After falling on the open, pulled down by Bunzl and the miners, the FTSE climbed higher across the session. A weaker pound and a mixed start on Wall Street lifted the index back towards a 6 month high and resistance at 7475 before falling back to break even
Miners were under pressure in early trade as concerns over the health of the Chinese economy hit metal prices. Economic growth of 6.4% in China was well received, however fears that it was not sustainable weighed on sentiment resulting in a mixed impact on the market. BHP also cut its iron ore production guidance in a third quarter trading update. Bunzl was the biggest drag diving 10% in the worst one day decline in three decades, as first quarter sales slowed.
China’s GDP beats estimates
China’s economy grew by 6.4% in the first quarter, retail sales and industrial production data also impressed easing fears over the health of the world’s second largest economy. Yet despite the strong data, investors are nervous that until there is a trade deal between the US and China these levels of growth could be unsustainable.
US Corporate earnings impress
Wall Street opened in a mixed fashion despite the Chinese growth figures and solid US earnings. Morgan Stanley and Pepsico rose after beating forecasts. Netflix was also up 0.5% despite a weak subscriber guidance. As investors digested, the latest batch of corporate earnings on Wall Street, the S&P hit a six-month high, however the Dow and the Nasdaq were unable to hold onto gains and slipped into the red.
Gold hits year to date low
With strong macroeconomic data releases from China and encouraging US corporate earnings demand for safe haven gold declined. Gold slumped to its lowest level since late December at $1273.04. As gold fell demand for the precious metal miners was also hit. Fresnillo traded over 2% lower.
Pound slipped as inflation stays steady
The pound dipped marginally lower versus the US dollar as UK inflation figures allow the BoE to sit on their hands for longer. UK inflation remained steady in March at 1.9%, below the central bank’s 2% target. The market had been expecting a stronger reading given the recent uptick in wages. With inflation below target and Brexit uncertainty remaining the BoE will be in no rush to start hiking rates.
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