Yesterday’s optimism around Chinese stimulus was short-lived. The hope that China would boost the economy through a mix of looser monetary policy and fiscal measures has quickly been met with scepticism about the effectiveness of their plans.

The result was a 0.5% drop in the FTSE 100 as China-focused stocks reversed much of yesterday’s gains.

“The FTSE 100 was in the red amid concerns that China’s economic stimulus measures might not have a long-lasting effect,” said Dan Coatsworth, investment analyst at AJ Bell.

“That triggered a sell-off in miners as investors worried that the Asian superpower wouldn’t have strong enough economic activity to drive a big increase in commodities demand.

“Chinese exports grew at a slower pace in November versus October and imports shrank. That doesn’t install much confidence about Beijing’s efforts to get the country back on top. The prospect of higher tariffs on Chinese goods exported to the US once Donald Trump is back in the White House also cast a dark cloud on the near-term outlook, making investors nervous about the region.”

The FTSE 100’s exposure to China means that any developments in the world’s second-largest economy have the potential to drive returns at an index level. The FTSE 100’s drop on Tuesday was almost exclusively due to concerns about China, with companies reliant on the country making up most of the top fallers. Antofagasta, Glencore and Prudential were all down over 2%.

Ashtead was the FTSE 100’s top faller, tanking over 12% after lowering its profit guidance amid slower revenue rental growth. Ashtead also dealt a major blow to London’s equity markets with plans to switch its primary listing to the United States.

“Equipment rental giant Ashtead is packing its bags and heading stateside, dealing another blow to UK markets. The move had been whispered about for a while, despite Ashtead previously insisting there were no such plans,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“It’s a logical leap – most of its leadership is already US-based, and the States are its biggest market. There will still be a secondary listing in the UK, albeit with less stringent requirements than a full listing. As for today’s results, they were a letdown, missing expectations across the board and topped off with a guidance downgrade. Sluggish commercial real estate is still a drag, but investors can find a silver lining in easier comparable quarters on the horizon and the longer-term tailwind of mega projects in the US.”

There was some marginal positivity in retailers such as B&M, Sainsbury’s and Tesco, but not enough to offset losses elsewhere.

hVIVO shares rose on Tuesday after the company announced a new contract win and reaffirmed revenue guidance, with EBITDA margin set to reach the upper end of the guidance.

hVIVO, the specialist contract research organisation, has secured a £11.5 million contract to test a new RSV antiviral drug candidate for an existing top-tier global pharmaceutical client.

The Phase 2a trial, scheduled to begin in the second half of 2025, will be conducted at the company’s Canary Wharf quarantine facilities, with revenue expected to be recognised across 2025 and 2026.

The study will be a randomised, double-blinded placebo-controlled human challenge trial, evaluating the safety, pharmacokinetics, and antiviral activity of the drug candidate. The company will use its in-house recruitment division, FluCamp, to enroll healthy volunteers for the study.

“This contract further demonstrates the trust and confidence that leading pharmaceutical companies place in hVIVO’s human challenge study models,” said Yamin ‘Mo’ Khan, Chief Executive Officer of hVIVO.

“We are proud to work with four of the top 10 global pharmaceutical companies to address unmet medical need in infectious and respiratory diseases. Our unique and established RSV model can provide valuable data on a candidate’s safety, pharmacokinetics, and efficacy, reducing the risks associated with later-stage clinical development and accelerating the pathway to market.”

hVIVO announced the new contract alongside a concise trading update confirming its financial guidance for the fiscal year 2024 and revenue of £62 million. The company expects its EBITDA margins to reach the upper end of market expectations, which currently range between 22% and 24%.

A comprehensive trading update for the year ended December 31, 2024, including the outlook for 2025, is expected to be released before the end of February 2025.

Ashtead has confirmed plans to switch its primary listing to the United States, where it conducts most of its business, to gain access to ‘deeper’ capital markets.

The announcement was made alongside the release of an interim statement revealing a 4% drop in profit before tax in the first half due to slower rental growth. Ashtead reduced its profit guidance for the year as a result.

