China fears hit the FTSE 100, property shares fall in FTSE 250

The FTSE 100 index is 1% decrease, down 78.56 factors at 7540.04, amid extra worries over China’s stuttering financial system.

Hong Kong’s Cling Seng index completed the session 0.9% decrease whereas the Shanghai Composite misplaced 2% on the finish of per week by which China reported worse-than-expected commerce figures and a slide into deflation territory.

The struggles of the world’s second largest financial system put strain on European inventory market sentiment, regardless of July’s inflation studying of three.2% fuelling hopes of a tender touchdown for the US financial system.

Fears over weaker China demand meant Glencore slipped 9p to 445.85p and copper miner Antofagasta declined 37p to 1545p, whereas BP led a poor session for the vitality sector by falling 6.95p to 483.95p.

Rate of interest-sensitive shares additionally struggled on the again of the newest UK GDP figures, leaving Piccadilly Lights proprietor Land Securities 8.2p decrease at 632.8p and retail warehouse enterprise Segro off 15p to 736p.

Former blue-chip British Land, whose portfolio consists of the Broadgate and Paddington Central campuses, fell 10.7p to 323.8p and Nice Portland Estates shed 14.4p to 414p because the FTSE 250 index weakened 102.91 factors to 18,890.90.

North Sea explorers Harbour Power additionally retreated 5.1p to 254.5p and Ithaca Power weakened 4.6p to 164p.

On the risers board, skilled providers agency FDM Holdings jumped 61p to 579p after its half-year outcomes confirmed a 34% rise in income to £29.8 million.

Deliveroo shares, in the meantime, have been 1.2p increased at 129p after Credit score Suisse raised its goal value to 183p following yesterday’s outcomes.

Enormous Wilko retailer property can be robust to re-let, new knowledge suggests

Various landlords will wrestle to shortly re-let the large Wilko property following the chain’s collapse, knowledge suggests because it emerged scores of outlets are nonetheless sitting empty from two different high-profile retail casualties.

Homeware chain Wilko fell into administration on Thursday in a transfer that places 12,500 jobs in danger.

The 93-year-old enterprise, which has grappled with inflationary pressures and felt the influence of the price of residing disaster on buyer spend, was unable to safe a rescue deal. PwC will work on the administration together with any seek for consumers of the model title or its round 400 outlets.

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One other yr of huge losses for Odeon

British cinema chain Odeon is struggling to get its funds again into form after the pandemic, new filings present, as a sluggish pick-up in footfall and a dearth of blockbuster movie releases in 2022 led to a different yr of 8-figure losses.

Firm revenues of £202.9 million stay 18% beneath pre-Covid ranges Pre-tax losses for the yr stood at £36.8 million. Regardless of hovering inflation, common ticket costs fell 1% to £7.95, whereas common buyer spend on food and drinks sunk 12% to £3.46.

The discharge of some massive Hollywood titles in 2022, together with Tom Cruise’s High Gun: Maverick and Black Panther: Wakanda Perpetually, spurred a greater than 50% year-on-year improve in cinema attendance to fifteen million.

The agency refinanced its £400 million debt that was as a result of mature as quickly as subsequent week, in favour of a brand new debt facility with 12.75% curiosity that matures in 2027.

Odeon conceded that its going concern standing trusted a promise of economic assist from its mum or dad, US cinema large AMC, from whom it anticipated to require additional funding for no less than one other yr to maintain it afloat.

“A extra strong slate of main film releases is scheduled throughout 2023, which has generated optimism that attendance and income ranges will proceed to enhance,” Odeon stated.

Fastened mortgage charges firmly on the way in which down

The decline in mortgage charges after a surge to 15-year highs appeared clearer as we speak, as charges declined additional.

In accordance with Moneyfacts, the typical two-year fastened residential mortgage charge is 6.80%, down from 6.83% yesterday as lenders together with Halifax and First Direct introduced in new decrease charges from as we speak.

The common five-year fastened charge fell from 6.33% to six.28%.

Purchase-to-let charges additionally dipped, however extra slowly.

Charges have been edging down for the previous three weeks after June inflation figures got here in beneath expectations, main merchants to consider the Financial institution of England is not going to increase rates of interest as excessive as initially feared.

FTSE 100 decrease on China fears, FDM surges 12% in FTSE 250

Considerations over China’s property sector have fed right into a weaker session for the London market, with the FTSE 100 index down 0.6% or 45.60 at 7573.

Prudential misplaced 10.5p to 1028p and mining shares additionally got here underneath strain after the Shanghai Composite fell 2% and the Cling Seng weakened 0.7%.

