AFTER China cut interest rates to calm markets, Britain’s top share index posted its biggest one-day rise since 2011 yesterday, following turbulence that has rocked equities globally.
The FTSE 100 rebounded, rising 182.47 points, or 3.1 per cent, to 6,081.34 points by the close after dropping to its lowest level since 2012 in the previous session. It had fallen for 10 straight days as concerns about China’s economy mounted.
Following weak data on Friday, China’s failure to deliver substantial stimulus over the weekend was cited as driving Monday’s dramatic falls in global markets.
However, investors took heart after China’s central bank cut interest rates and relaxed reserve requirements for the second time in two months, cranking up support for a stuttering economy and its plunging stock market.
“It’s clearly a positive. The question is, whether it will be enough?” said Francis Yared, rates strategist at Deutsche Bank, adding that hopes of further easing would be as important as the measures delivered yesterday. “The bigger picture is that the source of the stresses we’ve had are coming from the fact that China needed to ease policy more.”
Shares in mining companies rebounded from China-related falls, having been under the cosh from commodity price weakness. The FTSE 350 mining sector was up four per cent from its lowest levels since 2009. Base metals rose modestly.
Antofagasta was up 8.7 per cent, the top FTSE 100 riser. It said it was targeting savings of about $160m (£102m) this year, and rebounded from its lowest levels in over six years.
Glencore rallied as much as eight per cent from all-time lows hit on Monday, and last traded 4.6 per cent higher.
Matthew Tillett, senior UK equity fund manager at Allianz, said that the falls in mining stocks made them good sources of value, despite their exposure to volatility in China, the world’s biggest metals consumer.
“(There is) more clear value out there than there was two or three months ago,” Tillett said.
BHP Billiton also rose about 5.5 per cent despite reporting a 52 per cent slump in annual profit to a decade low, as the world’s biggest miner said it would cut spending more deeply to shore up dividends.
Meanwhile, RSA rose 3.9 per cent after receiving a 550 pence all-cash takeover proposal from Zurich Insurance, paving the way for one of Europe’s largest insurance deals.