London’s FTSE 100 was dragged lower today by softer than expected data from China signalling the world’s second largest economy is on the wane.
The capital’s premier index slid 0.98 per cent to 7,448.01 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, dropped 0.45 per cent to 18,723.25 points.
Numbers out this morning from China’s National Bureau of Statistics revealed sluggish demand is squeezing the country’s economy.
The purchasing managers’ index for this month revealed manufacturing activity is shrinking, with the sector’s reading slumping below the 50 point growth threshold to 48.8 points, down from 49.2 points in the previous month.
New export orders dropped for the second straight month, indicating the global economic slump triggered by high inflation and central banks’ efforts to tame it with aggressive interest rate hikes is knocking spending on Chinese goods.
Services sector activity expanded at the slowest pace in four months in May, with the official non-manufacturing PMI falling to 54.5 points from 56.4 points.
Stalling spending among Chinese consumers weighed on FTSE 100 listed stocks that generate a big chunk of their income from Asia.
Luxury fashion retailer Burberry fell 2.25 per cent on concerns that the boost the firm has received from a resurgence in Chinese consumer spending after pandemic restrictions were lifted after three years could peter out.
Insurer Prudential was also lower, another company that has a strong presence in the East and whose chief financial office stepped down today after a probe found he’d fallen short of standards in a recruitment process, as was Standard Chartered, an Asia-focused bank.
Stationery retailer WH Smith surged to near the top of the FTSE 250’s top risers table after it raised its profit estimates on expectations of a summer travel surge in the UK. Its shares climbed more than two per cent.
Discount retailer B&M hoisted just under eight per cent and to the top of the FTSE 100 after it also yanked its profits expectations higher.
Traders were boosted by data showing inflation in the Eurozone’s top economies is cooling, raising the chances of the European Central Bank only signing off on one more interest rate rise this year.
The pound was broadly flat against the US dollar.
Oil prices lost more than one per cent.