FTSE 100 in reverse as China fears grow
Heavyweight miners were at the forefront of another big market sell-off today after investors were given more reasons to worry about the strength of the Chinese economy.
Anglo American fell 8% on Friday and was down another 6% today as the ongoing slide in iron ore prices from May’s peak was accompanied by more evidence of a slowdown in China’s property sector after shares in developer Evergrande skidded in Hong Kong.
The risk-off session left the FTSE 100 index more than 1% lower, down 94.86 points at 6,868.78, having fallen below 7,000 for the first time since July on Friday.
The impact of rising prices has added to the market jitters, particularly with policymakers at the Bank of England and US Federal Reserve meeting later this week.
Hargreaves Lansdown analyst Susannah Streeter said: “With the recovery stuttering, while prices rise, it’s feared the lethargy of stagflation could emerge upon an unstable economic footing.”
Alongside falls of 4% and more for miners including Rio Tinto and Glencore, Asia-focused stocks dominated the fallers board in London. Standard Chartered dropped 16.9p to 425.1p and luxury goods firm Burberry was 55.5p cheaper at 1,742.5p.
The slide in market sentiment was particularly bad timing for Prudential after it unveiled the latest leg of its restructuring through a plan to raise about £2 billion from Hong Kong investors as it shifts its focus toward long-term growth in Asia and Africa.
Shares fell more than 6% or 95.5p to 1,350p.
British Airways owner IAG moved in the other direction after chief executive Luis Gallego told the Sunday Times there were no plans for his company to follow the lead of easyJet’s £1.2 billion rights issue. Amid investor relief, shares rallied 3.7p to 153.22p.
AstraZeneca was also 2% higher after it reported positive results for a prospective breast cancer treatment.
The UK-focused FTSE 250 index was not spared the market sell-off, falling 302.21 points to 23,356.73 and led lower by Wagamama operator Restaurant Group after shares slid 7% or 8.2p to 106.8p.