The FTSE 100 felt the strains on the Chinese economy on Wednesday as the index dipped following news that Chinese manufacturing activity contracted faster than expected.
China Manufacturing PMI fell to 48.8, lower than the 49.4 consensus. A reading below 50 signifies a contraction.
“Growth slowdown fears have accelerated as the latest data from China shows a faltering recovery, knocking back sentiment on markets,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Investors have been unnerved by the snapshot showing the Chinese manufacturing sector contracted again in May, while activity across services also slowed for the fourth month in a row. Far from being the powerhouse which will offset America’s slowdown, China’s economic recovery from the pandemic is looking more precarious.”
The FTSE 100 was down 0.85% at the time of writing. The index had nearly recovered early morning losses before the sellers reappeared in afternoon trade.
FTSE 100 movers
B&M European Value was the FTSE 100’s top riser after the budget retailer said they were carrying ‘excellent profitable momentum’ into 2024FY.
B&M’s revenues were 30.7% ahead of pre-pandemic FY20 levels on a constant currency basis in 2023FY and cash generated from operation jumped 44.8% to £866m.
B&M shares were 7% higher at the time of writing.
“During Covid B&M benefited as one of a handful of retailers which were able to stay open and operate. Its performance during this period therefore comes with an asterisk attached, which is why investors will be particularly pleased to see its value credentials paying off in a more normal retail environment,” said AJ Bell investment director Russ Mould.
“In theory B&M should be well placed against a backdrop where households are really watching their pennies and that is largely reflected in this latest trading update. The company is also generating lots of cash which it can return to shareholders.
Prudential shares were down over 5% after chief financial officer James Turner resigned amid a code of conduct breach. Turner is the 26th CFO of an FTSE 100 firm to step down this year.
Ocado was down 5% as the premium retailer looked set to be demoted from the FTSE 100.