European stocks went into Tuesday afternoon on the back foot, with the mood in equity markets hurt by a series of less-than-stellar manufacturing sector readings.
There may have also been an element of profit-taking, after stock markets ended last week on the up, despite a trio of major central bank decisions. The central bank action continues on Thursday with the Bank of England. The Reserve Bank of Australia earlier on Tuesday decided against a rate hike.
‘Stock markets opened slightly lower in Europe on Tuesday as investors took some profits amid new all-time highs yesterday and a choppy trading session in Asia overnight,’ ActivTrades analyst Pierre Veyret commented.
‘Today’s price action is seen as normal and technical as the markets test newly established support levels.’
The FTSE 100 index was down 29.40 points, 0.4%, at 7,670.01. The FTSE 250 was down 61.77 points, 0.3%, at 19,081.99, and the AIM All-Share was down 1.63 points, 0.2%, at 763.09.
The Cboe UK 100 was down 0.4% at 765.39, the Cboe UK 250 was down 0.5% at 16,733.40, and the Cboe Small Companies was up 0.3% at 13,834.11.
In European equities on Tuesday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both down 0.9%.
The mood in Europe was largely downbeat, following some disappointing purchasing managers’ index readings.
The downturn in the UK’s manufacturing sector continued in July. The S&P Global/CIPS manufacturing PMI worsened to 45.3 points in July, from 46.5 in June. The sub-50 reading indicates a continuing contraction in the sector. This was slightly below a previous flash estimate of 46.5.
This marks the lowest reading in the year so far and the joint-weakest since May 2020.
Meanwhile, the eurozone’s manufacturing sector activity hit a 38-month low in July.
The Hamburg Commercial Bank eurozone manufacturing PMI fell to 42.7 points in July from 43.4 points in June. It was in line with the previous flash estimate.
Still to come on Tuesday’s economic calendar, there is a US PMI manufacturing reading at 1545 BST.
Meanwhile, data from Eurostat on Tuesday showed that the unemployment rate in the eurozone was unmoved in June and slightly better than expected.
According to Eurostat, the single currency area’s seasonally adjusted jobless rate was 6.4% in June, where it stood in May. It was down from 6.7% a year prior.
The unemployment rate had been expected to tick up to 6.5%, according to consensus cited by FXStreet.
‘The eurozone labour market remains extremely tight, with the unemployment rate steady at a record low in June. We expect weakness in activity to cause labour market conditions to loosen somewhat in the rest of this year, but the resulting rise in the unemployment rate is likely to be small,’ said Capital Economics Giulia Bellicoso.
The dollar was higher on Tuesday.
The pound was quoted at $1.2801 at midday on Tuesday in London, lower compared to $1.2860 at the equities close on Monday. The euro stood at $1.0973, lower against $1.1027. Against the yen, the dollar was trading at JP¥142.73, higher compared to JP¥142.12.
In the FTSE 100, Weir Group was up 4.0%, putting it towards the top of the index.
It reported that pretax profit in the half-year ended June 30 increased by 35% to £170.3 million from £126.0 million the prior year. Revenue increased by 19% to £1.30 billion, a rise of £1.10 billion year-on-year.
Weir declared an interim dividend of 17.8 pence per share, up 32% from 13.5p per share the year before, which the company said reflected its ‘high levels of confidence’ in its strategy and future prospects.
Weir said it had raised its full-year revenue and profit guidance, and stated that it was confident of meeting cash conversion.
Peel Hunt analyst Harry Philips said: ‘Weir has a record order book, excellent momentum and high levels of activity within its mining customer base.’
Fresnillo lost 7.6%.
The gold and silver miner in Mexico said pretax profit from continuing operations dropped markedly to $47.9 million in the six months that ended June 30, from $155.2 million a year before. The two figures include negative revaluation effects of the Silverstream contract of $17.0 million and $36.3 million, respectively.
Amid the lower profit, Fresnillo cut its interim dividend by more than half to 1.40 US cents from 3.4 cents a year before.
In the FTSE 250 index, 4imprint was up 9.7%.
The London-based marketer and distributor of promotional products said it saw ‘continued encouraging results at the demand level’ throughout the first half of 2023. This included an 18% increase in order intake compared with the prior year.
For the full year, 4imprint expects revenue to be ‘slightly above’ $1.3 billion, up from $1.14 billion in 2022. It also anticipates pretax profit to be at least $125 million, up from $103.7 million the previous year and ‘materially above’ analysts’ current consensus.
Man Group lost 8.6%, amid a mixed second quarter.
Assets under management at June 30 totalled $151.7 billion, rising 5.9% from $143.3 billion at the end of December. It reported net inflows of $2.6 billion during the half year, and $1.5 billion for the second quarter alone.
The London-based firm said revenue for the six-month period fell 43% to $506 million from $887 million. Pretax profit declined 70% to $114 million from $380 million.
Alongside the $2.6 billion worth of net flows, Man’s asset management increase over the first half was boosted by a $5.1 billion positive investment performance.
‘Pleasingly, we recorded net inflows across alternative and long-only strategies, which highlights the broad-based demand for the range of differentiated investment strategies and solutions that we offer at Man Group,’ the company said.
In the final three months of the half-year, however, it was Man’s long-only offering which outperformed. It recorded net flows of $1.8 billion for long-only positions, compared to an outflow of $300 million for alternative.
Analysts at UBS said this is likely to put shares under pressure.
‘Man Group’s core earnings were generally in line, and while AUMs and flows were a beat, the mix was not in Man Group’s favour (more towards the lower-margin long-only strategies). As a result, we expect a moderately negative response for the shares,’ the Swiss bank explained.
Among London’s small-caps, International Personal Finance was up 6.0%.
The company which offers small, unsecured cash loans reported that revenue in the first half of 2023 rose to £380.0 million from £297.4 million a year earlier. Pretax profit jumped to £37.8 million from £33.8 million, which the company said is ahead of internal plans.
Stocks in New York were called to open lower. Both the Dow Jones Industrial Average and the Nasdaq Composite are called to open down 0.3%. The S&P 500 index is called to open 0.2% lower.
Brent oil was quoted at $84.90 a barrel at midday in London on Tuesday, down from $85.08 late Monday. Gold was quoted at $1,954.50 an ounce, down against $1,969.90.
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