On Monday, UK’s FTSE 100’s index climbed, as drugmaker AstraZeneca recorded gains, as did consumer stocks.
This relieved the pressure on the index from oil and mining heavyweights, after data showed that there was an unexpected slowdown in the Chinese economy last month.
There was a 0.2% gain in the blue-chip FTSE 100 index, as it reached almost 10-week highs, while a 0.1% decline was seen in the midcap FTSE 250 index.
Investors are keeping an eye on the employment report, along with consumer price data in the UK, both of which are due later this week.
This will help them in gauging the state of inflation and the labor market.
The data could also provide clues about whether there will be a second straight 50-basis points increase in the interest rate by the Bank of England (BoE) in its meeting scheduled for September.
There was a 2.6% gain in AstraZeneca’s share price, after the drug maker’s disclosure about Enhertu, its cancer drug, which it has developed with Daiichi Sankyo in Japan.
According to the announcement, the progression of a form of advanced breast cancer amongst patients who have been previously treated can be delayed with the drug.
Mining companies like Anglo American and Rio Tinto and oil major Shell recorded declines, in light of the weakening commodity prices because of the release of disappointing Chinese data.
The mood in European and Asian markets also remained dull, as investors turned towards defensive sectors, such as consumer staples and healthcare.
This was because of worries over the health of the Chinese economy, which is considered the world’s second largest.
According to the latest numbers, industrial output, retail sales, and factory activity all faltered in the country in the month of July.
This prompted the People’s Bank of China (PBoC) to reduce its lending rates unexpectedly, which saw the yuan decline.
FTSE 100’s performance
The year has seen the UK FTSE 100 index outperform most of its global peers, thanks to its heavy exposure to commodity stocks, which have recorded a rise due to a jump in metal and oil prices.
Those in the index who generate income in dollars have also benefitted because of a weakening sterling.
Market analysts said that whether the trend would continue mostly depends on the performance of global energy stocks as compared to the broad market.
So far, the FTSE 100 index has recorded gains of 2% this year, while there has almost been a 13% decline in the MSCI index of world equities.
Market analysts have chosen to stay bullish where oil is concerned. It is expected that Brent crude prices will reach $110 per barrel by the end of the fourth quarter.
They also believe the prices will touch $117 per barrel in 2023, which would also benefit UK equities, as they remain commodity-heavy.
Monday also saw the British pound weaken yet again against the US dollar, as the latter strengthened after the release of the Chinese economic data.