Sector movers: China drives commodity related equities down

Commodities drove a number of key sectors down on Monday, as analysts started to crunch the numbers from China.

The FTSE 100 closed down 25.71 points (0.40%) to 6,352.33, while the FTSE 250 gained 24.64 points (0.15%) to end the day on 16,917.34.

China’s National Bureau of Statistics said gross domestic product rose 6.9% in the third quarter - the worst rate of growth since the first quarter of 2009. On top of that, Chinese industrial production rose 5.7% in September, missing economists’ expectations of a 6% gain, while retail sales were up 10.9%, a touch ahead of the 10.8% increase expected.

“Overall, we see some nascent signs of growth stabilisation in the non-financial sector driven by fiscal stimulus but no evidence of a durable rebound in the coming months,” said Nomura.

“We continue to expect moderate fiscal stimulus from the central government and continued monetary easing, with one more bank reserve requirement ratio cut in the fourth quarter and another four in 2016 (each by 50 basis points), together with two more benchmark interest rate cuts (each by 25bp) in 2016.”

Base metals declined on the LME’s three-month futures contract including copper (-0.5%), lead (-0.7%), nickel (-0.7%), tin (-0.6%), zinc (-0.9%) and primary aluminium (-0.3%). That sent the industrial metals and mining sectors down, led by Anglo American, Glencore, Fresnillo and Antofagasta on the FTSE 100 and Kaz Minerals, Evraz and Vendata Resources on the FTSE 250.

Oil prices also had an impact on the market. Brent crude futures fell 2.5% to $49.21 per barrel and West Texas Intermediate was down 1.8% to $46.39 per barrel at 1534 BST. Along with slower growth in China, reports of a possible nuclear deal between the West and Iran this year weighed on the sector.

As a result the oil equipment, service and production sectors dropped, with both sets of Royal Dutch Shell shares taking a hit on the FTSE 100, and Nostrum Oil & Gas, Premier Oil and Tullow Oil on the FTSE 250.