London close: Stocks fall after better-than-expected US data

(Sharecast News) - London stocks ended in the red on Thursday as better-than-expected US data cast doubt over the prospect of further rate cuts from the Federal Reserve.

The FTSE 100 closed down 0.4% at 9,213.98.

Kathleen Brooks, research director at XTB, said better-than-expected US GDP data leads to questions about whether the Fed needs to cut rates further, especially since inflation has picked up in the third quarter.

"Added to this, more current economic data was also positive for the US economy. There were signs that the labour market is picking up. Initial jobless claims fell to their lowest level since mid-July, and durable goods orders were also stronger than expected," she said.

"The strength of the US economic data has led to a mini recalibration of US interest rate expectations. On Wednesday, the market was pricing in a 90%+ chance of a rate cut in October, that is now 83%. Likewise, expectations for a December cut have also been scaled back."

On home shores, the latest Distributive Trades Survey from the Confederation of British Industry showed that the retail sector continued to struggle in September as sales fell for the twelfth month in a row.

Retail sales volumes fell in the year to September at a similarly strong pace to that in August.

September's weighted balance was -29, compared to -32 a month earlier. Analysts had been hoping for a larger improvement, to -26.

The weighted balance is the difference between firms reporting an increase and those seeing a decrease.

Sales for the time of year were also judged to be poor, with a balance of -13, although that was an improvement on August's -19.

The survey also flagged an ongoing slowdown in orders placed with suppliers, with a balance of -36.

Looking ahead, retailers said they expected to continue cutting back on orders next month, as sales volumes were likely to continue falling.

The retail sector is facing a raft of headwinds, including higher costs - following rises to employer's National Insurance contributions and the minimum wage - sticky inflation, US tariffs and poor consumer sentiment.

Martin Sartorius, principal economist at the CBI, said: "Weak demand continues to weigh on sales, while US tariffs are adding pressure for some retailers. Lacklustre economic conditions are also affecting the wider distribution sector, with wholesalers and motor traders seeing fast sales declines.

"As we approach the autumn Budget, retailers and other distribution firms will want the chancellor to deliver certainty and restore confidence to businesses and consumers alike."

In equity markets, medical products and technologies firm Convatec slumped after the Trump administration launched an investigation into imports of personal protective equipment, medical consumables, and medical equipment including devices.

Babcock reversed earlier losses to close a touch higher as it reaffirmed its full-year outlook after an "encouraging" start to the year. Updating on trading, the company organic revenue growth and underlying operating margin progress had both been in line with expectations in the five months to August end.

Mitchells & Butlers slumped as news that weaker sales in London and at its premium businesses disappointed investors despite the pub and restaurant group holding annual guidance on the back of a 4.2% rise in like-for-like sales.

Eurowag lost ground after TA Associates Management sold 61 million shares in the company in a placing.

Phoenix, Endeavour Mining and Drax all fell as they traded without entitlement to the dividend.

On the upside, shares in Petershill Partners rocketed after the investment firm said it plans to delist from the London stock market after concluding it was undervalued as a public company.

SSP shot higher following a report that activist hedge fund Irenic Capital Management is trying to drum up interest in a take-private deal for the Upper Crust owner after lifting its stake.

According to the Financial Times, the New York-based hedge fund is encouraging private equity groups to launch takeover bids for SSP. The fund has shared materials about the merits of a leveraged buyout with investment bankers and private capital firms in recent weeks, according to a pitch deck seen by the Financial Times.

Safety equipment group Halma was in the black as it said year-to-date trading has remained in line with expectations, leading it to reiterate full-year guidance despite mixed regional performance and ongoing macroeconomic uncertainty.

Market Movers

FTSE 100 (UKX) 9,213.98 -0.39%

FTSE 250 (MCX) 21,591.89 -0.45%

techMARK (TASX) 5,394.00 -0.53%

FTSE 100 - Risers

Rio Tinto (RIO) 4,916.00p 3.54%

3i Group (III) 3,935.00p 1.96%

Entain (ENT) 888.40p 1.65%

Beazley (BEZ) 860.50p 1.41%

Smiths Group (SMIN) 2,290.00p 1.15%

Imperial Brands (IMB) 3,159.00p 1.06%

Halma (HLMA) 3,372.00p 1.02%

British American Tobacco (BATS) 3,934.00p 1.00%

Shell (SHEL) 2,699.00p 0.97%

Pearson (PSON) 1,043.00p 0.92%

FTSE 100 - Fallers

Convatec Group (CTEC) 221.20p -5.63%

Phoenix Group Holdings (PHNX) 623.00p -5.39%

AstraZeneca (AZN) 10,956.00p -2.27%

Barclays (BARC) 376.35p -2.26%

DCC (CDI) (DCC) 4,714.00p -2.16%

Ashtead Group (AHT) 4,995.00p -2.14%

Smurfit Westrock (DI) (SWR) 3,196.00p -2.11%

Experian (EXPN) 3,654.00p -2.09%

NATWEST GROUP (NWG) 505.20p -2.06%

Standard Chartered (STAN) 1,425.50p -1.86%

FTSE 250 - Risers

Petershill Partners (PHLL) 310.00p 34.20%

SSP Group (SSPG) 167.00p 6.98%

Computacenter (CCC) 2,608.00p 4.24%

Ithaca Energy (ITH) 195.00p 3.39%

International Workplace Group (IWG) 210.20p 1.94%

Playtech (PTEC) 364.50p 1.67%

4Imprint Group (FOUR) 3,120.00p 1.63%

Discoverie Group (DSCV) 594.00p 1.54%

Rotork (ROR) 340.40p 1.25%

HarbourVest Global Private Equity Limited A Shs (HVPE) 2,870.00p 1.24%

FTSE 250 - Fallers

Mitchells & Butlers (MAB) 241.00p -8.54%

THG (THG) 35.40p -7.09%

Oxford Nanopore Technologies (ONT) 147.80p -4.34%

Raspberry PI Holdings (RPI) 399.80p -4.32%

Pinewood Technologies Group (PINE) 434.50p -3.44%

Pollen Street Group Limited (POLN) 914.00p -2.75%

Vistry Group (VTY) 617.80p -2.65%

Investec (INVP) 560.00p -2.61%

Lion Finance Group (BGEO) 7,435.00p -2.49%

IP Group (IPO) 52.10p -2.43%