The FTSE 100 has handed back some of yesterday’s gains as a surprise slump in China’s retail sales weighed, overshadowing the economy’s return to growth in the second quarter.
The UK’s main index fell 49 points, or 0.8%, to 6,243 as European stocks tracked back from one-month highs.
Chinese growth rebounded in the second quarter, with a 3.2% expansion marking a sharp turnaround from the 6.8% contraction in the previous month. But retail sales were unexpectedly down 1.8% in June, confounding expectations of a 0.3% rise.
Tensions with the US also persist. US president Donald Trump ended Hong Kong’s preferential trade status and imposed sanctions on officials after China imposed new security laws in the region. China has vowed to retaliate.
The Office of National Statistics (ONS) reported that unemployment remained at 3.9% in the three months to May. Wages shrank by less than expected but Spreadex analyst Connor Campbell said the ONS figures were a ‘mixed bag’ as 649,000 jobs had been lost between March and June.
‘The self-employed suffered their worst quarter on record,’ he said. ‘Job vacancies are non-existent. Weekly hours worked from March to May dropped by 5.5 hours, and reportedly, 29% of UK businesses are preparing to cut jobs across the next three months.’
GVC (GVC) slumped to the bottom of the FTSE 100, down 5.9%, or 54p, at 859p.
The betting group has struggled during the Covid-19 shutdown with the lack of sporting events, sending its second quarter revenue plunging 86%, although it did benefit from a shift to online gambling.
Richard Hunter, analyst at Interactive Investor, said there would be ‘an element of adjustment until the company can regain its previous momentum and negate the revenue declines’.
Hays (HAS) led ‘mid caps’ lower, shedding 4.3% to 121p after the recruitment group warned it would be loss-making in the summer and reported a 34% drop in fourth quarter fees as companies freeze recruitment.
Dixon Carphone (DC) dropped 4.2% to 75p after the electrical goods retailer reported a halving of full-year profits and warned it would take time for its mobile phone arm to return to profit after the virus.
Investment trusts suffered this morning, with Fidelity China Special Situations (FCSS) falling 4.3%, or 13.5p, to 294p as the China-US row weighed.
HICL Infrastructure (HICL) lost 3.2%, or 5p, to trade at 168p after proposing a capital raise.