China was driving the FTSE 100 once more on Monday as concerns about the property sector hit London’s leading index.

While European indices such as the German Dax and French CAC carved out respectable gains, the FTSE 100 dipped 0.3% after a major property company missed a bond payment.

The FTSE 100 started the day in the red before staging a rally that was quickly sold into.

“A crisis in the Chinese real estate sector is a story the market has heard before and not one which has typically come with a happy ending for stocks,” said AJ Bell investment director Russ Mould.

“News China property giant Country Garden had missed bond payments as it racked up big losses was always likely to prompt selling in Asian markets and that’s fed through to the European open.

“This latest calamity is reflective of a recovery which has not lived up to expectations since the world’s second largest economy ditched zero-Covid measures at the end of last year. The usual catalogue of names with Chinese ties were under the pump including Burberry, Standard Chartered and Prudential. The one silver lining for the West may be a deflationary impact from China’s woes which helps in the battle against inflation.”

The FTSE 100 has managed to close above 7,500 since 19th July with the round number acting as a level of support over the past two weeks.

However, persistently downbeat news emanating from China and recent weakness in US tech stocks may culminate in further weakness for London’s leading index.

From a technical analysis perspective, the FTSE 100 is starting to form a very neat descending triangle formation which is typically bearish for stocks. A test of the 7,300 region will be fascinating to see if this key level of support can hold, or if the descending triangle is confirmed and we break lower.

UK housebuilders were among the top fallers as the highly cyclical sector faded a recent rally. UK inflation stands at 7.9% and continues to be a headache for the Bank of England who will likely hike rates again at their next meeting.

The all-important FTSE 100 natural resources sector was driving the losses on Monday with names such as Anglo American, Rio Tinto and Glencore giving up between 1%-2.5%.

Negative developments in China have been met with the selling of China-exposed stocks before hopes of stimulus reinvigorate the bulls. This pattern has been consistent, but may not last forever.

On Monday, Premier African Minerals announced the resolution was duly passed at the general meeting held in London on Saturday, and that offtake partner Canmax had agreed to an amended arrangement.

Canmax had previously issued a termination notice and Premier African Minerals were at risk of having to repay and prepayment amount, plus interest.

The amended agreement will be welcomed by shareholders but details on the new Canmax agreement were scant, and Premier African Minerals said they would issue a separate RNS containing the specific terms of the Canmax agreement.

Premier African Minerals shares were up 10% at the time of writing.

The disapplication of the pre-emption resolution proposed at the General Meeting held on 12 August 2023 passed, and Premier African Minerals now have greater flexibility to issue new shares to raise funds.

The company hasn’t announced a specific funding round, but one would expect one to follow in the not too distant future.

Tekcapital shares were higher on Monday after their portfolio company Innovative Eyewear released a new ChatGPT-enable app for their Lucyd smart eyewear.

The new 2.0 app provides users with a range of updates and experience improvements including better connectivity with ChatGPT, voice quality improvements and the addition of the ChatGPT toolbox in the Lucyd app.

Users will now be able to import ChatGPT responses to email through the newly updated Lucyd app and submit long-form queries to ChatGPT.

“We are excited to roll out a significant new upgrade to the Lucyd iPhone/iPad app just a few months after the initial release,” said Harrison Gross, CEO of Innovative Eyewear.

“The new state-of-the-art interface makes ChatGPT easier to use than ever on our smart glasses. We look forward to introducing more features such as a shop, and a pro version of the app which are planned for later in 2023. We believe this will deliver more value to our community and potentially develop an additional revenue stream from users of other hearable devices that want seamless voice access to ChatGPT.”

At the close yesterday, The FTSE 100 seemed to be heading for a positive finish to the week after US CPI inflation sparked a global rally in stocks.

However, in Friday’s midday trade, the FTSE 100 looked set for another negative week as US interest rate fears reemerged and a stronger pound sapped the life out of London’s overseas earners.

News the UK grew faster than expected in the second quarter helped lift the pound against the dollar and the inverse relationship between the FTSE 100 and sterling kicked in.

Although broad European equity indices were mostly in the red, the FTSE 100 was underperforming, with losses in excess of 1% at the time of writing. The German Dax was 0.4% weaker.

“After another positive surprise on US inflation, stocks were all set to stage another rally before the head of the San Francisco Federal Reserve Bank intervened to dampen hopes of a shift in the trajectory of rates,” said AJ Bell investment director Russ Mould.

“That dragged US stocks down from their highs and set the scene for a weak open for European stocks.

“The FTSE 100 was also affected by a strong pound, after better-than expected figures on the UK economy, and weak resources stocks after a tough week for China marked by deflation, falling producer prices and soft trade figures as well as a sorry showing for Chinese equities. As the world’s most rapacious consumer of commodities, the fortunes of the Chinese economy are closely tied to these markets.”

FTSE 100 movers

As of 12.32pm on Friday, 84 of the 100 FTSE 100 constituents were trading negatively. There was little in the way of corporate news on Friday, and moves were driven by investor positioning and macroeconomic developments.

Silver miner Fresnillo was the FTSE 100 top riser gaining 1% after trading ex-dividend yesterday.

As alluded to by Russ Mould, China-focused stocks, including the miners, were among the top fallers. Copper miner Antofagasta gave up 2% while Glencore fell 1.8%.

Uk housebuilders were weaker despite the better than expected UK GDP release, as stronger growth means the Bank of England is more likely to continue hiking rates to bring inflation under control. UK CPI inflation stands at 7.9%, significantly higher than the 3.2% US CPI released yesterday.

Entain was the top faller after announcing it was getting aside £585m for an investigation into its Turkish business yesterday.