The combination of slower rental growth, lower profit guidance, and plans to shift their primary listing to the US resulted in a 10% drop in Ashtead shares on Tuesday.

“Ashtead has warned on profit this morning citing difficulty in its primary market of North America. The construction market has seen weakness driven by the higher interest rate environment lasting longer. This has in turn hurt used equipment sales and higher depreciation costs have hit Ashtead’s numbers,” said Adam Vettese, market analyst at investment platform eToro

“Most notably in the update is the long rumoured intention to switch to a US listing. The firm does almost all of their business in North America, they report in dollars and the vast majority of their staff are in the region. Despite this making sense on many levels, it is still a huge blow for the UK to see the 25th largest firm in the benchmark FTSE100 index leaving. Amid London’s campaign to be attractive to upcoming IPOs, it’s far from the best time to see one of their stalwarts leave for pastures new.”

The decision comes as the company acknowledges its transformation into a predominantly US-focused business. With its executive management team and operational headquarters already based in the United States, along with the majority of its workforce, the company believes this change will better align with its operational reality. As part of this transition, the company will rebrand as Sunbelt Rentals.

The overarching reason behind the switch is the attraction of US capital markets. Ashtead said they expect the move to give the company greater access to US investors and deeper capital markets, potentially increasing the liquidity of its shares. Additionally, the relocation of its primary listing could position the company for inclusion in major US stock indices.

Losing Ashtead will be a significant blow to London, given the company’s stellar performance over the years, driven by consistently growing profits.

The FTSE 100’s natural resource sector rallied on Monday after China promised to change its approach to supporting the economy amid sluggish growth and a struggling property sector.

Oil majors BP and Shell also joined the action as oil prices rose after Syrian rebels swept into Damascus and took control of the country, increasing tensions in the region.

“London’s blue-chip index has started the week on the front foot, shaking off signs of downbeat demand in China, as energy giants gain ground amid rising oil prices,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“The benchmark, Brent Crude, has crept higher towards $72 a barrel, as a fresh wave of uncertainty engulfs the Middle East, given the rapid fall of the Assad regime in Syria. Weak demand from China and the postponement of the plan by OPEC+ nations to postpone production increases is keeping a lid on prices to some extent. However, the speed at which rebel forces took over in Syria and the unpredictability of what will come next has raised fresh supply concerns in a region already wracked by conflict.”

China’s promise to take a “more proactive” approach to fiscal policy was music to equity investors’ ears. The world’s second-largest economy’s stuttering growth has been a major concern compounded by a lack of meaningful action by the authorities, who have seemed content to let things play out. This now looks set to change.

Rio Tinto, Antofagasta, Glencore and Anglo America surged to the top of the FTSE 100 leaderboard with gains between 2.6% and 3.5% on the promise of easier Chinese monetary policy and fiscal stimulus.

“The mining sector, as well as other China-exposed stocks like Prudential, Standard Chartered and Burberry, moved higher on tweaked wording from the country’s Politburo that suggested more economic stimulus could be on the way. Stocks in Hong Kong were also higher,” said AJ Bell investment analyst, Dan Coatsworth.

WPP gained 2.3% as news broke that two of its largest competitors would merge to create an advertising giant that promises to send waves through the industry.

“Investors in WPP seemed to shrug off the prospect of two arch-rivals coming together and creating a force to be reckoned with. Speculation that Omnicom and Interpublic are plotting a $30 billion merger is the talk of the town yet shares in WPP moved 3.5% higher on Monday,” Coatsworth explained.

“On one hand, a merger of two companies this size would inevitably involve widespread cost cutting as the first course of action. That could give WPP a window of opportunity to try and poach some clients while its enlarged rival’s management is distracted. On the other hand, a merger would bring together the cream of the crop from both companies which would aid their narrative during account pitches.”

Frasers Group was the top faller after Institutional Shareholder Services, an independent proxy adviser, advised against the proposals tabled by Frasers Group in their spat with Boohoo.