FTSE falls after weak Chinese trade data, Holiday Inn owner IHG sees profit rebound, Beyond Meat sales slump and Glencore hit by normalising commodity markets

“The Chinese economy continues to splutter and that’s bad news for a FTSE 100 chock full of companies which are closely tied to its fortunes,” says AJ Bell Investment Director Russ Mould.

“This time it’s trade data which has come in way short of expectations. China has been trying to move to being an economy driven by domestic consumption but the level of support provided to households during Covid and the country’s particularly stringent and long-lasting Covid restrictions didn’t match up to those seen in the West.

“Expecting a big wave of ‘revenge spending’ was always likely to be a forlorn hope. To compound matters a weakening global economy and geopolitical tensions with some of its trade partners will have done nothing for China’s export market. Miners and Asian-focused insurer Prudential are among the top fallers in London this morning.

“Holidays remain a priority as people continue to look to get away using their stretched finances and it feels telling Holiday Inn operator InterContinental Hotels expects a full recovery from the pandemic by 2025 as it reports a notably big increase in profit.

“The company’s franchise-based model means it can expand capacity to meet returning demand without requiring lots of fresh capital.”

Beyond Meat

“Highs above $200 seen in 2019 shortly after it joined the US stock market feel a long way off for plant-based meat substitute specialist Beyond Meat.

“After hours trading has pushed the shares below $14 as the company has reported an alarming drop in sales for its second quarter. The problem is its product is too expensive and people don’t really have the budget to look beyond the cheaper meat option right now.

“Question marks over the health credentials of its product and how processed it is are also a problem given a key driver for the increased adoption of vegan diets in recent years has been people looking to get healthier.

“Larger diversified food producers are also eating Beyond Meat’s lunch, launching their own plant-based products which, thanks to their scale, they can sell at more attractive price points.

“In its current state Beyond Meat looks an easier to swallow morsel for one of these competitors who may see continuing value in a brand which, after all, has an attractive supply agreement with fast food giant McDonald’s.”

Glencore

“If you wanted clear evidence that the resources market has normalised since the disruption created by Russia’s invasion of Ukraine last year then the halving of profit seen in Glencore’s results are it.

“The diversified mining and commodity trading company has also not been helped by a slower than expected post-Covid recovery in China – one of the world’s thirstiest consumers of resources.

“Glencore has dialled back its generosity in terms of shareholder returns – though some of this is about keeping powder dry for a potential deal to acquire assets from Canada’s Teck Resources after a long-running pursuit.

“The company’s interest in coal makes it stand out from a peer group which is increasingly looking to tie itself to the transition away from fossil fuels by supplying the materials required for a big expansion in renewables and electric vehicles.

“In this context a potential plan to combine its own coal assets with Teck’s and spin this off as a separate entity might be warmly received by the market.”

These articles are for information purposes only and are not a personal recommendation or advice.