(Alliance News) - London's FTSE 100 struggled on Tuesday, under the weight of share price falls for miners, water utilities and another slide for luxury retailer Burberry.
Elsewhere, the dollar perked up after US retail sales data, though the growing conviction that the Federal Reserve will soon cut remains, giving gold some sparkle.
The FTSE 100 index ended down 18.06 points, 0.2%, at 8,164.90. The FTSE 250 added 24.27 points, 0.1%, at 21,213.79, and the AIM All-Share rose 1.50 points, 0.2%, at 786.98.
The Cboe UK 100 ended down 0.1% at 815.66, the Cboe UK 250 rose 0.2% at 18,466.14, and the Cboe Small Companies lost 1.0% at 17,165.46.
In European equities on Tuesday, the CAC 40 in Paris fell 0.7%, while the DAX 40 in Frankfurt closed down 0.4%.
Sentiment in Europe contrasted with more bullish trade in New York. At the time of the closing bell in London, the Dow Jones Industrial Average was 1.5% higher, the S&P 500 was up 0.5% and the Nasdaq Composite was a touch higher.
"European markets are losing traction once again today, with equities remaining under pressure after yesterday's session that saw Chinese economic data highlight the ongoing demand issues from the world's largest economy," Scope Markets analyst Joshua Mahony commented.
Worries about the Chinese economy hurt miners on Monday, and the declines extended on Tuesday. Glencore fell 2.7%, and Anglo American and Rio Tinto declined 2.3%. The latter's latest production report was also poorly-received.
It said iron ore production in the first half of 2024 at the Pilbara mine in Australia declined 2.0% to 157.4 million tonnes from 160.5 million tonnes a year ago.
Iron ore shipments from Pilbara declined 2.1% to 158.3 million tonnes from 161.7 million tonnes on-year.
"Rio Tinto disappointed with its latest production update, with iron ore the biggest worry area after a weak quarter for output," AJ Bell analyst Dan Coatsworth commented.
Burberry, also exposed to the ebbs and flows of the Chinese economy, fell 5.3%. The firm warned on profit, axed its dividend, and replaced its under-pressure chief executive on Monday.
The pound was quoted at USD1.2957 late Tuesday afternoon in London, down from USD1.2984 at the equities close on Monday. The euro stood at USD1.0884, down from USD1.0912. Against the yen, the dollar was trading at JPY158.57, up from JPY157.85.
Giving the greenback a helping hand, overall US retail sales landed in line with expectations, while one measure beat the market forecast.
According to the Census Bureau, retail sales were flat in June from May, as expected. They had risen 0.3% on-month in May, the pace of growth upwardly revised from an initially reported 0.1% rise. The latest reading was in line with consensus.
Excluding motor vehicles and parts, retail sales increased 0.4% in June from May, topping the FXStreet-cited consensus of 0.1%. They had risen 0.1% in May from April.
ING analysts commented: "While auto and gasoline station sales fells heavily in June, there was significant strength elsewhere that provided an equal offset. It may be that the weather has boosted retail footfall as people try to escape the heat, but there are still challenges for the sector from weak real income growth, a run down in savings levels and high borrowing costs.
"Slower consumer spending growth, moderating inflation and an upward trend in the unemployment rate are the ingredients needed to justify the Fed moving policy to a slightly less restrictive position from September."
US Federal Reserve Chair Jerome Powell said Monday that recent data lifts the central bank's confidence that inflation is coming down towards its 2% target – a trend that signals interest rate cuts on the horizon.
"We didn't gain any additional confidence in the first quarter but the three readings in the second quarter, including the one from last week, do add somewhat to confidence," Powell said in an interview with David Rubenstein of the Economic Club of Washington DC.
Softer US interest rate expectations boosted gold, sending the precious metal to a record high.
Gold was quoted at USD2,463.64 an ounce at the time of the London equities close on Tuesday, up from USD2,436.88 late Monday. It hit a record high above USD2,465 an ounce.
"Powell added that the Fed does not expect to wait until inflation reaches 2% before moving toward monetary easing, suggesting that interest rate cuts may not be far off, providing some near-term support for gold prices. Current market prices indicate higher chances of the Fed reducing borrowing costs in September and potentially cutting rates again by the end of this year," XS.com analyst Rania Gule commented.
Back in London, Severn Trent fell 4.1% and United Utilities lost 3.5%. All 11 water firms in England and Wales are under scrutiny by Ofwat as part of its major investigation into whether their sewage treatment works are polluting the environment.
The water regulator said it showed "how concerned we are about the sector's environmental performance".
United Utilities said in a statement: "We understand and share people's concerns about the health of the environment and the operation of wastewater systems, including combined sewer overflows."
Severn Trent said it had "committed to going further and faster than anyone else in the sector" in relation to tackling sewage overflows.
Both firms said they would "work constructively" with Ofwat in its investigation.
Brent oil was trading at USD83.89 a barrel late Tuesday afternoon, down from USD84.83 at the same time on Monday.
Wednesday's local corporate calendar has a trading statement from miner Antofagasta.
The economic diary has inflation readings from the UK at 0700 BST and the eurozone at 1000.
By Eric Cunha, Alliance News news editor
Comments and questions to newsroom@alliancenews.com
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