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London open: Stocks decline after more weak Chinese data
London stocks declined on Monday as concerns on China’s flagging economy grew on the back of more weak economic data. China’s industrial profits fell 8.8% in August compared to a year ago, following a 2.9% drop in July, according to the National Bureau of Statistics. The bureau said exports suffered exchange losses on the yuan’s depreciation in August.
“It is yet another reminder of the creaky nature of China’s economy, and, despite mild (and always suspicious) closing gains for the Shanghai Composite, was partly to blame for this Monday’s morning losses,” said Connor Campbell, financial analyst at Spreadex.
Elsewhere in Asia, Bank of Japan governor Haruhiko Kuroda said inflation would not reach 2% without further improvement in wages, employment and prices. “The positive feedback loop between the increases in employment and wages and the rise in inflation needs to gain further momentum in order to achieve the price stability target of 2%,” Kuroda said in a speech to business executives in the western city of Osaka.
Meanwhile, the shock vote in favour of Catalonian independence shook European markets. Pro-independence parties in Spain’s Catalonia region won an absolute majority in regional elections but they fell just short of getting 50% of the vote, winning 1.9m out of 4m ballots cast. Spain’s central government in Madrid said it would challenge the move towards independence.
Michael Van Dulken, head of research at Accendo Markets, said a pro-independence win for the Catalonia electorate “adds to Eurozone political risk, showing desire for the key state to break away from Spain and means the likelihood of an official Scotland-like ‘Yes or No’ vote in the next 18-months”.
Across the Atlantic, a report on personal consumption expenditure will be released at 1330 BST and pending home sales figures will be published at 1500 BST. Federal Reserve officials Charles Evans and John Williams will speak at separate events after the close of markets, potentially offering further hints on the timing of an interest rate hike. Fed Chair Janet Yellen last week said she expected a rate increase later this year but left the door open on maintaining policy if the global economic outlook worsened.
On the corporate front, SABMiller jumped following a Sunday Times report that Anheuser-Busch InBev SA could bid about $106m for the company as early as Monday.
Glencore slumped after agreeing to sell its Araguaia nickel project to Horizonte Minerals for a discount price of $8m.
Vodafone dropped after ending talks with Liberty Global about a merger of the European businesses.
