The FTSE 100 felt the strains on the Chinese economy on Wednesday as the index dipped following news that Chinese manufacturing activity contracted faster than expected.

China Manufacturing PMI fell to 48.8, lower than the 49.4 consensus. A reading below 50 signifies a contraction.

“Growth slowdown fears have accelerated as the latest data from China shows a faltering recovery, knocking back sentiment on markets,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Investors have been unnerved by the snapshot showing the Chinese manufacturing sector contracted again in May, while activity across services also slowed for the fourth month in a row. Far from being the powerhouse which will offset America’s slowdown, China’s economic recovery from the pandemic is looking more precarious.”

The FTSE 100 was down 0.85% at the time of writing. The index had nearly recovered early morning losses before the sellers reappeared in afternoon trade.

FTSE 100 movers

B&M European Value was the FTSE 100’s top riser after the budget retailer said they were carrying ‘excellent profitable momentum’ into 2024FY.

B&M’s revenues were 30.7% ahead of pre-pandemic FY20 levels on a constant currency basis in 2023FY and cash generated from operation jumped 44.8% to £866m.

B&M shares were 7% higher at the time of writing.

“During Covid B&M benefited as one of a handful of retailers which were able to stay open and operate. Its performance during this period therefore comes with an asterisk attached, which is why investors will be particularly pleased to see its value credentials paying off in a more normal retail environment,” said AJ Bell investment director Russ Mould.

“In theory B&M should be well placed against a backdrop where households are really watching their pennies and that is largely reflected in this latest trading update. The company is also generating lots of cash which it can return to shareholders.

Prudential shares were down over 5% after chief financial officer James Turner resigned amid a code of conduct breach. Turner is the 26th CFO of an FTSE 100 firm to step down this year.

Ocado was down 5% as the premium retailer looked set to be demoted from the FTSE 100.

Challenger Energy Group shares jumped on Wednesday as the oil explorer said a recent study of its Uruguay assets estimates there could be up to 4.9 billion barrels of recoverable oil in place. This makes the asset a world-class project.

Listen to the recent UK Investor Magazine Podcast with Challenger Energy Group here.

On a recent Podcast with UK Investor Magazine, CEO Eytan Uliel alluded to the potential of the AREA OFF-1 prospects. Today’s announcement confirms it.

Challenger’s AREA OFF-1 asset consists of three prospects; Teru Teru, Anapero and Lenteja.

These three prospects are estimated to hold a total Estimated Ultimate Recoverable resource of circa 2.0 billion BBOE (Pmean, unrisked, and over 4.9 BBOE in an upside case.

The world-class nature of the asset has attracted the interest of oil majors, and Challenger said their target is to complete a farm-out by the end of the year.

“We continue to be encouraged by the opportunity that our AREA OFF-1 licence in Uruguay represents. Our technical work highlights how AREA OFF-1 is clearly world class acreage with massive resource potential, in what has become a global exploration hotspot,” said Eytan Uliel, Chief Executive Officer of Challenger Energy.

“To capitalise on this, I can confirm that a farm-out process has now commenced, with very strong initial indications of interest received from multiple major oil companies. Our target is to complete a farm-out transaction by year end, so that we can continue to rapidly progress work on the block, and thereby generate value for shareholders.”

Challenger Energy Group shares were 10% higher at the time of writing and had been considerably higher before traders booked profits.

XTB researchers have taken to Microsoft’s AI chatbot, Bard, for investment ideas. XTB set out to judge how AI can help investors when selecting stocks and asked Bard directly which stocks would be good to invest in.

These are the results.

When asked for 5 stocks in general to invest in, its recommendations were: Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOG) and Tesla (TSLA).

When asked for 5 lesser known stocks to invest in, its recommendations were: Acacia Communications (ACIA), CrowdStrike Holdings (CRWD), Marqeta (MQ), Roblox Corporation (RBLX) and Snowflake Computing (SNOW).

These are fairly generic answers and there was no analysis of why these stocks should be selected. AI chatbots use vast data sets to provide information and the answers were likely based on the analysis of market commentary, as opposed to performing financial analysis on the stocks.

A thorough financial analysis of companies may be an AI development we see in future.

XTB also asked Bard tips for novice investors. Again, the answers were very generic and can be found through a quick Google search:

1. Set your goals. What are you hoping to achieve with your investments? Are you saving for retirement, a down payment on a house, or something else? Once you know your goals, you can start to develop a strategy to reach them.
2. Do your research. Before you invest in anything, it’s important to learn as much as you can about it. Read financial news, research different investment options, and talk to a financial advisor if you need help.
3. Start small. There’s no need to invest a lot of money right away. Start with a small amount that you’re comfortable with and gradually increase your investment over time.
4. Be patient. Investing is a long-term game. Don’t expect to get rich quick. Invest for the long term and you’ll be more likely to reach your financial goals.
5. Diversify your portfolio. Don’t put all your eggs in one basket. Spread your money across different investments to reduce your risk.

The FTSE 100 was on the back foot on Tuesday as fears about the US debt ceiling lingered. Weaker oil prices dragged the index, with BP and Shell falling.

The FTSE 100 was down 0.8% at the time of writing.

“A deal may have been struck on the debt ceiling, but it’s not fully calmed nervousness on financial markets. Limits on spending are being imposed just as America looks set to head towards recession, which could make it harder for growth to snap back,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Clamour from dissenting voices on both sides of the political divide are rising, ahead of a crucial Congressional vote later today. Nevertheless, the US does appear to be inching towards Budget agreement, although it’s likely to take a good deal of wrangling this week before it’s passed.”

Major US indices outperformed Europe with help from tech stocks and Tesla.

Nvidia was again pushing higher as the hype around AI provided continued support for the stock. Last week, the chipmaker revealed strong revenue forecasts directly for the adoption of AI. 

Tesla shares were higher on hopes the EV maker would see further growth in China as Elon Musk met with Chinese officials.

FTSE 100 movers

FTSE 100 Oil majors were a large drag on the index as oil prices dipped on growth fears. BP and Shell were down 2.2% and 2.7%, respectively.

Unilever shares were lower as key staff departed ahead of the new CEO’s arrival. The CFO and marketing head will soon be clearing their desks. Unilever shares were 2.9% down at the time of writing.

Rolls Royce was off by 2.3% after reports India launched criminal proceedings against BAE Systems and Rolls Royce for the procurement of fighter jets.