The FTSE 100 managed to inch higher this morning despite oil majors and mining stocks slipping over concerns of slowing demand from China, while the mid-caps were buoyed by soaring Renishaw (RSW) shares as the engineer is put up for sale.
The main index ticked up 0.2%, or 18 points, to 6,606 as investors who were yesterday optimistic about a US recovery package, turned their attentions to a different part of the world and worried about a slowdown in Chinese demand for oil and metals.
Reports that China is nearing the limit for its crude oil reserves, therefore reducing demand, saw oil majors fall to the bottom of the blue chips; BP (BP) was down 2.4% at 290p and Royal Dutch Shell (RDSA) lost 1.8% to trade at £14.40.
Worries about slowing commodity demand weighed on miners, who yesterday led the index higher. Polymetal International (POLY) fell 1.4% to £14.22, Fresnillo (FRES) lost 0.7% to change hands at 895p, Anglo American (AAL) was down 0.55% at £28.82, while BHP (BHP) slipped 0.51% to £23.00.
Spreadex analyst Connor Campbell said sentiment was also ‘undermined’ by comments from Guo Shuqing, head of the China Banking and Insurance Regulatory Commission, who warned over bubbles in financials markets that are running ‘counter to the real economy’ and ‘will one day pop’.
‘Shuqing is really saying nothing that investors, in their hearts, won’t – or shouldn’t – already be aware of,’ said Campbell.
‘However, it was enough to halt the kind of bombastic growth that kicked off the month.’
The winners on the main index included Taylor Wimpey (TW), which moved 3.2% higher to 172p, after reinstating its dividend despite profit falling by two-thirds. Factoring in the Covid disruption, the housebuilder said it had performed in line with expectations and the shares rallied. This added to gains made yesterday on the back of rumours chancellor Rishi Sunak will announce a mortgage guarantee scheme that will see the return to 95% mortgages in tomorrow’s Budget.
The FTSE 250 was up 0.4%, or 94 points, at 21,315 despite sterling taking a 0.42% hit to trade at $1.3863 against the dollar. The mid-caps were buoyed by Renishaw, which soared 15.2%, or 885p, to £66.85 as the engineering group put itself up for sale.
The founders, David McMurtry and John Deer, who own 53% of the company, announced they want to offload their stakes in the maker of high-precision healthcare instruments as they ‘recognise that neither of us is getting any younger’.
In investment trust news, blue chip trust Scottish Mortgage (SMT) added another day of gains after last week’s tech sell-off, ticking 1.9% higher to £12.08
RIT Capital Partners (RCP) jumped 0.9% to £21.10 on the back of its annual results that reported a net asset value return of 16.4% for 2020, beating the MSCI World index as it benefited from growth in its technology bets in both Asia and the US.
Target Healthcare Reit (THRL) jumped 0.5% to 111p after an oversubscribed fund raise that saw the care home investor bolster its coffers by £60m.