FTSE Rallies On Chinese Stimulus Hopes

After a brief stint in the red the FTSE has powered higher on Monday as risk on dominated.

After a brief stint in the red the FTSE has powered higher on Monday as risk on dominated, as the prospect of economic stimulus for China lifted the FTSE at the start of the week. 

Chinese GDP data showed that the economy grew by 6.2% its lowest level of growth in almost a decade. However, rather than depressing the market, hopes of stimulus for the world’s second largest economy have boosted risk appetite, lifting demand for riskier assets such as stocks.  Just as we are seeing with the US, the prospect of easing financial conditions is not being interpreted as bad news for stocks. Instead the prospect of cheaper borrowing in the case of the Fed and support from the PBOC is giving investors plenty of confidence to buy in. 

Miners gain
Miners are featuring on the FTSE leader board, with the likes of Antofagasta, Evraz and Anglo American all trading over 1.6% higher. The prospect of economic stimulus in China, the world’s largest consumer of metals is like Christmas come early for the miners.

House builders struggle on falling house prices
House builders dominated the lower reaches of the FTSE following Rightmove data showing that prices slipped by -0.2% year on year. Ongoing political and economic uncertainty means that potential homeowners are delaying the decision to buy a new property. With lingering Brexit uncertainty, the current political climate means that confidence, a crucial ingredient for a strong housing market, has been hit. As a result, both buyers and sellers are hesitating. The likes of Persimmon, Berkeley Group and Barratt Development traded over 1% lower.

FTSE levels to watch:

The FTSE is trading 0.4% higher on the day, snapping a 7 session losing streak. FTSE bulls will be looking for a move above 7550 to confirm a break out, prior to resistance in the region of 7625. On the downside support can be seen in the region of 7450, prior to 7375.

Build your confidence risk free
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.