London close: Stocks mixed on raft of global PMI data

London stocks ended Monday with mixed results as investors navigated a mix of UK economic data and the outcome of the French elections.

Results from the first round of polling overnight indicated the far-right would likely not secure an absolute majority in the second round of voting.

The FTSE 100 inched up 0.03% to close at 8,166.76 points, while the FTSE 250 dipped 0.32%, ending the day at 20,222.08.

In currency markets, sterling was last up 0.05% on the dollar to trade at $1.2651, while it slipped 0.09% against the euro, changing hands at €1.1790.

“It’s not been a roaring start to the week in London, but the gains for continental markets have spilled over, while both Land Securities and British Land have made strong gains following a broker upgrade,” said IG chief market analyst Chris Beauchamp.

“For now European markets are enjoying a relief rally, but with French yields still rising there is plenty of nervousness about the outlook for France and the French economy.”

Beauchamp added that July had been a strong month for the last decade, but the first session had not gotten off to a “particularly cheery” start.

“Early gains for the Dow were promptly walloped by a weaker ISM manufacturing figure, which was below 50 for the third month in a row.

“With Thursday out of the picture it looks like investors will be twiddling their thumbs for most of the week.”

UK manufacturing sector slows in June

In economic news, the UK’s manufacturing sector experienced a slight slowdown in June, as revealed by the S&P Global manufacturing purchasing managers’ index (PMI).

The index dipped to 50.9 from May’s 22-month high of 51.2, remaining above the 50.0 threshold that indicates expansion.

However, it fell short of the initial flash estimate of 51.4.

Despite the slowdown, optimism persisted, with 57% of firms expecting an increase in output over the coming year, close to May’s 27-month high.

“The UK manufacturing sector is enjoying its strongest spell of growth for over two years, with June seeing output and new order growth sustained at robust rates similar to May’s recent highs,” said Rob Dobson, director at S&P Global Market Intelligence.

“The performance of the domestic market remains a real positive, providing a ripe source of new contract wins.

“In contrast, the ongoing weak export performance is concerning, with manufacturers reporting difficulties in securing new business in several key markets including the US, China and mainland Europe.”

UK mortgage approvals meanwhile decreased in May due to higher mortgage rates, according to the Bank of England.

Net mortgage approvals for house purchases fell to 60,000 from 60,800 in April, slightly above economists’ expectations of 59,900.

Remortgage approvals also saw a small decline, coming in at 29,600 compared to 29,900 the previous month.

Consumer borrowing, however, increased significantly to £1.5bn in May from £800m in April.

“The strong recovery in mortgage demand seen in the early part of the year has petered out of late, in keeping with the rise in quoted mortgage rates over the past few months,” noted Peter Arnold, EY UK chief economist.

“Net secured lending also fell to £1.2bn from £2.2bn in April, although that was due to a significant rise in repayments.

“Gross lending continued to increase, reflecting the pickup in approvals at the start of the year.”

House prices in the UK remained broadly stable in June, as per data from lender Nationwide.

Annual house price growth was 1.5%, up from 1.3% in May, while monthly growth was more modest at 0.2%, down from 0.4% in May.

The average home price rose to £266,604 from £264,249.

Nationwide chief economist Robert Gardner said prices were around 3% below the all-time high recorded in the summer of 2022.

“Housing market activity has been broadly flat over the last year, with the total number of transactions down by around 15% compared with 2019 levels,” he said.

“Transactions involving a mortgage are down even more (nearly 25%), reflecting the impact of higher borrowing costs.

“By contrast, the volume of cash transactions is actually around 5% above pre-pandemic levels.”

On the continent, the eurozone’s manufacturing sector contraction was less severe than initially estimated in June.

Revised data from S&P Global and the Hamburg Commercial Bank (HCOB) lifted the manufacturing PMI to 45.8 from an initial reading of 45.6.

That marked a slight improvement, although the sector remains in contraction.

Notably, manufacturing PMIs for Germany, France, and Italy were all revised higher.

Across the Atlantic, the US manufacturing sector saw a further slight decline in activity last month, with the Institute for Supply Management‘s PMI falling to 48.5 from 48.7 in May.

That was below economists’ forecast of 49.1.

The survey indicated reduced orders and softer demand across various subsectors, although price pressures eased.

Finally on data, Chinese manufacturing activity expanded at its quickest rate in over three years, driven by production gains despite slowing demand.

The Caixin/S&P Global manufacturing PMI, focusing on smaller firms, rose to 51.8 in June from 51.7 in May, surpassing expectations of 51.2.

Growth was particularly strong in consumer and intermediate goods, outpacing investment goods.

Centrica rises on broker upgrade, Anglo American in the red

On London’s equity markets, British Gas owner Centrica increased 1.3% following an upgrade from ‘hold’ to ‘buy’ by Berenberg, driven by expectations that the company will utilise £1bn of its cash reserves to extend its share buyback programme.

Both Land Securities and Primary Health Properties experienced gains, with shares rising by 2.07% and 1.36% respectively.

The increases were prompted by HSBC upgrading both stocks to ‘buy’.

Trustpilot Group saw a rise of 4.19% after JPMorgan Cazenove placed the shares on ‘positive catalyst watch’ ahead of the first-half trading update scheduled for 11 July.

JPMorgan said it expected the company to report adjusted EBITDA figures that surpass market expectations.

On the downside, mining giant Anglo American faced a decline of 1.56% after announcing a suspension of production at its Grosvenor steelmaking coal mine in Queensland.

The suspension followed an underground coal gas ignition incident over the weekend.

While no injuries were reported and all workers were safely evacuated, the mine’s closure was expected to impact its contribution to Anglo’s annual steelmaking coal output, projected at 3.5 million tonnes for 2024.

The company said it would provide updated guidance once more information becomes available.

Reporting by Josh White for Sharecast.com.

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