The FTSE 100 dipped on Tuesday after manufacturing data from the UK and Eurozone sapped confidence from markets, despite a roaring session in the US overnight.
The FTSE 100 was trading down 0.25% at 7,764 in early afternoon trade following news the UK and Eurozone manufacturing sector contracted, but at a slower rate than expected.
“It seems there’s no such thing as good news, as a brighter outlook painted by the PMI numbers for the eurozone also led to a slip in stocks. Manufacturing activity shrank the least in five months for the region, but the realisation is washing over investors that although this is certainly progress, there is still a long way to go at a time when a hawkish ECB is preparing to hike rates further,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
“The UK snapshot shows how low consumer confidence, widespread strikes and the ratcheting up in interest rates are clearly taking their toll, with business activity falling to a two-year low. The flash reading for January dropped more sharply than expected to 47.8 from 49, in December with below 50 indicating a contraction.’
UK-focused stocks such as the housebuilders and retailers were actually stronger on Tuesday, but those exposed to global growth felt the pain of mixed manufacturing data.
Miners were down heavily, as were the oil majors BP and Shell.
AB Foods
AB Foods were weaker on Tuesday after releasing a relatively upbeat set of festive trading figures. Revenue was 20% on an actual currency basis in the 16 weeks to 7th January, but a warning of future cost pressures evidently caused concerns among investors.
Strong US session
The softer session in Europe followed a strong session in the US driven higher by technology names including Meta, Tesla and Alphabet. US futures were falling going into the US open on Wednesday.
The disparity between the FTSE 100 and US stocks yesterday was reminiscent of the variability in performance last year when the FTSE 100 outperformed the major US indices significantly.
UK stocks secured a rare outperformance compared US stocks in 2022 in the face of rising energy prices and economic uncertainty that favoured London’s defensive nature.
This is now showing signs of reversing with US tech storming ahead and the defensive attributes of the FTSE 100 becoming a drag on the index, compared to US counterparts.