By Chris Dorrell
London markets were mixed on Thursday as a weaker pound lifted the FTSE’s major exporters despite concerns over the Chinese economy.
The FTSE 100 climbed 0.1 per cent to trade at 7,434.79 although the FTSE 250 remained in negative territory, down 0.1 per cent at 18,425.43.
The capital’s bluechip index was trading slightly higher after the pound continued to soften as investors bet the Bank of England is approaching the end of its tightening cycle. A weaker pound benefits many multinationals, who make the majority of their profits abroad.
Wider sentiment was subdued after imports and exports from the world’s second largest economy dropped in August, thanks to falling overseas demand and weak domestic spending.
Exports dropped 8.8 per cent while imports fell 7.3 per cent. Both falls were smaller than expected, but still indicate that the Chinese economy is struggling to rebound from the Covid lockdown.
“Demand for Chinese goods both inside and outside the vast country declined again, and even though the fall in imports and exports was lower than expected, the data yet again shines the spotlight on the slowing economy,” Susannah Streeter, head of money and markets at Hargreaves Lansdown said.
“It doesn’t look as though there will be much respite in the coming months without further stimulus to kick start spending,” she continued.
Investors were also concerned by data out yesterday which showed that the US services sector unexpectedly picked up steam, with the services PMI rising to the highest level since February. Economists are concerned this signals the risk of inflationary pressures.
Melrose soared to the top of the FTSE 100 after it forecast that annual profits would hit £1bn thanks an aerospace boom with boss Simon Peckham saying there was a “huge backlog of orders”.
Revenue climbed 19 per cent to £1.63bn while profits multiplied to £134m.
Beazley slumped to the bottom of the FTSE, falling seven per cent, despite notching record profits. The insurer’s combined ratio, a key measure of profitability, increased to 84 per cent – which shows that its margins are falling.
On the FTSE 250, Direct Line jumped nearly 16 per cent after announcing the £520m sale of its commercial insurance business to bolster its finances.
