By Patrick Munnelly, Market Strategist, Tickmill
The FTSE 100 index experienced a slip to start the week, primarily led by declines in mining stocks.
We’ve seen lower metal prices as a result of weak growth in China, the world’s second-largest economy. The FTSE 100, which has a significant concentration of commodity-related companies, has fallen by over 7% from its record high levels reached in February with today’s decline influenced by fluctuating oil and metal prices due to concerns about demand in China’s economy.
The second-quarter growth of China’s economy was feeble, with the post-COVID momentum deteriorating rapidly, increasing pressure on policymakers to implement further stimulus measures to support economic activity.
Industrial metal miners were particularly affected, experiencing a 1.8% dip as prices of most base metals faced downward pressure.
Global mining giants Rio Tinto LON:RIO and Glencore LON:GLEN suffered losses, declining by 2.4% and 2.7%, respectively, however, the bottom spot on the index today is Coca Cola HBC LON:CCH as the bottler shed 4% on the session.
Investor confidence in online grocery retailer Ocado LON:OCDO -2.3% has waned this year due to the company’s ongoing losses, putting pressure on the company to achieve profitability. Despite a projected 9.8% increase in income to £1.385 billion compared to last year, including a 3.3% boost from their partnership with Marks and Spencer LON:MKS, shareholders are growing impatient. However, if the forecasted adjusted EBITDA loss of £25.1 million is accurate, a significant rise from last year’s £13.6 million loss, it is likely to further dampen shareholders’ spirits. Ocado’s continued investment in automation technology and increased marketing budgets will continue to deplete its cash reserves, leading to an expected increase in net debt.
It is important to monitor any changes in Ocado’s forecasts, as the company aims for moderate annual revenue growth in the mid-single digits and a “slightly positive EBITDA.” Ocado plans to recover these losses in the second half of the year. It remains a potential target for takeover, which has caused its shares to surge since the lows of June.
On the positive side of today’s ledger is Natwest LON:NWG sitting on gains of 1.5% as investors cheer the announcement of Apple’s partnership with the UK high street bank as the iPhone maker rolls out tap to pay technology for UK businesses.
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