UK Market Comments

Heading into the close the FTSE 100 is down 70 points as a growth warning from Beijing shakes natural resource stocks to the core.

UK markets

In London, the FTSE 100 is off 1% as the mining stocks go into meltdown. China delivered a thinly veiled growth warning overnight which has sent the mining stocks into a tailspin, and traders are preparing themselves for terrible manufacturing figures from HSBC's survey of Chinese manufacturing tomorrow. If Tesco is trying to gain market share and credibility it is going about it the wrong way. The supermarket has admitted it may have overstated its profits by £250 million, and traders have lost respect for the company.Now that the element of doubt has entered the equation it is no wonder the stock has crashed through the £2 mark.

US markets

In the US, the Dow is trading at 17,213, down 66 points on the day. William Dudley of the New York Federal Reserve stated that the strong dollar may hurt US growth. He also pointed out that inflation isn’t at a level that warrants an interest rate rise, but the Fed decision will be data driven. Last week Alibaba got off to a flying start when it listed on the NYSE, but traders have pulled the rug from underneath it today and the stock is down 3% in early trading.

Commodities

Copper has dropped to a four-month low after Beijing gave a clear warning that it may not achieve its growth target for 2014. Adding to the pressure on the metal is the HSBC Chinese manufacturing survey due out tonight, and traders do not have high hopes for good figures. Gold’s performance has been anything but good; the precious metal has dropped to a nine-month low as chatter regarding an interest rate rise from the Fed picks up.

FX

Sterling has returned to stability now that the Scottish question has been put to bed. The pound is gaining momentum after taking a hammering during the past fortnight, and there is a sense that it is now safe to go in the water. The Australian dollar has been dragged to a six-week low as it pays the price for being too financially dependent on China. The shockwaves from Beijing can be felt down under, and traders will look to Glenn Stevens’ statement on Thursday as to whether Australian growth remains strong.