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London open: Stocks slide as Chinese imports and exports contract
London’s FTSE 100 index declined early on Tuesday after Chinese trade data showed a fall in exports and imports in September, adding to worries about the country’s flagging economy.
Chinese exports decreased 3.7% in September from a year earlier in US dollar terms following a 5.5% drop in August, the General Administration of Customs revealed. Analysts had expected a 6% slide.
Imports plunged 20.4% last month, worse than the 15.9% dip predicted, after a 13.8% fall in August.
The trade balance, however, unexpectedly widened to $60.34bn in September from $60.24bn a month earlier when a surplus of $47.90bn had been forecast.
“Chinese trade figures have been a source of concern for some time now, with both dollar-denominated exports and imports having contracted for most of the year when compared to 12 months previous,” said Craig Erlam, senior market analyst at Oanda.
“The biggest concern is the huge decline in imports and while a large part of this can be attributed to the collapse in commodity prices and should therefore ease of in the coming months, there does also appear to be a domestic demand problem as well.”
The market is now switching its attention to UK inflation figures due at 0930 BST. The consumer price index expected to remain at 0% year-on-year in September, well below the Bank of England’s 2% target. On a month-on-month comparison, CPI is forecast to fall to 0% last month from 0.2% in August.
The BoE said the outlook for CPI in coming months looked weaker than it previously thought, according to the meeting minutes of its 8 September policy meeting. The central bank, which is taking inflation into close consideration in determining the timing of an interest rate hike, said CPI was unlikely to reach 1% until the spring of 2016.
Meanwhile, the BoE will at 0930 BST release its Credit Conditions and Bank Liabilities surveys, which are another key element in the Bank’s assessment of economic conditions.
In company news, SABMiller jumped after the brewer agreed to a possible £44 per share takeover offer from AB InBev.
Royal Mail was in the red on news the government has sold its remaining stake in the postal service group to professional investors.
Glencore was under the cosh as the mining continued to sell off assets, confirming the sales of mines in Australia and Chile.
Other mining companies, including Anglo American and BHP Billiton, edged lower as the price of gold, silver and copper fell following China’s trade data.
Oil stocks including Royal Dutch Shell, Premier Oil and Tullow Oil slipped after OPEC reported its September output rose to an average of 31.57 million barrels a day, up about 109,000 barrels a day from the previous month and above the group’s target of 30 million barrels a day.
