Beijing comes to rescue the LSE

05/20/2022 | 05:03am

The big selloff on Wall Street, sparked by worries over the impact of inflation as Target and Walmart posted lower-than-expected results, spread to the UK. Investors were already reeling from the release of data showing inflation reached 9% in April in Britain. Commodity stocks limited losses and the FTSE 100 ended 1.82% lower yesterday.

Investors worry that it may get worse this year. In a note, Berenberg puts a 40% risk on a recession in the UK (15ppt of a mild downturn, 25ppt of a severe recession).

But in the midst of all this, good news from China gave the LSE a boost. The FTSE 100 was up 1.8% this morning after Beijing cut its five-year loan prime rate 15 basis points to 4.45% to support a weakened real estate sector and boost economic growth.

Stocks that are exposed to China, such as insurer Prudential and mining stocks, are lifting the blue-chip index.

 

Things to read today:

China cuts mortgage lending rate by record as lockdowns hit economy (Financial Times)

Fed to Plow Ahead on Half-Point Hikes, Undeterred by Stock Slump (Bloomberg)

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