Concerns over the Chinese economy sent London’s FTSE indexes slightly lower on Tuesday morning despite a strong performance from Barclays.
The FTSE 100 dipped 0.08 per cent to trade at 7,722.16 while the FTSE 250, which is more aligned with the health of the domestic economy, dipped 0.28 per cent to trade at 19,163.89.
Caution gripped the air as investors continued to fret over the prospects of the world’s second largest economy, which has battled slowing growth, deflation and a real estate crisis over the past couple of years.
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China’s central bank slashes mortgage rates in high-stakes bid to revitalize property market
In an attempt to jumpstart its struggling property market, China’s central bank slashed the benchmark mortgage interest rate on Tuesday.
The People’s Bank of China announced a reduction in the five-year loan prime rate from 4.20 per cent to 3.90 per cent, surprising economists who had expected a median rate of 4.10 per cent based on a Bloomberg poll of 12 economists.
“The sharper than expected cut hasn’t done the trick of shoring up confidence yet. It’s concentrated minds on the collision of concerns about the economy, from real estate debts to deflation to falling foreign investment,” Susannah Streeter, head of money and markets at Hargreaves Lansdown said.
“Asian stocks dipped back again as worries continued about the economy, setting the scene for a lacklustre start to trading for the FTSE 100,” she continued.
The FTSE 100’s mining giants, many of whom are very dependent on Chinese demand for minerals, all fell in early trade.
The top riser on the FTSE 100 was Barclays, which climbed 5.6 per cent, after it announced plans to return around £10bn to shareholders by 2027.
Its profits for 2023 were £6.6bn, down from £7bn in 2022 but roughly in line with analyst expectations.
Alongside its 2023 results, it revealed that it would revise its corporate structure to comprise five new divisions, including retail banking, wealth management and investment banking. It aims to reduce costs by around £2bn by 2026.
Holiday Inn owner InterContinental Hotels Group (IHG) announced a new share buyback and hiked its dividend 10 per cent after a bumper year.
The group published its final results for the year today which showed a 23 per cent leap in operating profit for £809m. Total revenue at the British chain, which owns several affordable and high-end hotels, leapt £3.6bn.
Its shares remained largely unchanged, rising 0.7 per cent in early trade.