By Worries about deeper cracks appearing in the Chinese property sector kept the FTSE 100 on a losing streak in early trade, as concerns continue to swirl about the health of the world’s second largest economy.
Problems are piling up at real estate giant Country Garden, which not only warned of multibillion-dollar losses, but also missed key interest payments on its debt and is suspending trading on 11 of its onshore bonds.
There had been high hopes that stimulus from the Central Bank might bolster the fragile state of the sector, but policies have underwhelmed investors and have failed to quell continuing troubles across the property landscape which risk spreading to other sectors.
Fresh uncertainty about what lies ahead for the Chinese economy and expectation of lower demand for energy in the vast country has prompted falls in oil prices, with Brent Crude dipping below $86 a barrel after a run of gains since late June.
That’s put pressure on oil giants BP and Shell in early trade, while miners also fell back amid forecasts of lower demand for metals.
Sentiment is likely to hinge on Tuesday’s data sets on industrial production, employment and retail sales with investors anxious to see if deflation risks becoming embedded in the economy, after consumer prices fell in July.
Fresh ire is being directed towards Northumbrian Water after reports that the company sharply increased dividend payments to overseas investors and also gave its chief executive a 65% increase in her bonus.
The payouts came even though the firm sank to a loss, was named as one of six worst performing companies by Ofwat, and discharged sewage into bathing waters for 963 hours last year.
The payouts appear to have been made possible by a sustained bout of financial engineering of increasing debt which in turn has wiped out profits and helped trigger a rebate from the regulator.
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