FTSE dips on China import data but then turns around

Although China’s economy is to a large extent showing a recovery after the pandemic, import numbers are remaining stubbornly low.

Charts (1)

Although China’s economy is to a large extent showing a recovery after the pandemic, import numbers are remaining stubbornly low. With a large percentage of China’s imports being used in products that are eventually exported, exports are likely to slow down too over the months ahead. This is not good news for companies with a significant China focus which are already hurting from a decline in domestic sales.

London opened a touch lower on the news and was further weighed down by a decline in AstraZeneca and Smith & Nephew, but then reopening optimism took over and the index started turning around.

Travel industry shares were the best performers, with cruise operator Carnival leading the pack. 

On the surface of things airlines should still be struggling as the controversial two-week quarantine rule kicks off today and is expected to stop hundreds of thousands of travelers going abroad for a summer holiday. But investors seem to take the same view as Ryanair boss Michael O’Leary who called the rule a political stunt that will be unenforceable.

AstraZeneca merger likely to hit hurdles on both sides of the pond

With the pharma industry now embroiled in a frantic search for a coronavirus solution it was only a matter of time before a major merger and acquisitions situation occurred. Over the weekend AstraZeneca made that approach, proposing to merger with US drug maker Gilead Sciences in a deal worth potentially $240bn. However, the deal is likely to run into opposition on both sides of the pond, with the US unlikely to be willing to give up domestic control over a developer that can find a solution not only for COVID but also for other potential future outbreaks, the same being the case on the British side of the deal.

Build your confidence risk free

More from Indices

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.