London Stocks Rise as China Ramps Up Stimulus; Oil Shares Slump

London’s FTSE 100 advanced on Thursday, buoyed by strong gains in mining and luxury goods companies after China pledged further stimulus measures to bolster its flagging economy. However, a sharp decline in energy stocks tempered the overall market gains.

China’s commitment to deploying “necessary fiscal spending” to achieve its economic growth target of around 5%, coupled with its earlier aggressive central bank easing measures and potential capital injections into major state banks, has rekindled hopes of a demand recovery in the world’s second-largest economy.

The news injected renewed optimism into the markets, particularly boosting sectors heavily reliant on Chinese demand. The index tracking industrial metal and mining companies surged 4% as copper prices rallied, reflecting anticipation of increased infrastructure and construction activity in China.

Luxury goods companies, heavily reliant on Chinese consumer spending, also saw significant gains. Burberry’s shares, for instance, climbed 6.5% on hopes of a rebound in Chinese luxury purchases.

However, the energy sector faced headwinds as oil prices slumped more than 2%. This decline followed reports that Saudi Arabia, a leading oil producer, is preparing to abandon its informal $100 per barrel price target in anticipation of increased output. The index tracking oil and gas companies on the FTSE 100 fell 4% in response to the oil price drop.

In other notable moves, Watches of Switzerland saw its shares jump 4.7% following a rating upgrade from Deutsche Bank.

Looking ahead, investors are focusing on upcoming speeches from Federal Reserve officials, including Chair Jerome Powell, for further guidance on U.S. monetary policy.

On the domestic front, a recent survey from the British Retail Consortium revealed growing consumer pessimism in the UK, fueled by concerns over rising living costs and the potential for tax increases in the upcoming budget. This news suggests that the UK economy remains vulnerable to headwinds despite positive global developments.