Shares of London-listed miners led U.K. stocks higher Monday as news of easing deflationary pressure in China bolstered hopes of improved demand from the world’s second-biggest economy.
Data released over the weekend showed China’s consumer price index rose 0.1% for the year to August, having fallen by 0.3% in July. Producer prices fell 3% over the year but that was less than July’s 4.4% contraction.
The readings imply an improvement in the commodities demand picture from China and provides a boost to the resources sector, according to Russ Mould, investment director at AJ Bell.
“The FTSE 100 has opened on the front foot with miners leading the pack amid hopes that China’s economic troubles could be dissipating,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
The U.K.’s benchmark
UK:UKX
came off those early session highs but was still gaining 0.1% as copper miner Antofagasta
ANTO,
rose more than 3%, while Anglo American
AAL,
Rio Tinto
RIO,
and BHP
BHP,
were all up between 2-3%.
The U.K. housebuilding sector was also in a better mood with Vistry Group’s stock
VTY,
jumping 14% after the company backed its full-year guidance, said it would pivot to the affordable housing sector and launched a £55 million ($69 million) share buyback program. Recently hard-hit peers such as Persimmon
PSN,
Taylor Wimpey
TW,
and Barratt Developments
BDEV,
were up about 2.5% each.
“[T]he need for more affordable housing doesn’t go away because economic conditions look tough. This provides large fixed-volume projects which should hold up better in a downturn,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
Germany’s DAX 40
DX:DAX
added 0.3% and the CAC 40
FR:PX1
in France rose 0.2% as the banking sector saw gains.
Meanwhile, the euro
EURUSD,
was little changed at $1.0718 after the European Union downgraded growth expectations. Weak domestic consumption and flagging global demand meant the 20-member bloc should book growth of 0.8% this year and 1.3% in 2024, revised down from previous estimates in May of 1.1% and 1.6%, respectively, according to the European Commission.
German government bonds shrugged off the downbeat assessment, however, with 10-year yields
BX:TMUBMUSD10Y
adding 2.2 basis points to 2.634% as global fixed income markets reacted to hints from the Bank of Japan that it may soon exit its negative interest rate policy.
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