FTSE begins the week in the red

The FTSE 100 has continued lower this morning after ending last week on the back foot, with mining stocks leading the losers. Market rumours from the far east that the Chinese central bank are taking steps to halt the rapid expansion of credit seen over the past few months has raised up a notch the level of skepticism which has met the recent rally in commodities, leaving Miners Anglo American, BHP Billiton and Rio Tinto beginning the new week deep in negative territory.

Chinese credit squeeze

Overnight, unidentified bank sources have supposedly stated that the People’s Bank of China (PBOC) are demanding that banks limit their April loan creation book to 70%, in a move to stem the recent record high growth rate of Chinese credit. It has been widely acknowledged for sometime that the level of activity in the world’s second largest economy is slowing, and the recent surge in credit alongside declining growth is worrisome, suggesting that if this lending boost is tapered off then the landing for the Chinese economy will be harder than many had previously hoped.

German data misses expectations

Also contributing to the selling pressure this morning has been the latest economic release from Germany, with an IFO survey of businesses showing lower than forecast operating conditions.
Following Friday’s report that the nation’s manufacturing and services sectors cooled slightly in April the miss in expectations for business conditions shouldn’t be too surprising, but nonetheless it has added to a sombre mood so far this morning.

BHS to file for administration

High street retailer BHS has announced that it will begin bankruptcy procedures after the collapse over the weekend of a deal regarding a possible buyout from Sports Direct. Almost 11,000 jobs are at risk after the 88 year old firm made the announcement this morning, and with 164 stores possibly being closed it represents another blow to the British high street. The retailer’s woes are nothing new, with legendary retail entrepreneur Sir Philip Green deciding to cut his losses last year in a deal that saw him offload the business to Retail Acquisitions for a token £1, and the problems essentially stem from a failure to embrace change in a dynamic trading environment that has seen more nimble players such as Primark and Zara overtake them in recent years.