The UK’s FTSE 100 index experienced a notable increase of 0.26% at the closing on Tuesday, driven by a wave of optimism surrounding China’s recently unveiled stimulus measures aimed at reviving the world’s second-largest economy. Investors are reacting positively as these measures are designed to inject liquidity and support sectors crucial for economic growth. The comprehensive stimulus package announced includes significant reductions in the People's Bank of China's seven-day repo rate, loan prime rates, and medium-term lending facility rates.
This proactive approach from policymakers comes in light of the persistent challenges faced by China's property market. Specifically, the government has signaled its intent to cut mortgage rates alongside additional strategies intended to strengthen the housing market. Given this backdrop, analysts foresee an uptick in demand across several sectors, particularly in luxury retail and commodities.
Consequently, mining stocks have emerged as leaders in this market rally, significantly contributing to the blue-chip index's performance. Among the most notable players in this session were Antofagasta and Anglo American, which posted impressive gains of 6.99% and 6.53%, respectively. Conversely, Smiths Group faced the steepest decline of the day, falling by 5.22%.
The British industrial technology firm is navigating challenges as it implements a group-wide acceleration plan that targets fiscal years 2025 and 2026, aiming to enhance both profitability and productivity. The company has set ambitious goals to realize annualized benefits ranging from 30 million to 35 million pounds sterling by 2027.
Additionally, it reported a modest EBITA shortfall for the fiscal year ended July 31, 2024. In the words of RBC Capital Markets, "The new cost plan indicates a focus on margin improvement, an area where progress has been limited. Shares trading at a price-to-earnings ratio of 17.5x24E align broadly with our coverage in the pan-European market; we maintain a Sector Perform rating and a price target of 1,750p.".