FTSE outperforms as traders abandon major China stocks

Chinese president Xi Jinping. The FTSE was greater on Wednesday as abroad funds have been fleeing the Chinese market. Photo: Leah Millis/Pool Photo by way of AP

The FTSE 100 (^FTSE) continued its optimistic run on Wednesday, outperforming in opposition to its friends, as traders offloaded shares in China’s blue-chip companies at document tempo amid rising considerations in regards to the world’s second largest financial system.

London’s benchmark index rose 0.6% by the top of the session, helped by a weaker pound and an increase in mining stocks on the again of beneficial properties in metallic and gold costs.

Meanwhile the CAC (^FCHI)was treading water in Paris, and the Frankfurt DAX (^GDAXI) was 0.1% greater after new information revealed that Germany suffered the steepest drop in enterprise exercise since May 2020.

Across the pond, the S&P 500 (^GSPC) was up 0.7% an hour earlier than the European shut and the tech-heavy Nasdaq (^IXIC) was 1.1% greater. The Dow Jones (^DJI) was 0.2% greater.

It got here as abroad funds fled the Chinese market, offloading the equal of £7.3bn ($9.29bn) in a 12-day run of withdrawals to Tuesday, the longest since Bloomberg started monitoring the information in 2016.

According to the newest information on particular person stocks obtainable, overseas buyers bought 6.2bn yuan (£676m) of Kweichow Moutai (600519.SS) from 7 to 18 August, making China’s largest spirits maker essentially the most closely bought inventory by way of buying and selling hyperlinks with Hong Kong.

It was adopted by 4.7bn yuan of promoting every for main renewables inventory LONGi Green Energy Technology (601012.SS) and major lender China Merchants Bank (600036.SS).

“The FTSE 100 managed to finally break its worst run of losses since 2019 yesterday, posting its first daily gain since 10 August. The gains were hard-won however with the index trying retreating from its daily highs and failing for the second day in a row to consolidate a move above 7,300,” Michael Hewson, chief market analyst at CMC Markets, stated.

“The rest of Europe managed to do slightly better, outperforming and closing higher for the second day in a row, although still closing well off the highs of the day.”

Read extra: Commodities round-up: Oil costs decrease as gold maintains its attract

Elsewhere, the UK’s non-public sector output suffered its steepest decline in exercise in additional than two and a half years due to a extreme downturn in manufacturing and spending on companies.

The headline seasonally adjusted S&P Global/CIPS Flash UK Composite Output Index got here in at 47.9 in August, down from 50.8 in July. This was beneath the impartial 50.0 threshold for the primary time since January.

The eurozone additionally noticed weaker-than-expected financial information with its PMI determine falling to a 33-month low of 47.0 in August, down from 48.6 the earlier month.

Watch: How does inflation have an effect on rates of interest?

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