22nd May 2025 12:09
(Alliance News) - Stock prices in Europe were lower on Thursday afternoon, with bond market worry compounded by underwhelming private sector survey readings in the UK and Europe.
An above-consensus rise in UK government borrowing, meanwhile, put Chancellor Rachel Reeves under the spotlight.
The FTSE 100 index traded down 61.92 points, 0.7%, at 8,724.54. The FTSE 250 fell 161.66 points, 0.8%, at 20,788.01, and the AIM All-Share was down 2.90 points, 0.4%, at 734.30.
The Cboe UK 100 was down 0.8% at 869.56, the Cboe UK 250 was 0.6% lower at 18,235.41, but the Cboe Small Companies was 0.4% higher at 16,610.43.
In Paris, the CAC 40 fell 1.0%, while Frankfurt's DAX 40 lost 0.8%.
Rostro analyst Joshua Mahony commented: "European markets are following their Asian counterparts lower, with PMI data and bond market concerns building to bring the bears back into play. Yesterday's Bloomberg outage might have forced a number of European treasury bond auctions to be extended, but the lack of demand for Japanese and US debt will have them wishing they could use the same excuse to allow them to drum up more demand for their products.
"With the Japanese and US bonds yields soaring amid weak demand, traders are growing increasingly concerned over the potential implications for US debt given the fact that the Japanese could start to reallocate away from US debt to further exacerbate the fiscal concerns highlighted by Moody's on Friday. While the rise in bond yields has been a long-standing phenomenon, there is a feeling that we are going to see markets grow increasingly concerned if this lack of demand pushes borrowing costs ever higher."
The yield on the US 10-year Treasury was quoted at 4.58% early Thursday afternoon UK time, widening from 4.54% at the time of the London equities close on Wednesday. The yield on the US 30-year Treasury widened to 5.08% from 5.02%.
US bond yields stretched after a 20-year auction saw weak demand, compounding fiscal worries that had also been worsened by a credit rating knock from Moody's late last week.
Stocks in New York are called to open mixed, after struggling on Wednesday. The Dow Jones Industrial Average is called down 0.15, but the S&P 500 up 0.1% and the Nasdaq Composite 0.2% higher.
The dollar has been under pressure this week, surrendering the stride it made after a tariff de-escalation between the US and China. The pound and euro gave back some progress against the greenback on Thursday, however, on the back of tepid purchasing managers' index readings.
The pound traded at USD1.3398 early Thursday afternoon, down from USD1.3443 at the time of the London equities close on Wednesday. The euro faded to USD1.1296 from USD1.1389. Against the yen, the dollar fell slightly to JPY143.57 from JPY143.63. The dollar had fallen below the JPY143 mark earlier on Thursday.
The eurozone private sector slipped into contraction territory this month, as the service economy sunk to a more than one-year low.
The Hamburg Commercial Bank's flash composite purchasing managers' index reading fell to 49.5 points in May, from 50.4 in April. The reading was a six-month low and sat under the 50 point mark which separates contraction from decline.
The UK private sector economy remained in decline in May, amid manufacturing sector weakness, numbers on Thursday showed.
The S&P Global flash composite purchasing managers' index rose to 49.4 points in May, from April's final tally of 48.5. Although a two-month high, the latest reading suggests the private sector remains in negative territory.
UK government borrowing surged by more than expected last month, numbers on Thursday showed..
According to the Office for National Statistics, UK government borrowing, excluding private sector banks, spiked to GBP20.16 billion in April, from GBP14.14 billion in March.
It rose from GBP19.14 billion a year prior, but had been expected to fall to GBP17.9 billion, according to consensus cited by FXStreet.
Rabobank analysts commented: "If Chancellor Reeves intends to stick to her self-imposed fiscal rules, she may have little choice but to raise taxes in the autumn budget or squeeze further savings from departmental budgets during next month's spending review."
In London, Intertek shares fell 3.1%. It reported a small uptick in revenue at the start of 2025, as it expects corporations to invest more in quality, safety and sustainability.
The London-based assurance, inspection, product testing and certification company said revenue grew 1.2% to GBP1.09 billion in the first four months of 2025 from GBP1.08 billion a year prior.
The company said revenue grew 4.6% at constant currency exchange rates, with the lower actual growth reflecting foreign exchange movements.
"We are uniquely positioned to help companies navigate the current environment, capitalising on our data-driven insights and technical expertise in each of the industries we operate in. Intertek is a true pioneer in the total quality assurance market, always anticipating the needs of clients and bringing to market industry-leading innovations with agility and pace to accelerate growth," Intertek said.
Looking ahead, Intertek expects the unit to continue to deliver mid-single digit like-for-like revenue growth at constant currency.
Analysts at Shore Capital Markets commented: "Clearly the impact of US trade policies are still to come and we note no comment on exit rates or, indeed, wider economic conditions and potential impacts on revenues and margins. So, we take this as the group retaining FY guidance for now."
Johnson Matthey jumped 30%. It reported a rise in annual profit and said it has agreed to sell its Catalyst Technologies business to Honeywell International for GBP1.8 billion, promising to return the bulk of that sum to shareholders.
AJ Bell analyst Russ Mould commented: "Johnson Matthey is one of several companies on the UK stock market including Smith & Nephew which feel as if they've been in turnaround mode for years, but where progress has been slow. It's been under pressure from activist investors to reshape the business and no doubt the latest disposal will have been influenced by such shareholders.
"The sharp rise in the share price implies that investors are happy with the new strategic move and its latest numbers."
Among those leading the way on London's junior AIM market, Ironveld jumped 45%. The South Africa-focused mining company has completed the first phase of construction of a dense media separation plant at a vanadium and titanium project in the Limpopo province.
"Trial production runs have been successfully completed and we are now commencing commercial production of DMS grade magnetite for our existing offtake agreement with Sable Platinum," Ironveld said. "Initial output from the DMS plant has been analysed by an external laboratory and the results show that the magnetite product meets the required market specifications."
CEO Kris Andersson expects to see a "fundamental shift in Ironveld's trajectory" in the months to come. Andersson predicts the firm will turn from a "development-stage company to a fully operational, revenue-generating business with positive cash flow".
TheWorks.co.uk jumped 22%. The seller of books, stationery and toys said its underlying performance in the year to May 4 beat the wider non-food retail market. Like-for-like sales rose 0.8% on-year.
Total revenue declined 2.0% to GBP277 million from GBP283 million, with the prior benefitting from an additional trading week.
"The board expects that the positive momentum seen since Christmas will continue. This, combined with ongoing focus on product margin growth, cost management and execution of our new strategy, means we expect to offset significant cost headwinds and deliver profit growth in the year ahead. As a result, we are targeting profit growth in excess of current market expectations in FY26," TheWorks.co.uk said.
A barrel of Brent fell to USD63.63 in London on Thursday afternoon, from USD65.08 at the time of the equities close on Wednesday. Gold declined to USD3,294.53 an ounce from USD3,312.03.
Still to come on Thursday is a US jobless claims reading at 1330 BST, before a US PMI at 1445.
By Eric Cunha, Alliance News news editor
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