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LONDON MARKET OPEN: Miners down as China trade data disappoints

8th Aug 2023 09:03

(Alliance News) - The FTSE 100 opened lower on Tuesday, dragged down by China-exposed stocks, as investors digest some disappointing trade data from the world's second-largest economy.

Focus now turns to an inflation reading from China, due to be published on Wednesday. Expectations are low. According to FXStreet cited consensus, consumer prices are expected to have fallen 0.5% on-year, having tread water in June.

The FTSE 100 index opened down 16.38 points, 0.2%, at 7,538.11. The FTSE 250 was up 21.17 points, 0.1%, at 18,882.83, and the AIM All-Share was down 0.58 of a point, 0.1%, at 759.05.

The Cboe UK 100 was down 0.3% at 751.14, the Cboe UK 250 was up marginally at 16,556.93, and the Cboe Small Companies was down 0.6% at 13,662.34.

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 0.4%. In China, the Shanghai Composite closed down 0.3%, while the Hang Seng index in Hong Kong was down 2.0% in late trade. The S&P/ASX 200 in Sydney closed up marginally.

Early Tuesday, China's trade numbers disappointed.

China last month suffered its biggest drop in exports for more than two years.

Sales of Chinese products to foreign markets plunged 14.5% on-year in July, a third consecutive drop, according to the customs authority. The decline was bigger than expected and the heaviest drop since the start of 2020, when the economy came to a standstill in the early weeks of the Covid-19 pandemic.

The data will likely ramp up calls for leaders to do more to revive growth, having laid out a series of stimulus measures in recent weeks.

"With numbers this poor it surely can't be too long before Chinese policymakers take further steps to support their economy with further easing measures, however, there appears to be some reluctance to do so at any scale for the moment, due to concerns over capital outflows," CMC Markets analyst Michael Hewson commented.

The news rippled onto China exposed stocks. Asia focused bank Standard Chartered was down 1.3%. Fashion brand Burberry lost 0.2%.

China's recovery has also weighed on commodity prices and mining stocks.

Brent oil was quoted at USD84.62 a barrel early in London on Tuesday, lower from USD85.44 late Monday.

Miners Anglo American and Antofagasta shed 1.8% and 1.0%.

Glencore, meanwhile, was down 2.6%.

For the first six months of 2023, the Barr, Switzerland-based miner and commodity trader saw its net income attributable to equity holders plunge by 62% to USD4.57 billion from USD12.09 billion a year earlier.

Revenue for the period dropped 20% to USD107.42 billion from USD134.44 billion, hurting profit. Adjusted earnings before interest, tax, depreciation and amortisation halved to USD9.39 billion from USD18.91 billion.

Despite sharply lower earnings, Glencore declared a special dividend of USD0.08 and announced a new USD1.2 billion buyback programme intended to run until the release of full year results in February 2024.

Elsewhere in the FTSE 100, abrdn lost 4.9%, making it the worst performer on the index in early trade.

abrdn reported its assets under management shrunk in the first half of the year, with outflows continuing as it grappled with turbulent market conditions. However, it extended its share buyback, and said it has the "key management resources on board" to ensure a promising future.

abrdn said assets under management and administration fell around 0.9% to GBP495.7 billion on June 30, from GBP500.0 billion at the end of last year.

The company reported "challenging market conditions and net outflows from the 'risk-off' environment".

The company maintained its interim dividend at 7.3p per share.

In addition, it upped its share buyback programme by GBP150 million to GBP300 million. It eyes returns for 2023 to be at a similar level to 2022.

In the FTSE 250 index, TI Fluid Systems jumped 14%.

TI Fluid Systems is an Oxfordshire-based maker of automotive fluid storage, carrying, delivery, and thermal management systems for light vehicles.

For the six months to June 30, the company reported a pretax profit of EUR58.9 million, leaping from EUR19.8 million a year prior. Revenue climbed 13% to EUR1.77 billion from EUR1.56 billion.

TI Fluid declared a dividend of 2.30 euro cents per share, more than doubled from 1.00 cents a year prior.

Looking ahead, the company remained cautious about its outlook, expecting the second half of 2023 to be slightly weaker than the first half. It cited modest global economic growth and ongoing uncertainties.

Among London's small-caps, Zotefoams lost 6.4%.

Zotefoams reported that revenue in the first half of 2023 rose 9% annually to GBP64.6 million from GBP59.0 million. Pretax profit climbed by 49% to GBP9.4 million from GBP6.3 million.

It upped its interim dividend by 4.6% to 2.28p per share from 2.18p per share, saying that this reflects "continuing confidence in the group's prospects."

On AIM, PHSC surged 50%.

The company said that in the year ended March 31, it swung to a pretax profit of GBP304,598 from a loss of GBP577,798 a year earlier. However, revenue fell to GBP3.4 million from GBP3.6 million.

Looking ahead, PHSC said financial 2024 "has the potential to be another successful year".

In European equities on Tuesday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was down 0.5%.

Germany's yearly inflation rate eased last month, numbers on Tuesday confirmed.

Germany's annual inflation rate cooled to 6.2% in July from 6.4% in June, Destatis said. The figure confirmed an earlier estimate. Month-on-month, consumer price grew 0.5% in July, picking up speed from a 0.3% rise in June from May.

"The rate of inflation has fallen slightly but remains at a high level", said Ruth Brand, president of Destatis.

In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.2%, the S&P 500 up 0.9% and the Nasdaq Composite up 0.6%.

The pound was quoted at USD1.2746 early on Tuesday in London, down compared to USD1.2776 at the equities close on Monday. The euro stood at USD1.0977, lower against USD1.1004. Against the yen, the dollar was trading at JPY143.06, up compared to JPY142.25.

Still to come on Tuesday's economic calendar, there are US wholesale trade sales at 1500 BST. There is also the US IBD/TIPP economic optimism index at the same time.

Gold was quoted at USD1,933.61 an ounce, slightly lower against USD1,934.11.

By Sophie Rose, Alliance News reporter

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