FTSE 100 feels the pressure of unconvincing Chinese trade data
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FTSE 100 feels the pressure of unconvincing Chinese trade data

Dec 25, 2023

The FTSE 100 was firmly in the red on Tuesday as the index felt the pressure of more poor Chinese economic data.

London’s-leading index is dominated by companies with exposure to China and performance is often driven by perceptions of Chinese growth.

The FTSE 100 was down 0.5% at the time of writing on Tuesday after Chinese exports fell 14.5% in July compared to a year ago.

“The Chinese economy continues to splutter and that’s bad news for a FTSE 100 chock full of companies which are closely tied to its fortunes,” said AJ Bell investment director Russ Mould.

“This time it’s trade data which has come in way short of expectations. China has been trying to move to being an economy driven by domestic consumption but the level of support provided to households during Covid and the country’s particularly stringent and long-lasting Covid restrictions didn’t match up to those seen in the West.”

In addition to disappointing Chinese data, sentiment was hit by a downgrade of US banks by Moody’s and weakness in Italian banks after the Italian government announced a 40% levy on excess profits earned due to higher interest rates.

It is safe to say markets were in a risk-off mood on Tuesday, with US equities falling and European stocks deep in the red.

The Italian FTSEMIB was down 2.2% and German DAX fell 1%.

One wouldn’t have been surprised to see the FTSE 100’s miners among the top fallers on Tuesday after markets learned of China’s dismal trade figures.

Anglo American, Glencore, and Antofagasta were among those most heavily impacted. The case for Glencore’s shares wasn’t helped by the 62% reduction in first-half net income released on Tuesday.

“Operating in what the company described as a “normalisation of commodity market imbalances and volatility” the group reported a 20% decline in revenues to $107bn and a drop of 62% in the group’s net income, to $4.6bn,” said Steve Clayton, head of equity funds at Hargreaves Lansdown.

“With debts equivalent to just two months of net income the group has decided to make an additional “top-up” distribution of $2.2bn to shareholders, taking total announced shareholder returns this year to $9.3bn.”

abrdn shares fell after the investment manager said a challenging macro environment has hit assets under management. Despite this, the company announced a fresh wave of share buybacks. abrdn shares were down 10% at the time of writing.

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