The FTSE 100’s China-exposed stocks were big winners on Tuesday on reports the Chinese government would focus on ensuring the country’s older population would receive the COVID vaccine.
Chinese vaccine rates of the over 65s are way behind other major economies – a significant factor behind the ongoing COVID-zero policy. China is also using a different vaccine to western countries which has a lower efficacy.
However, widespread unrest in China’s largest cities over the weekend sparked a response from Chinese authorities and market participants are hopeful of a continued effort to reopen China’s economy.
“The FTSE 100 bounced back on Tuesday as the same oil and mining stocks which had driven the index lower yesterday recovered on hopes for an easing of China’s strict zero-Covid policy,” said AJ Bell investment director Russ Mould.
The FTSE 100 was 0.5% higher at 7,513 at the time writing. The index had briefly broken above 7,540 earlier in the session.
China-exposed stocks
Rio Tinto was 3.5% higher while Anglo American, Glencore and Antofagasta also gained on hopes of increased demand for natural resources.
Prudential was the FTSE 100’s top riser, gaining some 5%, as investors bought into the wealth manager which earns around a third of its profit from Hong Kong and Mainland China.
Burberry also gained on the prospect of China’s luxury consumers returning to their stores in greater numbers.
easyjet
easyJet was among the FTSE 100’s worse performers after the disruption of cancelled summer flights overshadowed a record 4th quarter. easyJet shares fell as analysts pointed to struggles with costs and expansion plans.
“EasyJet is struggling to compete on costs and fares with Wizz Airline and Ryanair. Our experts say that it’s proving difficult for EasyJet to expand in markets where there is already an abundance of capacity, such as Milian,” said Olly Anibaba, airlines analyst at Third Bridge.
“EasyJet is in a better position to compete with legacy carriers in capacity-constrained airports, thanks to its relative cost base. Easyjet’s strength remains in its aggressive cost-saving measures, including greater utilisation of aircrafts and more reliable on-time performance.”