The UK’s leading index had staged a dramatic recovery a few days previously, as worries about the strength of the Chinese economy appeared to be fading, however trading conditions remain turbulent. According to the latest economic figures coming out of China, the PMI had fallen to 49.7, from 50 in July. A figure below 50 indicates market contraction.
Shares in mining companies in particular were hit hard, as China is a key importer of basic materials, and if their market is slowing down then this will be reflected in demand for minerals, oil and gas. Among the biggest losers fo the day were Glencore, who shed 10 percent, and Anglo American, who shed 7.6 percent.
Meanwhile, in the currency markets, the pound fell after the UK’s PMI data also came in weaker than expected. This raised questions as to whether the Bank of England would raise interest rates at some point in the near future. The pound fell by 0.3 percent against the dollar, and by more than a cent against the Euro.
Investors are now waiting for news about the latest market reshuffle, which is set to take place later in the week and will likely see Weir Group leaving the FTSE 100, to be replaced by Berkeley.