Miners, oil drag London stocks lower after modest China rate cut

Britain’s main share indices fell on Tuesday, dragged down by miners and energy stocks as commodity prices took a hit following a smaller-than-expected interest rate cut by top consumer China.

The resource-heavy FTSE 100 slipped 0.3%, hitting a one-week low, while the FTSE 250 mid-cap index fell 0.6%. Copper prices dipped as China’s benchmark rate cuts failed to soothe investor concerns around the top consumer’s economic growth, dragging industrial metal miners 2% lower.

“Given expectations across the world whether China was going to see strong recovery post-COVID, it hasn’t really materialized that way,” said Daniela Hathorn, senior market analyst at Capital.com. “It’s likely that the authorities are concerned about growth, but they also don’t want to taunt inflation.”

China-exposed insurer Prudential slipped 2.5%. Heavyweight energy stocks lost 1.1% as oil prices trickled lower, while precious metal miners also responded negatively to lower gold prices, down 1.4%.

Investor focus will now shift to domestic inflation data due Wednesday, to assess the state of economy, leading up to the Bank of England’s policy decision on Thursday, with traders widely expecting another 25-basis-point hike. Meanwhile, industry data showed British grocery inflation eased slightly for the third month in a row in June.

The personal care, drug and grocery stores index gained 0.5%. Shares of engine maker Rolls-Royce rose 2.1% to a one-month high. It was among top gainers on the FTSE 100 after CEO Tufan Erginbilgic said the company did not rule out future partnerships in the narrowbody airplane market.

U.S. Federal Reserve Chair Jerome Powell’s semi-annual monetary policy testimony on Wednesday will also be on the watchlist, after the central bank projected more rate increases this year following a pause last week. Among other movers, Lookers jumped 33.9% as Global Auto Holdings is set to buy the British car dealership chain for about 465.4 million pounds (about $595 million) in cash.

Ocado Group lost 2.5% after several brokerages cut their target prices for the online supermarket and technology firm’s stock. ($1 = 0.7849 pounds)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)