FTSE 100 analysis: Blue-chips hit by soft China GDP data – Top UK stocks

FTSE 100 falls

The FTSE 100 is down 0.3% at the start of a new week.

That follows on from a largely negative session in Asia, dragged lower by weak economic growth in China. GDP growth slowed to 0.8% in the second quarter from 2.2% in the first to suggest the economy is losing momentum despite coming in above the 0.5% forecast. GDP was up 6.3% on a year-on-year basis and accelerated from the 4.5% we saw in the first, but came in way below the 7.3% expected by economists. Industrial output was stronger than anticipated but retail sales and property sales were both softer than hoped. The People’s Bank of China also kept its one-year medium-term lending facility rate at 2.65% following the cut we saw last month, despite calls for more stimulus to be introduced. That will heighten attention on the government meeting pencilled-in for later this month.

The fact US consumer sentiment came in at a two-year high on Friday is also reigniting fears that the Federal Reserve isn’t as close to ending the current cycle or rate hikes as hoped.

The economic calendar is quiet today. We have Italian inflation numbers due out this morning followed by the New York Empire State Manufacturing Index over in the US this afternoon. Finance ministers of the G20 and central bank governors will be meeting in Gandhinagar in India for a two-day meeting.

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the FTSE 100, is struggling to keep up the momentum we saw last week when it rebounded from eight-month lows.

We could see the index continue to drift back toward 7,300 if it remains under pressure this week. Notably, the longer-term 200-day moving average has crossed above the 50-day moving average to provide a new bearish signal.

A recovery back above 4,450 remains the immediate upside target before the falling trendline, which can be traced back to April, comes back into play.

Top UK stock news

Entain is down 0.6% after agreeing to purchase Angstrom Sports for £81 million, plus contingent payments totalling a maximum of £122 million over the next three years. Angstrom Sports is a specialist provider of sports modelling, forecasting and data analytics. The deal should close in the third quarter. ‘The acquisition secures Entain as the only global operator with a full in-house suite of end-to-end analytics, risk and pricing capabilities for US sports betting products.  The combination of Angstrom's innovative data-driven capabilities alongside Entain's global scale and market leading platform will offer our customers an unrivalled US sports betting experience,’ said the company.

Rio Tinto is down 1.8% this morning after agreeing to become a strategic investor in Australian firm Sovereign Metals, taking a 15% stake for AUD40.4 million and helping it with its rutile and graphite project in Malawi. That saw Rio Tinto buy around 83 million new shares in Sovereign Metals for AUD0.486 each. Rio Tinto has an option to increase its stake by another 4.99% within the next 12 months. Those option shares can be exercised at AUD0.535 each.

Trustpilot is down 1.5% after appointing Adrian Blair as its new chief executive. He was the global chief operating officer of food delivery platform Just Eat between 2011 and 2018, after which he became the chief executive of accounting software-as-a-service provider Dext between 2019 to 2022. He will join Trustpilot on September 13.

Tullow Oil is trading marginally lower in early trade after its key Jubilee field surpassed 100,000 barrels of oil per day since the Jubilee South East project started up. Two wells at the new project are now in production and two more should be tied-in before the end of the year. ‘For Tullow, delivery of this step up in production is a key part of our business plan, in line with our commitment to deliver over $800 million of free cash flow between 2023 to 2025,’ said CEO Rahul Dhir.

BP and Shell are down 1% to 1.2% today as oil prices tumbled in wake of the economic data out of China, with Brent down over 1% this morning.

DFS Furniture is down 3.3%. The retailer said it delivered underlying profit before tax and brand amortisation in-line with its guidance at ‘slightly above’ £30 million despite describing market conditions as ‘significantly worse than expected’. It said its gross margin continued to improve as freight rates returned to pre-pandemic levels and it kept a tight control over costs. It said its market share has hit a record 38%, despite reporting a 15% to 20% drop in volumes as consumer demand takes a hit in the current environment. Trading in the new financial year has been in-line with expectations but it is still expecting a mid-single digit decline in volumes, but said underlying profit should be ‘slightly above’ what we saw in the recently-ended year.

Futura Medical is up 1.7% after striking a licensing deal with Haleon to help commercialise its topical, gel-based erectile dysfunction treatment named MED3000 in the US. This will see Futura receive a $4 million upfront payment in addition to royalty payments from any sales of its drug made by Haleon under the deal. Futura could secure more payments worth between $4 million to $5 million over several years depending on if certain milestones are met. Haleon is up 0.3%.

Oxford Nanopore is trading 1.5% higher after it reiterated its full year guidance this morning as it released a trading update for the six months to the end of June. It said its Life Sciences Research Tools division saw revenue grow 22% from the year before to £86 million. It said underlying growth, which excludes sales from the Emirati Genome Program and Covid-19 sequencing, was up 46% at constant currency. The firm is hoping to post positive adjusted Ebitda by the end of 2026.

Diversified Energy Co is down 0.3% after selling some of its undeveloped acreage in the US for $16 million. It has offloaded 22,000 net acres in Oklahoma, which it said was a ‘small portion’ of its land holdings in the area. ‘Once again, our teams delivered in their commitment to enhance the value from recent Central Region acquisitions, significantly reducing our net purchase price by successfully monetizing another portion of undeveloped leasehold. This Transaction exemplifies our strategy of efficiently managing our producing assets while extracting upside from other portions of our asset portfolio,’ said CEO Rusty Hutson.

Gore Street Energy Storage Fund is up 0.5% this morning. The company said its net asset value jumped 47.8% in the year to the end of March to £556.3 million, with the per share figure rising only 5.9% to 115.6p. Revenue increased to £39.3 million from £29.3 million as it squeezed out more money for each megawatt hour in its portfolio. Adjusted Ebitda was up 19% at £27.8 million. Over 63% of earnings came from outside the UK as it continues to diversify by expanding overseas. It said larger projects will be prioritised going forward. It said it continues to expect revenue and Ebitda growth in the new financial year.

LXi REIT is down 0.4% after announcing chief financial officer of its investment manager, Freddie Brooks, is stepping down to pursue new opportunities. That will happen on September 3, but Brooks will remain a consultant until the end of 2023. A search for his successor is underway.

Gresham House is in talks about being taken over private equity, according to Sky News. US buyout firm Searchlight Capital is looking to take the alternative asset manager private and the potential price was being discussed over the weekend. Gresham House is up 56% today!

Victrex has been upgraded to Buy at Berenberg, which said earnings are approaching their trough and raised its price target to 2,090p from 1,750p. The chemicals company is up 1.8% at 1,524.40p today.

Johnson Matthey has been upgraded to Buy at Deutsche Bank, which set a 2,500p price target. The chemicals firm is up 1% at 1,771.50p today.

Spirax-Sarco Engineering has been raised to Overweight by JPMorgan and given a price target of 11,900p. The engineer is down 0.1% today at 10,440p.

Spectris has been downgraded to Underweight by JPMorgan and given a 3,100p price target. The maker of high-tech instruments is down 2% at 3,578p in early trade.

Rotork has been cut to Neutral by JPMorgan, which has a target price of 330p on the stock. The valve manufacturer is down 3.1% this morning at 298p.

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