BT Group shares led the risers board, however the enchancment was a modest 0.7p to 115.95p.

The FTSE 250 index fell 45.91 level to 18,947.90, pushed by falls within the oil and gasoline sector after North Sea explorers Harbour Power and Ithaca Power weakened 2%.

IT-focused skilled providers agency FDM Holdings jumped 12% or 61p to 579p after its half-year outcomes confirmed a 34% rise in pre-tax income to £29.8 million.

Key market knowledge

Check out our key market knowledge because the FTSE 100 fell by 0.5% in early buying and selling.

A few of yesterday’s massive fallers, similar to Entain and Spirax-Sarco, continued their declines as we speak.

‘Uncommon’ manufacturing surge drove GDP progress

James Smith, developed markets economist at ING, stated the constructive GDP shock may largely be put all the way down to ‘uncommon’ ranges of producing progress.

“The UK financial system grew quicker than anticipated in June, helped by a surge in manufacturing manufacturing,” he stated. “Month-to-month GDP rose by 0.5% on the month, although the two.4% improve in manufacturing between Might and June is extraordinarily uncommon (no less than exterior of the Covid-19 interval). The result’s that general second-quarter financial progress got here in at 0.2%, a bit increased than anticipated.

“The ONS places this all the way down to prescribed drugs and automobile manufacturing. And whereas the latter can in all probability be partly defined by the continued enchancment in provide circumstances (manufacturing is up 15% since final summer season’s low), it’s onerous to elucidate why a lot of this progress fell in June particularly. The influence of Might’s financial institution vacation seems to have been pretty minimal compared to previous royal occasions.

“Nonetheless, whereas a lot of the constructive shock may be defined by these manufacturing sectors, the remainder of the financial system seems pretty resilient too. That was helped by higher climate in June which appears to have boosted the likes of hospitality and retail.”

Might financial institution holidays ‘make the financial system look stronger than it truly is’

The expansion in GDP was not sufficient to make Ruth Gregory, deputy chief UK Economist at Capital Economics, optimistic. She nonetheless predicts a recession this yr, and stated the June numbers look higher than the fact as a result of they’re being in comparison with a month with three financial institution holidays.

“The 0.5% m/m rise in actual GDP in June and 0.2% q/q improve in Q2 confirmed {that a} recession has to date been averted,” she stated. “However with a lot of the drag from increased rates of interest nonetheless to come back, we’re sticking to our below-consensus forecast that the UK is heading for a gentle recession later this yr.

“On the face of it, June’s 0.5% m/m rise seems encouraging. It was stronger than we and the consensus had forecast (0.3% m/m) and left the extent of GDP in June 0.8% above its pre-pandemic February 2020 degree. Nevertheless, because the rise was largely because of the return to the traditional variety of working days in June after Might’s financial institution vacation for the King’s Coronation, it makes the financial system look stronger than it truly is.

“The ONS didn’t present an estimate of the influence of the additional financial institution vacation. However it did observe that it explains among the 1.8% m/m acquire in industrial manufacturing in addition to among the 0.2% m/m in providers output. If the web impact was much like the additional financial institution vacation for the Queen’s funeral final September, then it may need boosted GDP progress by 0.3ppts.”

Heathrow passenger numbers climb to 7.7 million in July

Passenger numbers at Heathrow airport soared to 7.7 million in July, up 21.4% from final yr as Brits sought to flee the unhealthy climate again house.

Whereas the expansion was sturdy, the numbers are nonetheless beneath pre-pandemic ranges.

Site visitors to Turkey was at file highs, whereas there have been near-record numbers of passengers going to Portugal, Gibraltar and Italy.

New York stays the most well-liked vacation spot.

Heathrow CEO John Holland-Kaye stated: “It is nice to see so many passengers getting away to seize some summer season solar. We have a fantastic vary of fashionable locations and our groups are delivering wonderful service which is able to guarantee your travels get off to the very best begin.”

Holland-Kaye will go away later this yr, however the date hasn’t been introduced but.

Economic system “flickering to life”

Matthew Fell, director of competitiveness at BusinessLDN, stated that whereas the newest GDP progress was excellent news,, it was nonetheless removed from the place the financial system must be.

“These figures present that the financial system is flickering into life, however the UK is caught in a low-growth rut. There are a number of low-cost measures the place the Authorities may present a much-needed increase to progress, together with reversing the choice to finish VAT-free purchasing for worldwide customers,” he stated.

“Powering up productiveness can also be important to maneuver out of the financial sluggish lane and treatment the continued value of residing disaster. The Authorities ought to unleash innovation with a deal on Horizon Europe and increase digital abilities capabilities to benefit from AI and rising applied sciences.”