The FTSE 100 closed down on Tuesday as strength in defensive shares failed to offset losses in cyclical sectors such as miners and banks.
The FTSE 100 finished the session down 0.25% at 7,569.
Investors displayed little excitement at a halfhearted attempt by China to stimulate the economy after weeks of anticipation around what measures the world’s second-largest economy would take.
“China’s injection of stimulus in its flagging economy was expected, and so it’s failed to pump a bounce of sentiment into the markets,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“By cutting the 1-year and 5-year loan prime rates by 0.1%, the aim is to bolster lending, but investors appear a little underwhelmed by the action and are waiting until further moves promised to bolster the economy materialise.”
UK investors will be bracing for incoming inflation data released tomorrow and the Bank of England interest rate decision on Thursday.
The Bank of England looks nailed on to increase interest rates by 0.25% on Thursday, but tomorrow’s inflation data could provide hints on whether there will be another interest rate hike in the coming months.
“The current market expectations are for rates to rise as high as 5.75% and if the numbers show inflation is continuing to prove very sticky, those forecasts may be firmed up,” Streeter said.
FTSE 100 movers
A poor session in Asia overnight spilt over into a weaker start for China-exposed stocks that failed to recover through the session. Miners Anglo American, Glencore, Antofagasta and Rio Tinto had a disappointing session, with Anglo falling over 3%.
Prudential closed down 2.8% as enthusiasm around their Chinese business ebbed.
Ocado shares fell 2.3% after the food retailer was cut to underweight by JP Morgan and placed on ‘negative catalyst watch’.
Investors shunned cyclical stocks in favour of steady defensive plays on Tuesday, with Rolls Royce, B&M, Centrica, GSK and BAE Systems among the best performers on the day.
