The FTSE 100 retreated on Monday as stocks came back down to earth after the shooting down of a suspected Chinese spy ballon over the weekend.
The FTSE 100 was trading at 7,845, down 0.7%, at the time of writing on Monday.
’It’s glass half empty time on financial markets as unease spreads about a deteriorating geo-political backdrop and realisation that more interest rate hikes are set to be inflicted on economies,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
“The shooting down of a suspected Chinese spy balloon off the coast of South Carolina has dashed hopes that reproachment between Washington and China could be achieved, causing a slide on the Hang Seng in Hong Kong and the Shanghai Composite.”
The FTSE 100’s exposure to China was a significant drag on the index with miners and oil companies falling as traders sold companies reliant on the Chinese economies demand for natural resources.
US futures were heading for a weaker open as the prospect of lower rate in 2023 were dashed by robust US jobs data on Friday.
GBP/USD
The FTSE 100 was supported by sterling weakness last week after the Bank of England hinted at slowing rate hikes and the US economy added blow out 517,000 jobs in January.
However, sterlings influence on stocks diminished on Monday as GBP/USD’s declines reversed as the pair gained 0.12% to 1.2067.
Overseas earners were a major factor in the FTSE 100 reaching the all-time closing high of 7,901. With heavyweights such as Diageo, AstraZeneca and Unilever flat on Monday, pressure from commodity stocks drove a weaker index.
Gold M&A
Precious metals miner Fresnillo was among the FTSE 100’s top risers following news Newmont had approached Newcrest will a $16.9bn takeover offer.
