On a Friday in mid-July 2022, London's blue-chip index climbed modestly, yet it still stood to end the week lower, as it so often does when distant pressures gather faster than local comfort can absorb them. The unease had two roots: a Chinese economy dimmed by lockdowns that had stalled demand across Asia, and central banks poised to tighten money in order to tame prices that had risen far beyond ordinary patience. Burberry, whose fortunes depend on Chinese shoppers, offered the clearest picture of how a distant slowdown reaches a British company's share price. The wider story is an old one,
FTSE 100 Edges Higher but Heads for Weekly Loss as China Slowdown and Rate-Hike Fears Weigh
Mainland China is acting as a serious drag for the group
Mark
The index rose on Friday, yet it's still heading for a weekly loss. How do both hold?
Mimi
Friday's 0.6% gain was a bounce, led by Shell and British American Tobacco. The week as a whole was weighed down by rate fears and China.
Luke
Worth noting the source doesn't say how large the weekly loss is. We know the direction, not the size.
Mark
Why did Burberry take such a hit?
Mimi
Its first-quarter comparable store sales rose just 1%, and China is its biggest market. The shares fell 5.8%.
Luke
That's the company's figure and the analyst's reading. Lund-Yates calls China a serious drag, but the report doesn't break out how much of the shortfall is lockdowns specifically.
Mark
And the rate story?
Mimi
Ramsden said rates will very likely need to go up further. Investors priced roughly an 83% chance of a half-point hike on Aug. 4.
Luke
That 83% is market pricing, not a Bank decision. And the Fed's move is only feared, not announced.
Mark
Any bright spots?
Mimi
Aston Martin rose 15.3% after Saudi Arabia's sovereign wealth fund became its second-largest shareholder and it said it aimed to raise 653 million pounds.
Luke
Note the wording: it's looking to raise that sum. It's not yet raised.
O Pulso
- The FTSE 100 rose 0.6% on Friday, but a weekly loss still loomed over the London trading floor.
- Burberry shares fell 5.8% as lockdown-hit Chinese demand undercut its first-quarter sales, rippling through markets already jittery.
- Asian stocks slid to a two-year low, dragging sentiment in London and across global investors.
- Traders bet on an 83% chance of a rare half-point Bank of England hike on August 4, while the Federal Reserve's next move hangs over every trade.
- Fevertree plunged 24.4% after cutting its profit forecast, while Aston Martin leapt 15.3% on news of Saudi investment, showing how sharply fortunes diverge.
On a Friday in mid-July 2022, London's blue-chip index climbed modestly, yet it still stood to end the week lower, as it so often does when distant pressures gather faster than local comfort can absorb them. The unease had two roots: a Chinese economy dimmed by lockdowns that had stalled demand across Asia, and central banks poised to tighten money in order to tame prices that had risen far beyond ordinary patience. Burberry, whose fortunes depend on Chinese shoppers, offered the clearest picture of how a distant slowdown reaches a British company's share price. The wider story is an old one, in which global strain arrives quietly at the ledger and is felt first by those whose livelihoods lean on faraway markets.
London's blue-chip index finished the week on a steadier footing than it had spent most of it. On Friday, July 15, 2022, the FTSE 100 rose 0.6%, supported by Shell and British American Tobacco, while the domestically focused FTSE 250 gained 1%. Even so, both were heading for a weekly loss.
Two fears weighed on the market. Lockdowns across China were dragging its economy into a sharp slowdown, pushing Asian stocks to a two-year low, and investors also dreaded aggressive interest rate rises from the Federal Reserve and the Bank of England. Deputy Governor Dave Ramsden had signalled further increases, and markets priced roughly an 83% chance of a half-point hike on August 4.
Burberry showed the human cost most plainly. Its first-quarter comparable sales rose just 1%, and weakness in mainland China, its largest market, sent its shares down 5.8%. Other names moved in their own directions: Rio Tinto slipped 2.7% on warnings about labour shortages and inflation, and easyJet fell 1.2% after a downgrade.
The sharpest fall belonged to Fevertree, whose shares dropped 24.4% after it cut its annual profit forecast. Aston Martin surged 15.3% when Saudi Arabia's sovereign wealth fund became its second-largest shareholder, and it moved to raise 653 million pounds.
The next markers are the Fed's decision later this month and the Bank of England's August 4 call, with China's lockdown-hit demand still shaping results across exposed companies.
London's blue-chip index finished the week on a better note than it had spent most of it. On Friday, July 15, 2022, the FTSE 100 rose 0.6%, held up by energy giant Shell and British American Tobacco. The more domestically focused FTSE 250 did slightly better, gaining 1%. Even so, both indexes were on course for a weekly loss.
Two worries accounted for that. One was the prospect of aggressive interest rate rises. The other was a sharp slowdown in China's economy, where widespread COVID-19 lockdowns were dragging on growth. Asian stocks had hit a two-year low, and that weakness fed into sentiment in London.
Burberry showed the cost most clearly. The luxury brand reported first-quarter comparable store sales growth of just 1%, and the shortfall in China, its biggest market, pushed its shares down 5.8%. Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said mainland China was acting as a serious drag on the group, one that was overshadowing successes elsewhere.
Rate policy was the second source of pressure. Investors feared a big move from the U.S. Federal Reserve later in the month to curb soaring prices. At home, Bank of England Deputy Governor Dave Ramsden said on Thursday that interest rates would very likely have to rise further to prevent a repeat of persistent inflation. Markets were pricing roughly an 83% chance that the Bank would announce a rare half-percentage-point increase on Aug. 4.
Beyond Burberry, company news pulled shares in several directions. Rio Tinto slipped 2.7% in London after the global miner warned that labor shortages and soaring inflation would hurt its earnings in the second half. EasyJet fell 1.2% after J.P. Morgan downgraded the low-cost carrier to "underweight".
The sharpest fall came from Fevertree. The tonic maker dropped 24.4% after cutting its annual profit forecast, citing worsening cost pressures and logistical issues.
Aston Martin went the other way. Its shares jumped 15.3%, the top performer on the midcap index, after the luxury carmaker said Saudi Arabia's sovereign wealth fund was becoming its second-largest shareholder. The company also said it was looking to raise 653 million pounds, about $771.58 million.
The next markers are the Fed's move later this month and the Bank of England's Aug. 4 decision, with China's lockdown-hit demand still shaping results at companies exposed to it.
Citações Notáveis
Mainland China is acting as a serious drag for the group, which is overshadowing successes elsewhere.— Sophie Lund-Yates, equity analyst, Hargreaves Lansdown
Interest rates will very likely have to rise further to stop a repeat of persistent inflation.— Dave Ramsden, Bank of England Deputy Governor (paraphrased)
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Economy & Finance