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FTSE 100 down as China COVID worries weigh on miners
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(Reuters) -UK stocks fell on Monday as worries about fresh COVID-19 curbs in China and the energy crisis in Europe hurt sentiment, with investors awaiting earnings reports for clues on corporate health.
(Reuters) -UK stocks fell on Monday as worries about fresh COVID-19 curbs in China and the energy crisis in Europe hurt sentiment, with investors awaiting earnings reports for clues on corporate health.
The blue-chip FTSE 100 fell 1% and the domestically focussed FTSE 250 index slid 0.6% after marking weekly gains on Friday.
Mining majors dragged the FTSE 100 lower, with Anglo American, Antofagasta and Glencore down between 2.7% and 3.2% as metal prices fell on news multiple Chinese cities are adopting fresh COVID-19 curbs, denting the outlook for demand from the top metals consumer.
While the severe cost-of-living crisis and political uncertainty darkens the outlook for Britain’s economy, the FTSE 100 has outperformed its global peers this year due to its exposure to commodity companies, stable defensive sectors and a weakening pound.
The exporter-heavy index is down 3.5% so far this year, however, the FTSE midcap index has shed more than 20%.
“Monthly GDP growth and industrial production data are due to be released in the UK on Wednesday and will likely confirm that the worsening of the economy is already on course, as BoE Governor Andrew Bailey already flagged,” Unicredit analysts said in a note.
“Bad news on the domestic macro front may drag GBP-USD lower again, making it difficult to hold the 1.20 handle.”
Sterling hit a two-year low at 1.19 per dollar last week on growing worries of a sharp economic downturn and in anticipation of the resignation of British Prime Minister Boris Johnson.
The contest to replace Johnson gathered pace on Sunday as five more candidates declared their intention to run, with many pledging lower taxes and a clean start.
Meanwhile, European markets remained on edge after the biggest single pipeline carrying Russian gas to Germany started annual maintenance on Monday amid worries the shut-down might be extended due to war in Ukraine.
Wizz Air fell 4% after the Hungarian budget airline said it may reduce its aircraft usage in peak summer period to hedge for labour shortages and strikes at European airports.
British franchisee of pizza chain Domino’s Pizza Group rose 1.5% after it appointed Edward Jamieson, an executive at food delivery firm Just Eat Takeaway, as its new finance chief. Deutsche Bank started coverage of the stock with a “buy” rating.
(Reporting by Sruthi Shankar in Bengaluru; editing by Uttaresh.V and Arun Koyyur)
Financial markets are platforms where buyers and sellers engage in the trade of financial assets such as stocks, bonds, currencies, and derivatives. They play a crucial role in the economy by facilitating capital allocation.
The mining sector involves the extraction of minerals and other geological materials from the earth. It is a significant contributor to the economy, especially in resource-rich countries.
Currency is a system of money in general use within a particular country or economic context. It serves as a medium of exchange, a unit of account, and a store of value.
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