The FTSE 100 has been driven by events in China over the past month as the anticipation of a reopening buoyed markets.
With Chinese equities surging overnight as China relax restrictions, one would have assumed the FTSE 100 follows suit.
“The Hang Seng is once again at the centre of all the action on the stock market with a 2.3% jump to 19,900. Much of the gains were down to ongoing optimism around more relaxed Covid restrictions which might lead to greater economic activity,” said Russ Mould, investment director at AJ Bell.
However, the optimism in China didn’t spill over into the European session to the extent investors may have hoped for, with the FTSE 100 flat at the time of writing. The China-exposed companies swept up in optimism around an economic reopening were instead influenced by industry-specific developments on Friday.
Anglo American caution
The positive news in China has been most pronounced in the FTSE 100’s miners but the sector was today held back by a cautious tone struck in an Anglo American investor update.
“As we have built operational momentum in the second half, we have also moderated our near term production growth plans with a clear priority to deliver a stable platform from which to build strengthened and repeatable performance,” said Duncan Wanblad, Chief Executive of Anglo American.
Anglo American’s comments suggested they foresee softer conditions in the market, sending their shares 2% lower. Glencore and Antofagasta also fell.
Oil weaker
The FTSE 100 oil majors were also a major drag as oil finished a tough week in the red as traders positioned for lower demand in the coming months. BP and Shell were down 1.7% and 1.2% respectively.
“The oil price is set for sharp weekly losses as Brent crude futures stabilise around $77 a barrel, as renewed recession fears take hold. The concerns around a global slowdown are outshining optimism from the relaxation of zero-Covid policies and China,” said Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown.
“The international Brent benchmark is down around 10% this week, which also reflects a slew of comments from US top executives about the incoming recession.”
Ocado
Ocado was one of the FTSE 100’s top risers as investors prepared for a trading update from the retail technology next week. Ocado shares have been on a rollercoaster ride of late and the trading statement could add to the choppiness.
