- Markets pull back after strong end to 2013
- China, UK manufacturing PMIs disappoint
- Resources stocks provide a drag on the FTSE 100
- Retailers in focus after mixed corporate updates
techMARK 2,780.21 -0.04%
FTSE 100 6,720.85 -0.42%
FTSE 250 15,925.41 -0.06%
Mixed global manufacturing figures ensured that UK markets started the first session of the year in negative territory, with the FTSE 100 pulling back after a strong end to 2013.
London's benchmark index, which had risen by nearly 5% in the final two and a half weeks of 2013, was trading 0.4% lower at around 6,720 by midday on Thursday. For the whole of last year, the Footsie rose by 14.4%, its best annual gain since 2009.
"Many traders had concerns about a potential pullback in the New Year, not only as the seasonal over exuberance of the festive period wears off, but also as the masses start to re-allocate resources for the year ahead. With many equity markets at all-time highs and bond returns creeping up, investors are likely to proceed with caution until the picture for the flows of 2014 starts to clear," said Toby Morris, Senior Sales Trader at CMC Markets.
Global manufacturing PMIs come in mixed
China's official manufacturing purchasing managers' index (PMI), released on Wednesday, fell from 51.4 to 51 in December, missing the 51.2 expected by analysts. Meanwhile, Thursday's HSBC/Markit survey showed that the manufacturing PMI declined from 50.8 to 50.5, broadly in line with forecasts.
While both figures came in above 50, indicating growth, they showed that the rate of manufacturing expansion had decelerated during the month.
Closer to home, the UK manufacturing PMI fell from a revised 58.1 to 57.3 in December, missing the prediction of a small up-tick to 58.2.
Meanwhile, the final reading of the Eurozone manufacturing PMI was confirmed at 52.7, up from November's 51.6. While activity picked up in Spain, Italy and Germany during the month, conditions in France continued to deteriorate.
"The French figure is the most concerning of these, having fallen to 47 from 48.4 in November, now deep in contraction territory and showing no signs of reversing the trend," said Market Analyst Craig Erlam from Alpari.
Mining, oil stocks provide a drag
Mining stocks were among the worst performers in London despite an increase in metals prices, as traders continue to digest the weak manufacturing PMIs out from the UK and China. Anglo American, Rio Tinto, Antofagasta, Ferrexpo and Vedanta were all firmly in the red.
Oil major Royal Dutch Shell fell despite the news that it has completed the purchase of $4.1bn of liquefied natural gas assets from Spanish rival Repsol at a better price than previously announced. BP was also lower.
Sector peer Ophir Energy slumped after it failed to discover oil or gas in the first of its much-anticipated "high impact" wells drilled offshore Tanzania in 2014. The highly prospective Mlinzi Mbali-1 well in Ophir's 80%-owned Block 7 was found to be water-bearing, a disappointing result in what is thought to be one of the largest prospects to ever be drilled in the region.
In contrast, retailers were performing well today, recovering after a Debenhams-inspired sell-off on Tuesday following its profit warning. The stock rose this morning on the news that its Chief Financial Officer Simon Herrick would be stepping down.
Sentiment in the industry has also recovered slightly after fellow department stores John Lewis and House of Fraser reported strong sales in the lead-up to Christmas. Analysts at Numis Securities said that this showed that Debenhams' problems were more "company-specific" rather than indicative of trends across the wider industry.
Kingfisher, Sainsbury and Sport Direct were all making gains this morning, along with Next ahead of its trading update due out tomorrow.
FTSE 100 - Risers
Ashtead Group (AHT) 773.00p +1.71%
Hargreaves Lansdown (HL.) 1,371.00p +1.26%
Capita (CPI) 1,051.00p +1.25%
Next (NXT) 5,510.00p +1.10%
RSA Insurance Group (RSA) 92.40p +1.09%
Kingfisher (KGF) 388.80p +1.07%
Wolseley (WOS) 3,461.00p +1.05%
Associated British Foods (ABF) 2,469.00p +0.98%
International Consolidated Airlines Group SA (CDI) (IAG) 404.90p +0.87%
Royal Bank of Scotland Group (RBS) 340.90p +0.83%
FTSE 100 - Fallers
Aberdeen Asset Management (ADN) 484.20p -3.16%
Anglo American (AAL) 1,287.00p -2.50%
Rio Tinto (RIO) 3,342.00p -1.98%
SSE (SSE) 1,347.00p -1.68%
Carnival (CCL) 2,459.00p -1.68%
Weir Group (WEIR) 2,097.00p -1.64%
Antofagasta (ANTO) 810.50p -1.64%
BHP Billiton (BLT) 1,839.50p -1.58%
Tesco (TSCO) 329.10p -1.57%
Amec (AMEC) 1,071.00p -1.56%
FTSE 250 - Risers
Hikma Pharmaceuticals (HIK) 1,273.00p +6.00%
Telecity Group (TCY) 760.00p +4.76%
Imagination Technologies Group (IMG) 186.00p +4.55%
African Barrick Gold (ABG) 193.50p +4.14%
Bank of Georgia Holdings (BGEO) 2,480.00p +3.55%
International Personal Finance (IPF) 515.50p +3.51%
Thomas Cook Group (TCG) 172.70p +3.29%
Moneysupermarket.com Group (MONY) 185.20p +2.55%
Diploma (DPLM) 690.50p +2.30%
Soco International (SIA) 403.30p +2.05%
FTSE 250 - Fallers
Ophir Energy (OPHR) 307.10p -6.31%
Ferrexpo (FXPO) 184.60p -3.35%
Big Yellow Group (BYG) 463.70p -2.99%
Enterprise Inns (ETI) 149.90p -2.66%
Vedanta Resources (VED) 909.00p -2.62%
Spirent Communications (SPT) 101.20p -2.50%
Dixons Retail (DXNS) 47.30p -2.49%
Investec (INVP) 427.10p -2.40%
IP Group (IPO) 165.90p -2.30%
Brown (N.) Group (BWNG) 520.50p -2.25%