The FTSE 100 was higher in thin trade on Monday after a strong session in Asia translated into a positive start for miners and other cyclical sectors.
The FTSE 100 was 0.3% higher at 7,556 at the time of writing.
The spluttering nature of China’s pandemic recovery has been a cause of concern for markets that have historically relied on China to drag the global economy higher with domestic 6%-8% growth rates.
Chinese growth of 4.5% in Q1 is a far cry from pre-pandemic levels, and investors are increasingly looking to the Chinese authorities for any hints of stimulus.
On Monday, expectations of further China stimulus and a slight easing in US inflation data were the core drivers in European stocks.
“Asian stocks took their cue from Friday’s rally on Wall Street, prompted by data showing core inflation in the US is easing, perhaps reducing the need for too many more rate hikes across the Atlantic,” said AJ Bell investment director Russ Mould.
“There is also improved sentiment towards the Chinese economy, reflected in strong gains for miners on the FTSE 100 on Monday. Now some of the disappointment about a slower than expected post-Covid recovery has eased, the focus is turning to potential financial stimulus and support which could have positive implications for metals and energy demand.”
While equities ticked higher on Monday, the general mood in markets will likely see stocks trade headline to headline as inflation and central bank action drives sentiment.
FTSE 100 movers
At the time of writing on Monday, the FTSE 100’s top five risers on the day were all commodities companies.
Anglo American was the top riser, closely followed by Glencore, BP, Rio Tinto and Antofagasta. Should China act to stimulate its economy further, natural resource demand will be buoyed and support mining and fossil fuel production profits.
AstraZeneca was the FTSE 100’s top faller after releasing lung cancer therapy trial results. While the results showed improvement in survival rates compared to alternatives, the results were not statistically significant.