UK FTSE 100 Feels Post-Holiday Blues as the Japanese Yen Tumbles

It was a quiet start to the week for the UK markets, with no major stats for the markets to consider this morning.

The lack of stats left the markets to rue economic data from China and the battle to curb the latest COVID-19 breakout.

In Q1, the Chinese economy grew by 1.3%, at a slower pace than 1.5% in the previous quarter.

While year-on-year, the economy grew at a faster pace, industrial production and fixed asset investments pointed to further weakness ahead.

In March, industrial production increased 5.0% year on year, down from 7.5% in February. Fixed asset investments rose by 9.3%, down from 12.2% in February.

Weak numbers from China, the latest lockdown measures, and the war in Ukraine weighed on riskier assets going into the open.

The current environment supports further supply chain disruption that would push input and output prices higher. Such an eventuality would force central banks to take more aggressive measures to tackle inflation.

Market Impact

At the time of writing, the FTSE100 was down 0.39% to 7,585.32. Despite the negative sentiment towards growth, mining stocks were up this morning to limit the damage.

Antofagasta was up 1.58%, with Anglo American (+0.82%) and Glencore (+1.08%) also providing support. Rio Tinto bucked the early trend with a modest 0.27% decline.

Things were not much better for the European majors after the holidays. The CAC40 and the DAX were both down 0.53%, with the EuroStoxx600 sliding by 1.11% early in the session.

Rising Treasury yields are doing the early damage, with the Japanese Yen down 1.06% to ¥128.34 against the dollar this morning.

USDJPY 190422

It was a better start to the day for the Pound despite Boris Johnson’s COVID-19 party woes and some tough questions to answer in Parliament.

At the time of writing, the Pound was up 0.11% to $1.30289. Early in the session, the Pound hit a morning high of $1.03410 before easing back.

Cable 190422 Hourly Chart

Looking at the crosses, the Pound has jumped by 1.25% to ¥167.333 against the Japanese Yen.

GBPJPY 190422