Earnings, China worries drag FTSE 100 to 3-month low

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By Pranav Kashyap

(Reuters) -London’s benchmark index hit its lowest point in over three months on Tuesday, fuelled by concerns that U.S. president-elect Donald Trump could appoint a China hawk as a leading diplomat, along with some disappointing corporate updates.

The blue-chip FTSE 100 closed down 1.2%, its lowest level since Aug. 6.

Industrial metal miners fell 5.2% as copper prices hit a two-month low, on worries about the impact of Trump’s policies on the economy of top metals consumer China. [MET/L]

China-linked assets came under pressure worldwide on anticipation Trump would appoint U.S. Senator Marco Rubio, considered the most hawkish contender on his shortlist, as secretary of state. [MKTS/GLOB]

“Despite the initial excitement upon the election result last week, investors are starting to realise that Donald Trump’s ideas could drive up inflation, make life tough for foreign companies selling into the U.S., and raise geopolitical risks,” said Russ Mould, investment director at AJ Bell.

“It creates the kind of uncertainty which markets hate.”

On the domestic front, data showed UK regular wage growth fell in the third quarter to its lowest in over two years, potentially boosting the Bank of England’s confidence that inflation pressures will continue to ease.

Average weekly earnings, excluding bonuses, were 4.8% higher in the three months to the end of September, down from 4.9% the month before and nearly 8% a year earlier.

The FTSE 350 personal goods index led sectoral declines, falling 5.2%, as Burberry extended declines by 6% from the previous session, after Reuters reported Moncler is not in talks to take over the luxury brand.

Vodafone fell 8.2% to the bottom of the FTSE 100, after the mobile operator reported a sharp downturn in top market Germany in its second quarter.

Convatec Group surged 22% after the medical products and technologies firm raised its full-year organic sales growth.

The mid-cap FTSE 250 lost 1.4%.

Drax Group climbed 3.8% as the power generator forecast annual core earnings around the top end of estimates.

(Reporting by Pranav Kashyap and Sruthi Shankar in Bengaluru; Editing by Vijay Kishore and David Gregorio)