MINING stocks boosted the FTSE 100 yesterday, after Chinese data beat expectations which pleased mining companies that export to the country, although a tepid outlook from Unilever kept confidence in check.
The FTSE 100 index closed 0.5 per cent higher at 6,620.10 points, after earlier reaching its highest point since the start of 2015 at 6,640.44 points.
Investors were relieved after data showed China’s economy grew 7.4 per cent in 2014, barely missing the country's 7.5 per cent target. It was China’s slowest pace of growth in 24 years, but many traders had feared an even sharper slowdown.
Financial and consumer-discretionary shares, which are sensitive to optimism about the economy, were among the best performers.
The prospect of strong demand from top metals consumer China boosted mining companies such as Glencore and Anglo American, up by 3.9 per cent and 2.9 per cent, respectively.
“There’s a pretty broad rally on the back of the news from China, which is supportive of equities,” said James Butterfill, global equity strategist at Coutts. “The majority of miners are doing well, but Rio have missed estimates, which is hindering the sector.”
Global miner Rio Tinto rose just one per cent after a production update. While iron ore production met targets, copper came in below expectations, traders said.
“The numbers were only a slight miss versus estimates and the relative underperformance versus the market and sector we think is overdone,” said Atif Latif, director of trading at Guardian Stockbrokers.
The index remains four per cent off the 14-year-high reached in September 2014. A decline in energy stocks as oil prices slump and concerns over global growth have held it back.
Consumer goods giant Unilever dropped 0.6 per cent after reporting lower-than-expected underlying sales growth, hindered by weak emerging markets.
Coca Cola Hellenic also suffered from its global exposure, dropping 5.8 per cent after a downgrade to “neutral” from “overweight” by JP Morgan analysts, who cited deteriorating macroeconomic trends in Russia and Nigeria. “Emerging markets are a story of weak demand, from Russia to Brazil, and there is a broad emerging market malaise out there, in terms of growth prospects,” Mike Ingram, market strategist at BGC Partners, said.