Stark reality of China's lockdowns: Oil and FTSE 100 down


Perhaps somewhat surprisingly, trade figures released this week by the Chinese government have been enough of a disappointment to affect the price of raw commodities.

China is by far the most productive country on earth. Its massive population coupled to its might as the world's manufacturing center has propelled it into a league of its own to the extent that new cities which were only built between ten and fifteen years ago across the country are now home to between fifteen and twenty million people per city and it is not uncommon to see Rolls Royce cars and huge corporate headquarters dominating the streets and skylines as if these metropoli had hundreds of years of prosperity behind them.

China's massive output which feeds its own enormous domestic market as well as provides pretty much everything to the entire world is unsurprisingly the reason why it is the highest importer and consumer of crude oil in the world by a very long way.

Therefore, when figures in China are down, this is enough to affect the price of crude oil as a global commodity.

Rather unbelievably, the Chinese government, which operates a single-party, communist state in which the entire economy is centralized and has massive government involvement, is engaging in draconian lockdowns, something that has been going on for over two years now, with its obedient population complying to the letter.

Due to these lockdowns which are still taking place in several major cities, the year-on-year figures showing exports growth of 7.1% and imports up by just 0.3% in August were both below expectations.

The export growth is an important metric here, because importing anything other than raw materials into China (an activity which is supervised by the government), is against the law as it contravenes the communist ethos of the government.

Exporting products made for external markets is China's strength, and a slow growth of such a massive mainstay of the economy is an indictor that a bit less oil would be required if productivity is down.

The price of Brent crude was below $92 a barrel at the start of London trading this morning, which has had an effect on mining and exploration company stocks which are listed on the London Stock Exchange.

China’s worse-than-expected trade figures led specifically toward energy and mining stocks opening lower, leaving the FTSE 100 index down 78.76 points at 7221.68.

It's still above the 7220 mark, which is not a catastrophe by any means, but the lowering value of oil globally and energy company stocks on London's markets is an indicator toward how much of an influencer Chinese productivity is on global markets.

To put some actual figures on this, Rio Tinto lost 2.5% and Anglo American fell by just under 2%, while BP retreated 1.5% or 6.5p to 446.15p.

China therefore remains the world's most influential market and this serves as a reminder of its might, whether things are going well or not so well!

Trade global index CFDs with zero commission and tight spreads. Open your FXOpen account now or learn more about trading index CFDs with FXOpen.

Start trading commodity CFDs with tight spreads. Open your trading account now or learn more about trading commodity CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Indices

The S&P 500 Index Has Reached a Significant Resistance Level France Joins European Stock Boom as CAC 40 Index Heads for Highs The Hang Seng Index Has Risen by Over 13% in 2 Weeks UK100 Analysis: Stock Market Optimistic Ahead of Bank of England News London Calling! FTSE 100 Stocks Flying High Once Again

Latest articles


Coinbase (COIN) Stock Price Holds at Key Support Level

On Thursday, stock market traders were concerned about the sharp drop in Coinbase shares, listed on the Nasdaq, which fell by 9%. This was triggered by rumours that the Chicago-based CME Group is planning to launch cryptocurrency trading, posing a

What Is the Gold/Silver Ratio, and How Do Traders Use It?
Trader’s Tools

What Is the Gold/Silver Ratio, and How Do Traders Use It?

The gold/silver ratio, which measures the relative value of these two precious metals, is a vital tool for commodity traders. Understanding this relationship helps identify market trends and trading opportunities. This article explores how to calculate, analyse, and trade

Financial Market News

Weekly Market Wrap With Gary Thomson: S&P500, US Dollar, Gold Price, PEP Stocks

Get he latest scoop on the week's hottest headlines, all in one convenient video. Join Gary Thomson, the COO of FXOpen UK, as he breaks down the most significant news reports and shares his expert insights. Read the latest news

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.