FTSE Hits 3 Week Low on Weak Chinese Data

The FTSE 100 fell to a three week low after Chinese factories shrank for what was the 14th consecutive month, leading investors to lose faith in the health of the global markets. Jasper Lawler, of CMC Markets, noted that UK investors have once again followed the mantra of “Sell in May and Go Away”, coming back from the Bank Holiday Weekend to shed assets. The markets have just recovered from the weak start to the year, but that recovery is now halting because of the seasonal weakness that tends to happen in May.

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shareprices.com - Tuesday, May 03, 2016

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Miners and oil and gas companies were some of the weakest performers. Tullow Oil made some significant losses after Goldman Sachs cut the company’s rating to Neutral on the back of its recently announced plans for two pipelines that will be in East Africa. The bank is concerned that the capital expenditure from those projects may eat into the company’s cash flow in 2018.

Goldman Sachs cautioned that Tulow’s share price is already sensitive to the movement of oil prices, and that the company’s outperformance could continue. Shares had jumped by 70 percent over the course of the year.

Meanwhile, gold miner Centamin put in a strong performance- after a big focus on productivity the company has increased its profits by 42 percent for this quarter - successfully both cutting costs and increasing its output. The company reported pre-tax profits of $40.9 million for the last quarter, up from $28.6 million for the same period last year.

 

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