FTSE 100 falls on weak Chinese activity data, falling business confidence

U.K. stock markets traded lower Wednesday, with sentiment hit by weak Chinese activity data as well as falling U.K. business confidence.

FTSE 100 Starting Benchmark – May 31
At 04:15 ET (08:15 GMT), the benchmark FTSE 100 index traded 0.2% lower, the mid-cap FTSE 250 dropped 0.4%, and the combined FTSE 350 fell 0.4%.

Data released earlier Wednesday showed that the important Chinese manufacturing sector, a major regional growth driver, shrank in May, retreating for the second straight month.

This pointed to a slowdown in the rebound seen earlier in the year after the second-largest economy in the world came out of its severe COVID restrictions, with growth slowing in major export market for European companies.

U.K. business confidence dips
Sentiment among British businesses fell for the first time in three months in May, with the Lloyds Bank Business Barometer falling to 28% in May from 33% in April, its first decline since February.

“The UK has avoided an outright contraction in GDP – indicating a certain amount of underlying resilience in the economy,” Hann-Ju Ho, senior economist at Lloyds Bank said.

Rail strikes
Business sentiment could not have been helped by a series of industrial strikes impacting U.K. industry, the latest of which is a 24-hour strike by the train drivers union ASLEF starting earlier today.

Further industrial action is planned for Saturday as part of a long-running dispute between the unions and the government over pay, jobs cuts, and work conditions.

U.S. debt ceiling deal clears hurdle
This weakened sentiment has dragged the U.K. market lower even after the agreement to suspend the U.S.’s $31.4 trillion debt ceiling cleared an important hurdle late Tuesday en route to a vote in the House of Representatives later Wednesday.

The Republican-controlled House Rules Committee voted 7-6 to advance the bill, making it more likely that the deal will be voted into law, thus avoiding a U.S. debt default which would have had disastrous global economic ramifications.

WE Soda IPO
In corporate news, the FTSE 100 index is set to receive the year’s first listing, with WE Soda, the world’s largest producer of soda ash which is used in glass manufacturing, expected to price its IPO by the end of June and join the FTSE 100 shortly thereafter.

The firm could fetch a market cap of up to $8 billion, according to Mergermarket.

Elsewhere, Bloomsbury Publishing (LON:BLPU) stock rose 0.4% after the company, which publishes the Harry Potter books, reported a 15% rise in sales and 16% jump in pretax profits, its “best ever performance”, according to CEO Nigel Newton.