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London open: Stocks rebound from previous day’s low
UK stocks rebounded on Tuesday from the previous day’s slump driven by further evidence of a slowdown in China’s economy.
China’s gross domestic product rose 6.9% in the third quarter, down from 7% in the second quarter but better than the 6.8% expected. Industrial production rose 5.7% in September from a year ago, missing estimates for a 6% increase, sending commodity prices lower on Monday.
“Between not being able to trust the GDP data, commodities being hit by industrial production figures, retail sales beating expectations and talk of more monetary stimulus, there wasn’t really a clear message to take away,” said Craig Erlam, senior market analyst at Oanda.
“Chinese growth remains a very real concern, not just for the country itself but many others in the region that rely on it for trade.”
Turning to Tuesday’s agenda, the Bank of England’s Ian McCafferty, who was the only policymaker to vote in favour of an interest rate hike at the last meeting, is due to speak at 1045 BST. McCafferty believes the BoE should raise rates to allow more room for cuts should the economy crash.
“Mr McCafferty is likely to reiterate his concerns about underlying price pressures and his belief that an immediate hike would increase the likelihood of a gradual path for policy tightening. BoE Governor Carney is also appearing before the Treasury Select Committee this morning although this is likely to focus upon macro-prudential concerns,” according to Lloyds Bank analysts.
The US session will include the release of housing starts and building permits figures at 1330 BST while Federal Reserve official William Dudley speaks at 1400 BST in New York. Dudley may provide more thoughts on interest rates ahead of the central bank’s policy decision later this month.
Company-wise, mining stocks continued to slide on China concerns including BHP Billiton, Anglo American, Fresnillo and Astrazenca.
Oil producers were also under the cosh, with BP and Royal Dutch Shell among the fallers, after Moody’s downgraded its 2016 estimates for Brent and WTI prices.
Intercontinental Hotels surged after posting a rise in third quarter revenue per available room and expressing confidence in the outlook.
Asos climbed after reporting a better-than-expected increase in full-year pre-tax profit, as UK and international sales grew.
