Chinese data disappoints, stocks take a hit

The stock market took a hit on Monday morning as disappointing economic data from China raised worries among investors. The FTSE 100 index started the day down by 7.20 points, or 0.1%, at 7,249.74. Meanwhile, the FTSE 250 experienced a decline of 37.29 points, or 0.2%, at 17,966.68, and the AIM All-Share was down by 0.66 points, or 0.1%, at 741.05.

Trading in Asia presented a mixed picture as weak Chinese inflation data pointed to subdued demand and a struggling economic recovery. The National Bureau of Statistics reported that the consumer price index for June remained flat, down from 0.2% in May, indicating a slowdown in domestic demand. This disappointing figure was primarily driven by a 7.2% annual drop in the cost of pork, the staple meat in China, and falling oil prices that resulted in cheaper transportation.

Moreover, producer prices, which measure the cost of goods at the factory gate, experienced a sharp decline of 5.4% compared to the previous year, following a 4.6% slide in May. This fall was more significant than expected, as economists surveyed by Bloomberg had predicted a 5% decrease.

Tim Waterer, chief market analyst at KCM Trade, expressed concerns about the current state of economic activity in China. He stated, “The releases of the latest indicators from China did little to quell concerns about the lethargic state of economic activity. CPI and PPI gauges both missed the target and with deflationary troubles brewing for the world’s second-largest economy, one wonders how long it will be before the central bank steps in to provide something more meaningful on the stimulus side.”

BT Group fell 0.6% as the telecoms company announced Chief Executive Philip Jansen will step down in the next 12 months ‘at an appropriate moment’. Its nominations committee has begun a formal succession process.

Commercial real estate and storage firms faced downward pressure following a downgrade from HSBC. Segro experienced a decline of 1.1%, while Land Securities fell by 1.3%. In the FTSE 250, Hammerson dropped by 4.6%, and Safestore saw a decline of 2.0%. Similarly, Big Yellow and Great Portland Estates witnessed a decrease of 1.5%.

Despite the negative trend, Big Yellow provided an update on its first quarter ended June 30, stating that it had a “solid start” to the year. Total revenue rose by 6.7% year-on-year to £48.1 million, with store revenue increasing by 5.4% on a like-for-like basis to £47.0 million.

On the AIM market, Petro Matad sank 18% due to disappointing well results. The petroleum explorer reported that the Velociraptor-1 exploration well in the Taats Basin of Block V, located in central Mongolia, reached a total depth of 1,500 meters. However, the company stated that all the reservoirs encountered were water-bearing, which dampened investor sentiment.