By Dave Morris
A significant miss in German industrial orders spilled into London markets, dragging energy and mining stocks lower.
How did markets perform?
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.52% gave back its advance from Wednesday. It declined 0.6% Thursday to 7,373.8 after having risen 0.4% on Wednesday.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0578% continued to rally after picking up 1% Wednesday. On Thursday it was $1.3173, a further rise of 0.1%.
What’s moving the markets?
Shock and awe in Germany Thursday morning as the February month-over-month survey data for manufacturing orders came in at -4.2%, well below the consensus of a 0.55% increase as well as January’s -2.1% drop. The numbers suggested the slump in German manufacturing was worse than the February Purchasing Managers’ Index (PMI) data indicated.
RBC Europe economist Cathal Kennedy wrote March 29 that “much of the problems in the German manufacturing sector are attributable to a severe Chinese slowdown, which is showing up in auto imports in particular.” Though recent Chinese data has been more encouraging, commodities stocks, which are often sensitive to the Chinese economy, were hardest hit in U.K. markets Thursday.
There was a mixed bag of Brexit news, as Prime Minister Theresa May and opposition party leader Jeremy Corbyn offered differing views of their talks Wednesday. While both sides called the meetings “constructive”, the Labour chief added that it was “useful but inconclusive”.
The very fact of the cross-party talks sent Conservative party members into a fury, with two ministers resigning in protest over the prospect of what one described as “a deal cooked up with a Marxist who has never once in his political life put British interests first”.
Of two bills before the House of Commons on Wednesday, one compelling the government to hold a legally binding vote in Parliament on an extension to the Brexit process passed by a margin of a single vote. Another bill proposing a third set of indicative votes on the various options ended in a rare tie, with Speaker of the House John Bercow breaking the tie to vote the bill down.
Which stocks are active?
Falling share prices in the U.K.’s FTSE 100 were largely among energy and mining companies. U.K. energy utility Centrica PLC /zigman2/quotes/205228367/delayed UK:CNA +0.61% fell 2.4% on a credit rating downgrade by S&P, London-listed Chilean mining company Antofagasta PLC /zigman2/quotes/200173667/delayed UK:ANTO +0.51% was down 1.8% and oil company BP PLC fell 1.3%.
U.K. emergency home repairs business HomeServe PLC /zigman2/quotes/201567132/delayed UK:HSV -0.42% issued guidance that its annual profit in 2019 was expected to improve significantly on the previous year’s figure, sending shares 2% higher. The company also indicated that its U.K. customer figures had fallen from 2.2 million to 2 million, but Russ Mould, investment director at AJ Bell, said “That won’t be a major problem for HomeServe because its story is now all about rapid growth in North America.”