The FTSE 100 fell just short of its record highest close on Monday night and was treading water on Tuesday after Chinese fourth quarter growth figures showed the impact Covid had on the world’s second largest economy.
AJ Bell investment director Russ Mould said: “China has particular influence over the FTSE 100 thanks to a heavy weighting for commodity stocks of which the country is a rapacious consumer. Rio Tinto’s latest update saw the miner warn of potential supply chain issues and labour shortages in China.
“This runs counter to the narrative that a reopening of the Chinese economy would help to improve the flow of goods in and out of the country and reduce disruption, but Rio’s warning suggests that in the short-term surging Covid cases will bring their own difficulties.
“China’s 2022 growth may have been no worse than expected but it was still the slowest pace since the mid-1970s as Covid restrictions took their toll – and that’s before you factor in the suspicion in some quarters that China doesn’t always paint the full picture with its official data.”