p.

This post first appeared on Dailymail.co.uk