News Column

Good news from China and UK boosts FTSE

June 3, 2014


Miners helped push the FTSE 100 Index higher as traders welcomed positive economic news from the UK and China.

Expectations that the European Central Bank (ECB) will unveil a series of measures this week aimed at stimulating the region's economy also aided progress.

The FTSE 100 Index was 19.6 points higher at 6864.1, with Anglo American up more than 2% - or 34p to 1491.5p - and Rio Tinto 63p stronger at 3120p as oil and commodity prices rose on hopes of rising demand from China.

This was fuelled by new figures showing factory activity in the country expanded at its fastest pace in five months during May, suggesting that the slowdown in the world's second-largest economy is stabilising. UK manufacturers are already well advanced on the recovery trail as figures from the closely watched CIPS/Markit purchasing managers' index survey for May gave a reading of 57 - with 50 separating growth from contraction.

The update boosted the pound against the US dollar and euro - to 1.68 and 1.23 respectively. Pressure on the single currency intensified on the back of disappointing manufacturing output figures, adding to pressure on ECB policy makers to deliver stimulus measures at their meeting on Thursday.

It is thought they could impose a negative deposit rate - effectively a charge for holding money - in order to stimulate lending to businesses and consumers.

Germany's Dax, France's Cac 40 were broadly flat, as was the Dow Jones Industrial Average at the time of the close in London.

In the FTSE 100, Barratt Developments was more than 1% higher - up 4.4p to 361.6p - after Goldman Sachs raised its stance on the housebuilder to buy.

It said housing market data remains positive and that a recent slide in the company's share price offered a buying opportunity. Other building stocks were on the front foot, with Berkeley up 45p to 2300p and Persimmon 10p higher at 1348p.

Standard Life was one the biggest fallers in the top flight as Bank of America Merrill Lynch said the proposed introduction of collective pension schemes in the UK added more uncertainty for investors. Shares were 6.7p lower at 393.3p.

And Tesco fell 3p to 300.55p amid speculation that the supermarket chain will report more disappointing sales figures in a first quarter trading update tomorrow. Analysts at Barclays expect like-for-like sales will be down 4.1%, an acceleration on the 2.9% slide the retailer posted in the fourth quarter of the 2013/14 financial year.

The biggest risers were Coca-Cola HBC up 46p at 1418p, Royal Mail up 14p at 526p, Anglo American up 34p at 1491.5p and Ashtead up 19.5p at 900p.

The biggest fallers were Sainsbury's down 7p at 339.1p, Smith & Nephew down 19p at 1027p, Standard Life down 6.7p at 393.3p and Morrisons down 3.1p at 198.6p.

The Dow and the S&P 500 finished at record highs again on Monday after a closely watched read on U.S. manufacturing was revised to show more strength than initially indicated.

Industrials and material stocks were among the day's biggest gainers, while the technology sector ended lower, weighed down by big names such as Apple and Google.

After hours of confusion, the Institute for Supply Management corrected its report to show the pace of growth in U.S. manufacturing accelerated in May. Wall Street fell initially after the first report, with all 10 S&P 500 sector indexes down at one point.

The ISM said its index of national factory activity rose to 55.4 last month from 54.9 in April, with the May figure just shy of the 55.5 expected by a Reuters poll of economists. The ISM had initially said the reading came in at 53.2, but it was corrected due to an error in applying the seasonal adjustments.

The Dow Jones industrial average rose 26.46 points or 0.16 %, to 16,743.63. The S&P 500 gained 1.40 points or 0.07% to 1,924.97. But the Nasdaq Composite dropped 5.42 points or 0.13%, to 4,237.20. The Dow ended at a second consecutive record high while the S&P 500 closed at a third consecutive record though volume was still slight. Both the Dow and the S&P 500 also set lifetime intraday highs on Monday.

Apple shares slid 0.7% to $628.65 after the tech giant introduced new operating systems for its Mac computers and mobile devices. Google Inc also pressured tech shares, falling 1.3 % to $564.34.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Herald, The (Scotland)

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters