Market report: Chinese property woes and oil uncertainty drags FTSE 100 lower
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “There’s little spring in the step of the FTSE 100 at the start of the week. Commodity giants are on the back foot, as oil prices dip and the real estate house of cards in China engulfs a large lender. A lethargic mood has been settling in, after the Thanksgiving weekend, with Wall Street also set for a lacklustre session. US indices have roared ahead in recent weeks, amid euphoria that another rate hike looked unlikely, but now the ‘good news’ effect has dissipated a little. Investors will be waiting for fresh data on house prices and consumer confidence, which will be swirled around to find a reading as to when interest rate cuts could potentially come.
Cyber Monday spending
For now, consumers still appear to be flexing considerable spending muscle, according to early indications of Black Friday sales. Expectations are high for volumes on Cyber Monday, with signs that shoppers have ringfenced budgets to take advantage of the wave of deals. How these spending patterns will wash up overall isn’t clear, with the discount window for the promotional event even wider this year, and it could herald a weaker period in the run up to Christmas.
China’s property woes
China’s property sector troubles look increasingly intractable as one of its huge lenders is now mired in a criminal investigation after declaring insolvency. The real estate boom has turned into a slow motion bust, with companies facing spiralling debt problems, and malaise seeping deeper into the financial sector. Authorities are probing illegal crimes at Zhongi Enterprise Group, which saw the value of its assets collapse as property prices have spiralled downwards. The latest twist in this sorry property tale of super-speculation is likely to hurt wider confidence further, as it burrows deep into household perceptions of wealth.
Oil dips back
Oil prices stay under pressure amid concerns about China’s property woes and uncertainty over the potential for more production cuts, however producers appear split about such a tactic aimed at bolstering prices, with some African countries resisting a cut. Now, any decision on quotas has been pushed back even further, into early December, adding to suspicions that disunity continues. With oil stocks remaining at higher-than-expected levels, particularly in the US, there appears to be little upwards momentum for Brent Crude, which is hovering around $80 a barrel.”
