FTSE 100 struggles as global indices hit fresh peaks

​​​FTSE 100 underperforms European peers

​The FTSE 100 started the week on a disappointing note, falling 0.1% and underperforming its European counterparts. The index's initial strong opening quickly faded as heavyweight stocks dragged on performance.

​AstraZeneca shares declined, contributing to the benchmark's weakness alongside energy sector stocks. The pharmaceutical giant's drop highlighted ongoing concerns about sector rotation and valuation pressures in healthcare stocks.

​European equity markets contrasted sharply with London's performance, benefiting from gains across technology stocks and luxury goods firms. The absence of major tech companies in the FTSE 100 continues to weigh on its relative performance against European indices.

​Investors noted that hopes for additional Chinese stimulus measures boosted luxury goods names across Europe. However, this positive sentiment failed to lift the UK market, which remains more domestically focused than its continental peers.

​US markets reach new heights despite mixed signals

​Wall Street delivered a mixed performance on Friday, with the Nasdaq Composite advancing 0.45% to reach a fresh record high. Technology giants Microsoft and Tesla provided the momentum needed to push the tech-heavy index to new peaks.

​The S&P 500 and Dow Jones Industrial Average both slipped despite the Nasdaq's strength, reflecting ongoing sector rotation and investor uncertainty. This divergence highlights the continued dominance of mega-cap technology stocks in driving market sentiment.

​Consumer confidence data added to the mixed picture, with the University of Michigan survey showing sentiment fell for a second consecutive month in September. Concerns about employment prospects, business conditions, and persistent inflation weighed on consumer optimism.

​Chinese economic data weighs on global sentiment

​Chinese economic activity slowed more than anticipated across multiple indicators in August, raising fresh concerns about the world's second-largest economy. Industrial output and consumption both recorded their weakest months of the year following disappointing July figures.

​Retail sales growth decelerated while fixed-asset investment expansion slowed sharply, indicating broad-based economic weakness. These disappointing numbers have intensified expectations that Chinese policymakers will introduce additional stimulus measures to meet growth targets.

​Mining companies and financial institutions with significant Chinese exposure face particular pressure from these developments. HSBC and Standard Chartered, which derive substantial revenue from the region, could see increased volatility as markets digest the implications.

​The ripple effects extend beyond direct China plays, with luxury goods companies also vulnerable to reduced Chinese consumer spending. Global supply chains and commodity markets remain sensitive to Chinese economic performance, making these data points crucial for international investors.

​Central banks in focus this week

​A packed schedule of central bank decisions dominates the week ahead, with the Fed, BoE, BoJ, and BoC all set to announce policy updates. Traders have positioned for a 25 basis point Fed rate cut on Wednesday.

​Approximately 75 basis points of easing are priced into markets by year-end following recent soft labour market data. This aggressive pricing reflects growing confidence that the Federal Reserve will adopt a more accommodative stance as economic growth concerns mount.

​The BoE faces its own challenges, with inflation concerns balanced against economic growth worries. Recent UK economic data suggests a cautious approach may be warranted, though market expectations remain fluid.

​Global monetary policy divergence could create significant currency volatility throughout the week. Forex trading opportunities may emerge as central banks signal different policy trajectories, particularly between developed and emerging market currencies.

​UK property market shows signs of cooling

​House prices registered their first annual decline in almost two years, with London and other expensive areas leading the downturn. Property values fell 0.1% year-on-year (YoY) according to Rightmove, marking a significant shift in market dynamics.

​London property prices dropped 0.1% annually, reflecting the capital's sensitivity to economic uncertainty and potential tax changes. Speculation about Chancellor Rachel Reeves replacing stamp duty with a tax on homes worth over £500,000.00 has dampened buyer enthusiasm.

​The housing market initially stumbled after April's stamp duty increase and now faces additional headwinds from budget speculation. Properties worth over £500,000.00 would face the most significant impact, affecting most London sales compared to just over one-fifth outside the capital.

​However, positive factors remain in play, including static house prices, rising wages, and lower mortgage rates improving buyer affordability. These supportive elements have led to increased sales agreements compared to the previous year, suggesting underlying demand persists despite headline weakness.

​Asian markets navigate thin trading conditions

​Asian markets opened cautiously on Monday with Japan closed for a holiday, creating thin trading conditions across the region. South Korea bucked the trend by hitting a record high, while Chinese shares showed modest firmness despite weak economic data.

​The holiday-shortened session limited liquidity and trading volumes, making price movements potentially exaggerated. Market participants remained cautious ahead of the week's central bank decisions, particularly the Fed meeting on Wednesday.

​Chinese shares displayed resilience despite disappointing economic data, possibly reflecting expectations of additional government stimulus measures. However, sustained improvement will likely depend on concrete policy announcements from Beijing.

​European futures pointed to a muted opening, with the DAX 40 expected to start flat while the FTSE faced slight declines. French OAT futures extended losses following the country's recent credit rating downgrade, highlighting ongoing fiscal concerns across the eurozone.