by Susannah Streeter
Head of Money and Markets and Podcast host for HL’s Switch Your Money On

There’s no September spark for the FTSE 100, with the index trading flat and losing more ground early in the session. After a disappointingly lower close on Friday, the footsie remains elusively below its record highs, with mining stocks sinking lower amid China’s ongoing economic troubles.

There wasn’t much relief provided by the latest snapshot of factory activity in China which showed an improvement for export-focused smaller companies. The Caixin/S&P Manufacturing PMI came in at 50.4 in August, beating the forecasts, with anything above 50 indicating expansion. It’s a faint glimmer of light shining through a big swathe of dark cloud though. It follows official PMI data out at the weekend showing that for larger manufacturing companies, more focused on the domestic economy, activity fell back again, declining to a six-month low of 49.1. Although the export picture is improving, thanks to brighter outlooks in key markets, there remain deep concerns about the health of China’s economy, which is still mired in a property slump, causing ultra cautious attitudes among consumers. There is a growing expectation that the government will have to step up its efforts to stimulate demand if growth targets are to be reached.

Australia’s REA Group has joined in the surge of enthusiasm which has hit the UK property market, with interest rate cuts eyed on the horizon. It has its sights set higher than a luxury mansion – the company, which is majority owned by News Corp, is considering snapping up the Rightmove portal. It cited clear similarities between the companies as a reason for interest. Although there is no certainty that an offer will be made, the announcement sent the stock soaring in early trade. Shares had been down 30% since the all-time high back in December 2021. Back then, a frenzy of pandemic-induced home searching, saw eyes on screen multiply. The company has been affected by the property market downturn amid a ratcheting up in interest rates. REA Group looks tempted by the sturdy fundamentals of the model, which offers an envious operating margin position of around 70%.

Regardless of what’s going on in the wider market, whether it’s up or down, today’s estate agents can ill afford not to advertise on Rightmove. Although total membership has reduced by 1% in the last full year, average revenue per advertiser was up 9% to £1,431. Potential buyers also continue to have a big appetite for scanning potential properties, even though the minutes spent on the platform have dropped from 16.2 billion in 2022 to 15.4 billion last year, that’s still 27% higher than in 2019.

Although REA Group clearly sees great potential in replicating this model in some of the other markets it has its fingers in, there are still risks ahead. The number of estate agents is falling, as DIY alternatives grow in popularity and more estate agents look set to be forced out of business. (extra space) This could hamper Rightmove’s ability to cross-sell premium advertising packages, and it’s still likely to be sensitive to the ebbs and flows of housing demand. Nevertheless, the interest has sent a big jolt of positivity, with investors cheering the prospect of a potential deal.

The boss of Ryanair has hinted that future growth could come from expanding into offering holiday packages, a nod to the success of rival easyJet in this space. Ryanair’s shares have been on a turbulent ride since the spring, sparked by concerns about passengers becoming less willing to shell out more for higher ticket prices.  Ryanair has been relying on its expanded fleet and more routes across Europe and Morocco to boost numbers. The boss is clearly keen on exploring the lucrative package market more extensively and will be looking to emulate easyJet’s success here, which saw passenger growth of 33% in the third quarter. Targeting family and couples’ breaks may also be seen as a way of moving away from the big drinking stag dos and singles trips, given the increased disruption excessive alcohol has been causing for Ryanair.

Brent Crude has fallen back to $76.6 a barrel, as traders mull OPEC’s expected production increase and China’s broader factory activity decline. Eight members of the oil cartel look set to raise output in October, flushing the market with an extra 180,000 barrels per day. Concerns about supply disruption from Libya have also been allayed by reports that a number of oilfields are set to resume production.’’