MARKET REPORT: Fears over health of China economy spook markets

Asia-focused stocks drove the London stock market into the red amid growing fears over the health of the Chinese economy.

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

The slump was triggered by new data showing a sharp slowdown in the services sector of the world’s second-largest economy.

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

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 flip a switch and everything to go full steam ahead immediately. would run.

“While there was a strong first quarter, it is clear that this will be more of a slow recovery than suddenly piles of cash floating around.”

Shares of insurer Prudential fell 3.9 percent, or 43 pence, to 1,063 pence, while HSBC bank lost 0.5 percent, or 2.8 pence, to 621.9 pence, and luxury retailer Burberry fell 2.1 percent , or 45 pence, up to 2059 pence.

Miners also pulled out due to demand concerns and weaker metal prices. Anglo American fell 2.7 percent, or 63.5p, to 2268.5p and Antofagasta fell 2.2 percent, or 32.5p, to 1470p.

Analysts at Jefferies said they expect the second-quarter earnings season to be “difficult” for the industry following the weakness of the Chinese economy and the threat of further rate hikes from the US Fed.

There were more woes in the city, stockbroker Numis warned of a lack of deals.

The company, which agreed to be acquired by Deutsche Bank in April for £410 million, said 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 that it is in takeover talks with a private equity firm.

The Dublin group, whose technology helps customers recover duplicate payments, has been in talks with Accel-KKR and its investment firm Basware Corporation over a cash offer.

Takeover rules state that a final offer – or a withdrawal – must be made before August 16.

Glantus was founded in 2014 and went to 102p in May 2021. Shares rose 86.7 percent, or 9.75p, to 21p.

Traders rushed to Impellam after the recruiter confirmed it was in talks to be acquired by HR provider Headfirst Global.

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

Pursuant to takeover rules, Headfirst must announce before August 1 whether it intends to make a final offer. Impellam added 5.8 percent or 40 pence to 725 pence.

Education publisher Pearson climbed 2.5 percent, or 20 pence, to 837.4 pence after UBS upgraded its rating from “neutral” to “buy” and raised its price target from 930 pence to 970 pence.

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

Group sales of £1.4bn in the six months to the end of June were level with the previous year amid a slowdown in demand in Germany and France.

As a result, earnings for 2023 are expected to come in at the lower end of the £65.3m to £84m range expected by analysts. Shares fell 14.2 percent, or 4.9 pence, to 29.6 pence.

Car rental company Redde Northgate posted higher revenues and profits in the year to the end of April, but warned a shortage of vans could persist for another two years. Shares fell 6.4 percent, or 24 pence, to 354 pence.

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

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

The stock rose 11.2 percent, or 79 pence, to 783 pence.