The FTSE 100 started this week in the same way it ended the last one one as the index drops firmly below 7,000 to its lowest level since July.
The UK index is down by 1.27% on Monday morning, dragged down by the mining sector.
“There’s plenty for the market to fret about and those arguing the markets were looking frothy are seeing some of that froth disappear as a brewing crisis in China, surging gas prices in Europe and concerns about stagflation combine to sink stocks,” said Russ Mould, investment director at AJ Bell.
“The ‘don’t panic’ message from the Government on energy prices is starting to sound worryingly like Corporal Jones from Dad’s Army as the UK faces a whirlwind whipped up by low levels of energy storage, huge global demand for LNG and Vladimir Putin’s machinations as the amount of gas pumped from Russia is constrained.”
There is fear is that in adding to inflationary pressures, it could threaten the UK’s recovery from the pandemic.
“More significant from the perspective of world markets is the concerning situation with huge Chinese property developer Evergrande which appears to be teetering on the precipice with concerns about contagion from the situation infecting the wider economy in China.”
“This is particularly bad news for miners. Any downturn in China would have significant implications for commodities demand given its status as the world’s largest consumer of many minerals and metals. The situation also has uncomfortable echoes of 2015 when fears about Chinese debt prompted a big and broad-based market correction.”
FTSE 100 Top Movers
AstraZeneca (3.03%), Sainsburys (2.11%) and Polymetal International (2.01%) are leading the way on the FTSE 100 at the beginning of the week.
Trailing the pack is Prudential (-7.33%) along with miners Anglo American (-6.83%) and Glencore (-4.63%).
