Early losses in the FTSE 100’s miners turned to gains on Tuesday and their transition helped London’s leading index swing from initial weakness to positive afternoon trade.
The FTSE 100 was trading 0.1% higher at 7,461 at the time of writing. The index had touched lows of 7,389 earlier in the session.
Natural resources stocks are trading from China headline to China headline and yesterday’s rally on positive support for China’s property market was today followed by dismal China export and services data.
“Nagging worries about the Chinese economy are a big contributing factor to the change in mood – the latest PMI reading from the services sector painting a shocking picture,” said AJ Bell investment director Russ Mould.
“Undoubtedly expectations for a Chinese economic recovery following the removal of zero-Covid measures got way ahead of themselves, but the manner in which things have panned out is probably worse than even most of the sceptics would have predicted.”
The FTSE 100’s miners started the session in the red but soon reversed the rally and swept the wider index up with it.
Ashtead was the top faller after warning of slowing US media demand due to the writer’s strike and spluttering growth in the UK. The plant hire company did, however, record 19% revenue growth in the first half. Ashtead shares were around 2% lower at the time of writing.
Investors may be interested in Ashtead’s growth not only because of the implications for the company, but what their activity reveals about the underlying economy.
“Equipment rental company Ashtead is seen as a bellwether of economic health and its latest update is a warning for deteriorating conditions in the UK,” said Susannah Streeter head of money and markets, Hargreaves Lansdown.
“Although sales are holding up Stateside, with the company expecting robust momentum to continue, it’s a very different outlook for the UK. Ashtead has flagged softening market conditions and dropped its annual UK rental revenue growth significantly from 10-13% to 6-9%.”