The FTSE 100 index fell 52 points to 10,781 on Thursday, driven down by a sell-off in the mining sector. The decline comes after a recent rally in metal prices lost momentum, with copper reaching record levels last week before retreating. Antofagasta, a major copper producer, was the worst performer, dropping 4.79% to 3,842p after cutting its production guidance due to severe weather in Chile that forced a mine shutdown. Other mining stocks also fell, including Rio Tinto, which dropped 4.08% to 7,217p, and Fresnillo, down 3.81% to 2,897p.
Economic Growth Data
Despite the decline in the FTSE 100, the UK economy showed signs of growth, expanding by 0.4% in the last quarter. This follows a trend of easing inflation, with consumer prices rising 3.4% in July, down from previous months. Traders are now awaiting the Producer Price Index (PPI) data, which is expected to provide further insight into inflation trends. A softer PPI could influence Federal Reserve policy regarding interest rates, with current expectations suggesting a 40% chance of a rate hike in September, down from nearly 50% the previous day.
Market Sentiment
Market sentiment remains cautious as traders digest the mixed signals from economic indicators. Elevated oil prices are also contributing to the negative mood, with prices falling over 5% amid geopolitical tensions. The market is particularly focused on upcoming economic data, including initial jobless claims, which will provide additional context following last week's disappointing employment report.
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The decline in the FTSE 100 is likely to impact mining stocks and related sectors, as falling metal prices and production cuts could lead to lower earnings forecasts. Investors will watch for the upcoming PPI data release, which could further shape expectations for Federal Reserve interest rate policy.
Based on reporting by: proactiveinvestors.co.uk