After US Federal Reserve chairman Jerome Powell eased the market’s concern about a tapering of support for the economy at Jackson Hole on Friday, investors have now gone back to fretting about the Covid recovery, says AJ Bell investment director Russ Mould.
“The FTSE 100 started a smidge lower after the Bank Holiday. Numbers out of China showed the first contraction in its services sector in 18 months and bore an uncomfortable echo of the beginnings of the pandemic.
“This time round it seems to be a combination of the Delta variant hitting China but also potentially the government’s crackdown on companies in the education and technology sectors.
“While the negative data will be kept in perspective for now, signs this is becoming a trend could spook investors and put further pressure on China-related assets and the commodities space.
“Oil prices are already under modest pressure ahead of an OPEC meeting tomorrow which may see the cartel agree to boost output while production affected by Hurricane Ida in the US has come back online.
“With few big corporate or economic announcements in the UK for the remainder of the week, the focus is likely to be on the US with PMI data and non-farm payrolls at the end of the week dominating proceedings.”