The UK market struggled on Wednesday, as commodities dragged down shares amid fresh concerns that China’s economy is struggling. The Asian nation is the largest consumer of metals in the world. North Korea’s recent nuclear test also weighed on investor confidence.
Data from a private survey showed that China’s services sector expanded at the slowest rate in over a year in December. The People’s Bank of China also set the yuan midpoint 0.22% weaker.
The FTSE 350 Mining Index fell 2.5% after major mining companies like Rio Tinto (RIO), BHP Billiton (BBL), Glencore (GLEN), Antofagasta (ANTO), and Anglo American (AAL) fell between 1.1% and 3.8%.
The FTSE 100 lost 0.8%, dropping to 6093.23 points and underperforming the wider European market.
Gas and oil shares also retreated, with Royal Dutch Shell (RDS.A) losing 0.7% and BG Group (BG) falling 0.2%. Oil prices fell below $36 a barrel amid fresh fears of a growing oversupply.
ARM Holdings (ARMH), the chipmaker, also lost 3%, falling to its lowest level in two months after the announcement that Apple will likely cut production of its newest iPhone models by 30% in the coming quarter.
Meanwhile, the FTSE 350 Aerospace and Defence index saw gains of 0.6%. BAE Systems (BA) led the way, with a 1.8% gain on the day.