The FTSE 100 was marginally lower on Monday despite the attempted assassination of Donald Trump threatening volatility in equities markets as trade got under way.
London’s leading index did fall materially in the early minutes of trade but made a respectable recovery as the session progressed and was down just 0.2% at the time of writing.
“Markets were surprisingly calm given the assassination attempt on US presidential candidate Donald Trump,” says Dan Coatsworth, investment analyst at AJ Bell.
“While equities saw a small pullback in parts of the world, there was no panic on the markets as a result of the weekend of violence.”
The biggest drag on the index stemmed from weak Chinese data released overnight that hit mining stocks heavily. Chinese GDP grew just 4.7% in the second quarter, missing analysts estimates of 5.1% and slower than growth of 5.3% in the first quarter.
“Investors are having to become accustomed to China running in second gear, a far cry from a decade ago when GDP growth was in the 7% region and when it was the envy of the world,” Coatsworth said.
“While 4.7% GDP growth is still better than many parts of the world, and certainly streets ahead of what the UK is currently managing, it is seen as failure in the context of China’s bold ambitions to be a superpower,
“Weaker economic activity has negative connotations for commodities demand, which in turn creates a less attractive backdrop for miners producing metals and minerals. That explains why Antofagasta and Anglo American were among the biggest fallers on the FTSE 100 on Monday.”
Antofagasta was down 3% and Anglo American dipped 1.7%.
Although the mining sector was the biggest drag on the index in terms of number of points, the impact of China’s luxury sector on Burberry’s sales meant the brand was by far the FTSE 100’s top faller on Monday.
Burberry shares were down over 16% at the time of writing after announcing retail revenue sank 21% in its first quarter, leading to a forecast of a first-half loss.
The Asian Pacific region, which includes China, saw retail sales plummet 23%, with Mainland Chinese sales dropping 21%. Japan was the only bright spot with sales gains of 6%.
“All of this led Burberry to suspend dividend payments, which is a desperate measure to preserve cash and fortify the balance sheet, indicating that fortunes aren’t expected to pick up in the near term,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“Brand weakness extends beyond China, with Europe and the Americas also seeing double-digit revenue declines. There’s a lot of work to be done to make up for years of underinvestment in the brand. Unsurprisingly, the shares have taken a big hit in early trading. The new boss has a lot of work to do to steady the ship and prove to investors that calmer seas lie ahead.”
The dismal outlook for Burberry was compounded by another change in senior management as the CEO stepped down with immediate effect.