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Monday, September 26, 2022
Stocks & Shares

FTSE 100 drops on global slowdown fears

global slowdown

The commodity-heavy FTSE 100 fell 0.8 per cent and the mid-cap FTSE 250 dropped 0.5 per cent

UK’s FTSE 100 fell on Wednesday, dented by oil and mining stocks after soft trade data from China spurred fears about global demand, while worries over recession and aggressive monetary tightening in major economies also weighed on sentiment.

The commodity-heavy FTSE 100 fell 0.8 per cent and the mid-cap FTSE 250 dropped 0.5 per cent by 0801 GMT.

Shares of oil majors BP and Shell slipped 1.2 per cent each, as crude prices tumbled on COVID-19 curbs in top importer China.

Mining stocks fell 2.5 per cent, as the greenback strengthened after U.S. economic data reinforced the view that the Federal Reserve will continue aggressive policy tightening.

China is the workshop of the world. If Chinese exports are falling dramatically that implies demand outside China is dropping, meaning the global economy is slowing down at a time when traders are expecting more rate hikes from various central banks, said David Madden, a market analyst with Equiti Capital.

Further weighing on Rio Tinto, a U.S. judge said the Anglo-Australian mining giant must face an investor lawsuit accusing it of concealing delays and huge cost overruns at a Mongolian copper and gold mine owned by Turquoise Hill Resources Ltd, in which Rio Tinto has a majority stake.

British Prime Minister Liz Truss will set out plans to tackle soaring energy bills this week, Deputy Prime Minister Therese Coffey said, but declined to discuss who will foot the bill for what is set to be a costly intervention.

If the markets feel whatever she delivers isn’t enough to actually cover for the time being, we’ll probably see a sell-off in British stocks and the pound, said Madden.


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