The FTSE 100 was slightly weaker on Friday as investors digested another tepid reading of UK GDP and Chinese stocks weakened overnight.
There is a sense investors are waiting for the next major catalyst for equities as the FTSE 100 traded down just 5 points to 8,233 at the time of writing.
“The FTSE has opened down a touch, as investors digest news that the UK economy returned to growth in August. The Office for National Statistic’s estimates that real GDP grew by 0.2% after two months of stagnation,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“This small rebound in growth was largely expected, but the lacklustre reaction echoes global markets struggle to find a clear direction. That’s perhaps unsurprising given high levels of geo-political tension, an upcoming US election and continued concerns about growth in China.
“Chinese stocks gave up some of this week’s gains overnight as traders look to Finance Minister Lan Fo’an’s scheduled Saturday press conference, where he’s widely expected to unveil additional stimulus measures. There are a range of opinions as to the potential size of any fiscal injection, ranging from anywhere between two and ten trillion yuan. The market is likely to be disappointed should the number be on the low side.”
Despite the weakness in China, miners were fairly flat on Friday with Rio Tinto trading 0.8% higher and ANTO down by the same amount. Should a fresh wave of stimulus be announced in China, one would expect this sector to fire up once more.
Sainsbury’s was down heavily on Friday on the news a large investor hold sold a stake in the supermarket.
After a fairly reasonable rally in Sainsbury’s shares over the past year, the Qatar Investment Authority has locked in profits raising questions about their motive for doing so.
Investors seemed to have concluded Qatar don’t see a great deal of upside and have followed them in dumping the stock, sending shares down 5%.
“Sainsbury’s shares fell nearly 5% following reports that its biggest shareholder, the Qatar Investment Authority (QIA), had sold £306 million worth of shares at 280p each. Prior to the transaction, QIA owned 14.2% of the supermarket,” said Dan Coatsworth, investment analyst at AJ Bell.
“The Middle Eastern investor has a reputation for backing financially strong companies across a wide range of industries. While it invests with a long-term view, like any asset manager it does make changes to its portfolio from time to time. QIA has been trimming stakes in other holdings of late, including Barclays, Shell, Vinci, Iberdrola and Accor. In contrast, it has been increasing positions in the likes of OQ Gas Networks, Kingdee International Software and Haleon.
“QIA might feel that now is a good time to trim its stake in Sainsbury’s, selling into a market where other investors have become more interested in the supermarket. The fact it managed to offload a large chunk of shares at only a 2.8% discount to last night’s closing price implies there was decent demand.”