The FTSE 100 closed down 1% on Wednesday after poor Chinese economic data hit the natural resource heavy index.
Miners were among the FTSE 100’s top losers following news China’s economy was continuing to slow. Anglo American and Antofagasta closed down over 2%.
China-focused Prudential was 3.75% weaker at the close.
“The Caixin China Composite PMI fell from 55.6 in May to 52.5 in June, the softest pace since January. Service providers have seen a big slowdown in growth, which will stir the pot for the argument that China’s post-Covid economic rebound is losing momentum fast,” said Russ Mould, investment director at AJ Bell.
“Expectations for China’s economic reopening were arguably too high at the start of the year, with many people expecting the country to effectively flick a switch and everything to run at full power instantly. While there was a strong first quarter, it’s now clear this is going to be more of a slow-burner recovery than wads of money suddenly sloshing around.”
As we noted earlier this week, the current macroeconomic backdrop means investors are likely to trade headline to headline resulting in sharp shifts in market pricing. Today’s developments in Asia were another such headline that caused a knee-jerk reaction in UK stocks.
Financial assets are carefully balanced between the potential upside offered by easier monetary as a result of falling inflation and the lingering prospect of recession in major economies.
Investors will be preparing for Friday’s Non-Farm Payroll and an insight into the resilience of the US jobs market and how the Federal Reserve may proceed with interest rates.
Despite forecasts of a US recession, the US labour market has been remarkably strong and consistently beaten economist predictions for job growth.
Ocado was the FTSE 100’s top faller, down 6.8%, as takeover hysteria faded into the rearview mirror.
