Market volatility and China woes persist

Market volatility and China woes persist

Investors were watching the markets this morning after a day in which the FTSE 100 fell below 6,000 points and the commodity industry took a punishing.

The UK’s blue chip index closed at 5,935.84 after a day in which commodity names including trader Glencore suffered heavy falls, and at a time of persistent concerns about a Chinese slowdown.

The market woes were followed by news this morning that the Caixin Flash China General Manufacturing PMI, reflecting industry activity, had hit a 78-month low.

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Jason Hollands, a managing director at private client investment manager Tilney Bestinvest, said: “Fears about the slowdown in China’s rate of economic expansion remain firmly at the epicentre of equity market weakness as China, the world’s leading manufacturing economy for two decades and a voracious consumer of raw materials, is the key lever in setting demand for commodities.”

He also warned that it was “impossible” to tell how long the recent market volatility could last, adding: “Long-term investors need to have thick skins in times like these. The brunt of this volatility will be felt by those in index tracker funds, which are fully exposed to the mining and oil and gas sectors.

“We think funds focused on more domestically skewed businesses should prove relatively more defensive, but are unlikely to be immune from indiscriminate selling.”