Investors unsure if Chinese recovery is worth celebrating
WEAKER growth in China and concerns over future lockdowns all helped push the London Stock Exchange’s leading index into the red as the week started.
With global Covid-19 cases topping 40 million, the FT SE 100 closed down 34.93 points at 5,884.65. It was followed by similar moves in France, with the Cac 40 down 0.2 per cent, and the DAX 30 in Frankfurt ended down 0.4 per cent.
Part of the fall was due to the pound strengthening against the dollar - which tends to push the share price of multi-national firms down as the price appears more expensive to traders who tend to work in dollars.
The pound was worth 1.300 dollars by Monday evening, up sharply from 1.292 when markets closed on Friday, with traders hopeful for a Brexit breakthrough.
But the overall market was dragged down on news from China that the economy grew 4.9 per cent in the third quarter compared with the same quarter a year ago.
This was not as strong as analysts had hoped for and led to fears that any rebound elsewhere may not be as strong as first hoped.
Closer to home, traders were also not helped by the Welsh administration’s decision to impose a full“fire break ’’ lock down for two weeks from Friday to cut coronavirus cases.
It followed similar moves from Italy and Belgium to slow down the second wave sweeping parts of Europe.
IG Group’s Josh Mahony explained: “Markets have kick-started the week in indecisive fashion, with a disappointing Chinese third-quarter growth figure laying the groundwork for a less than convincing session.
“With so many varying factors influencing market sentiment, it comes as no surprise to see confusion amongst the trading community.
“With traders having to weigh up the importance of Brexit concerns, coronavirus lockdowns, the US election, and the Chinese recovery, the indecision seen today could be indicative of the week ahead.’’
In company news, investors took flight at online clothes retailer Boohoo after the company confirmed its auditors at PWC are cutting ties with the business. Shares closed down 61.6p, or 19.5 per cent, at 254p.
Chairman and co-founder Mahmud Kamani is facing pressure to resign following a highly critical report into alleged abuses at factories in Leicester.