European shares subdued, UK outperforms as China-exposed stocks jump

European shares were subdued on Wednesday, while UK’s FTSE 100 outpaced peers after a long Christmas holiday weekend as investors assessed Beijing’s steps towards reopening its Covid-battered economy.

The region-wide STOXX 600 (.STOXX) was flat as of 9:31 GMT, while the FTSE 100 advanced 0.7% as commodity-linked and China-exposed stocks jumped in early trading. The UK market, which was closed for holidays since its half-day trading on Friday, is playing catch-up, analysts said.

The FTSE 100 index has benefited this year from its exposure to commodities as prices of oil and base metals have rallied amid the Russia-Ukraine war.

“The UK index could end the year in positive territory despite the broad pressures on global equity markets, weighed down by rising interest rates, inflation, and the threat of recession,” said Victoria Scholar, head of investment at Interactive Investor.

Miners (.SXPP) jumped 1.0% as copper prices rallied on hopes of a demand recovery in the world’s second-largest economy after China further eased its stringent Covid curbs on Monday.

London-listed financials exposed to China such as insurer Prudential (PRU.L) and HSBC (HSBA.L) added 2.6% and 1.3%, respectively.

Meanwhile, STOXX 600 was headed for an annual loss of 12.2% as concerns about an economic recession due to aggressive monetary policy tightening by central banks globally weighed on the European index.

The technology sector (.SX8P) weighed on STOXX 600 on Wednesday, tracking the overnight fall in U.S. peers as rising yields pressured the interest rate sensitive shares, a recurring theme this year.

Tech shares have fallen nearly 28.4% so far in 2022.

Germany’s Infineon (IFXGn.DE) fell 1.1% amid broader tech moves and after Chief Executive Jochen Hanebeck said it is ready to spend several billion euros on the right takeover target as it searches for acquisitions.

Ireland’s stock market <.ISEQ>, which was also closed since its half-day trading on Friday, slipped 0.1%.

Traders and analysts said thin trading volumes also influenced market moves.