The FTSE 100 bounced back on Tuesday as the same oil and mining stocks which had driven the index lower yesterday recovered on hopes for an easing of China’s strict zero-Covid policy.
AJ Bell investment director Russ Mould said: “Oil prices were also being lifted by chatter around OPEC production cuts. The widespread protests across China against Covid restrictions seem to have drawn a carrot and stick response from the government. Police have been out in force to prevent further civil disobedience while news the country plans to ramp up booster shots for the elderly hint at a more pragmatic response to the pandemic.
“However, China has largely been reliant on less effective domestic vaccines and rates of vaccination are still a long way behind those in the West, while more successful containment of the virus means there is less natural immunity than in other parts of the world.
“As the shutdown at several car manufacturing sites across China shows, all the disruption is only likely to add to global supply chain woes.
“There is a flood of data coming from the US in the remainder of the week – PMI, core inflation and jobs data are all likely to be closely scrutinised by investors aiming to guess the next moves from the US Federal Reserve.”