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Published On: Mon, Jun 24th, 2013

FTSE extends five month low, China plays on investors minds

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The FTSE 100 fell again today, reaching its lowest point since the turn of the year, as the economic climate in China continues to pull down the price of equities across the globe. Miners were once again on the wrong end of the scale as concerns for demand of metals used for production and manufacturing were at the forefront of the minds of investors.

With China seemingly about to enter a banking crisis of epic proportions and the nation’s central bank stating that banks will be held accountable for their own actions, Chinese equities crossed the line and entered a “bear market”. The situation was underlined when Goldman Sachs announced it had lowered its near to medium term growth forecasts for the world’s second-largest economy, raising something of a red flag for investors.

The FTSE 100, London’s blue-chip index, fell by 87.07 points, or 1.4 percent, closing the day at 6029.1 – a price not seen on the London Stock Exchange for the benchmark since the beginning of January. Many investors had been sidelined early in the day as they remain cautious after last week’s decline of 3.1 percent on the back of the Federal reserve’s announcement that they may begin tapering their $85 billion a month monetary stimulus before the end of the year, potentially bringing it to a halt by mid-2014.

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Manufacturing Suppliers Decline

Vedanta Resources PLC led the index in declines with a slip of 71.0 points, or 6.47 percent, closing at 1026.00. The copper mining specialist was without question the worst hit stock in the group, as copper prices hit a 20 month low key to the concerns around Chinese manufacturing. Croda International plc slid by 114 points, or 4.8 percent, to end the session at 2260.00. The company supplies manufacturers with a vast range of materials that are used in the manufacturing process and has seen its profit margin slide quite substantially over the last couple of years. This seemingly led investors to believe that the stock was weak and inspired a sell-off.

Just seven of the FTSE 100’s constituents made in advance today, however the only one to 2 reach a 1 percent increase was United Utilities Group PLC, which advanced by 6.500 points, or 1.00 percent, to close the day at 655.50.

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About the Author

- Gregory previously worked for a leading financial news publication and is now assistant news editor of financialtrading.com.

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