Mining stocks suffered as the fragile state of the Chinese economy sparked fears of a slowdown in demand for commodities.
Covid-19 restrictions have been reinstated in several Chinese cities, including the tech hub of Shenzhen in the south, and Chengdu in the west and Tianjin in the north, raising concerns the country will take longer to recover from its recent slump.
“With millions of citizens facing severe restrictions on movement, there are fears that China’s fragile recovery will be reversed and the drop in factory activity in August will not be a blip but will last much longer,” said Susannah Streeter, an analyst at Hargreaves Lansdown.
Dumped: Mining stocks fell after Covid restrictions were reinstated in several Chinese cities, including tech capital Shenzhen
China is one of the largest importers of commodities such as iron ore and copper, meaning any slowdown in the country’s economy threatens to seriously affect global demand.
Glencore fell 6.6 percent or 31.3 pence to 442 pence, Endeavor Mining fell 4.9 percent or 82 pence to 1601 pence, Fresnillo fell 4.5 percent or 31 pence to 657.6 pence, Antofagasta slipped 4.6 per cent or 51 pence to 1050 pence and Anglo American fell 3.8 per cent or 105 pence to 2678 pence.
The FTSE 100 fell 1.9 percent or 135.65 points to 7148.5, its lowest level in over two weeks.
Meanwhile, worries about the state of the domestic economy weighed on the more domestically-focused FTSE 250, which fell 3 percent or 570.01 points to 18,493.74.
Pressure on the cost of living continues to weigh heavily on the market after the Resolution Foundation think-tank warned that 3 million people will be pushed into absolute poverty as Britain faces the biggest drop in living standards in a century.
The prospect of a massive contraction in consumer spending sent many retailers and hospitality businesses into the red.
Next fell 0.9 per cent or 50 pence to 5762 pence, Primark owner AB Foods fell 1.6 per cent or 25 pence to 1500 pence, Sainsbury’s slipped 1.7 per cent or 3.4 pence to 200 pence, Tesco down 1.8 per cent or 4.5 pence to 244.2 pence, B&M slipped 0.4 per cent or 1.5 pence to 368.4 pence and Ocado fell 5.8 per cent or 41.8 pence to 684, 2 pence.
Stock Watch – camellia
Tea, avocado and macadamia grower Camellia hit its lowest level in 13 years after issuing a profit warning for one of its “most difficult years”.
The company had been battered by extreme weather conditions in the countries where it grows its crops, as well as disruptions from the pandemic, the war in Ukraine, supply chain delays and industrial unrest. A lower profit than in the previous year was expected for 2022. Shares fell 7.3 percent or 425 pence to 5400 pence.
Also on the decline were Premier Inn owner Whitbread, which fell 1.6 per cent or 41 pence to 2463 pence, as well as Burberry (down 3.5 per cent or 60.5 pence to 1687.5 pence) and Intercontinental Hotels (down 3.1 percent). , or 144p, up to 4547p).
On the plus side, education group Pearson was one of the top blue-chip climbers, rising 1.2 percent, or 10.6 pence, to 873.4 pence after analysts at JP Morgan upgraded their “overweight” rating on the stock had resumed.
The investment bank said the company was making “good progress” in executing its strategy and was “well positioned” to weather the coming economic slowdown.
Property firms were less fortunate, with both British Land (down 5.7 percent or 24.7 pence to 406.1 pence) and Land Securities (down 5.2 percent or 33.6 pence to 617 pence) from buy Analysts at Panmure Gordon downgraded hold.
Barclays announced plans to sell its remaining stake in South African lender Absa, ending its presence in African retail banking after nearly a century.
The banking group has sold its 7.4 per cent stake for £538m but expected a loss of £31m, suggesting it had taken a hit from the sale. Barclays shares fell 1.9 percent, or 3.1 pence, to 161.4 pence.
Advertising giant WPP has acquired Dutch e-commerce consultancy Newcraft for an undisclosed sum.
The group expected the purchase would boost their digital commerce capabilities. WPP shares fell 2.5 per cent, or 18.6p, to 725.8p.
Serco (down 2.5 percent or 4.4 pence to 170.7 pence) also bought in. The outsourcer bought ORS, a provider of immigration services in Switzerland, Germany, Austria and Italy, for £39m.
ORS 2000 employees will help expand Serco’s European operations.
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