Optimism vanishes from the FTSE

Heading into the close the FTSE 100 is 20 points lower, as China weakness takes its toll yet again.

Miners walking
Source: Bloomberg

Indices have failed to win back any of the ground lost yesterday, as the higher open for the FTSE 100 this morning gave way to a fresh bout of losses.

Chinese CPI was one of the chief culprits, with the FTSE’s underperformance today versus other European indices once again due to the mining sector, and other key firms connected to China, such as Burberry.

Unless, and until, China data begins to pick up, those companies whose performance is heavily skewed towards Chinese demand will find the going tough. With US earnings season winding down and markets still adjusting to the increased possibility of a December rate hike, we may well see equities struggle for the time being, with the gains of October continuing to be unwound.

Further cause for concern can be seen in the price of copper, which has returned to the lows of August and threatens to break lower in a continuation of a long-term downtrend. The broader global economy has yet to display signs of real health; while some might hope that this will stay the Federal Reserve’s hand in December, the rise in the US dollar points to a market that is preparing itself for the first US rate rise in years. 

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