(Alliance News) - Stocks on London ended the week on a positive note on Friday as investors cheered the conditions of a phase one trade-war truce between Washington and Beijing being met.
Bloomberg News reported that China plans to accelerate purchases of US farm goods including soybeans, corn and ethanol to comply with the phase one trade deal following talks in Hawaii this week.
China intends to step up buying of everything from soybeans to corn and ethanol after purchases fell behind due to coronavirus disruptions, the news agency reported citing two unnamed people familiar with the matter.
US Secretary of State Michael Pompeo said Thursday, following meetings in Hawaii this week, that Beijing would honour its commitments under the trade accord.
The FTSE 100 index closed up 68.53 points, or 1.1%, at 6,292.60, and ended the week up 3.5%.
The FTSE 250 closed up 169.00 points, or 1.0%, at 17,687.26, ending the week up 4.0%. The AIM All-Share closed up 2.56 points, or 0.3% at 890.39, ending the week up 2.9%.
The Cboe UK 100 ended up 1.2% at 10,642.58, the Cboe UK 250 closed up 0.6% at 15,136.86 and the Cboe Small Companies ended flat at 9,890.74.
In Paris the CAC 40 ended up 0.4%, as did the DAX 30 in Frankfurt.
"Markets continued to climb on Friday, with investors buoyed by reports that China is stepping up its purchases of US farm products. Though there is plenty of reason to be worried about the relationship between the two superpowers - just yesterday the president tweeted that the US 'certainly does maintain a policy option, under various circumstances, of a complete decoupling from China' - a commitment to fulfilling the terms of the phase 1 trade agreement can be read as a positive," said Spreadex analyst Connor Campbell.
On the London Stock Exchange, AVEVA ended the best blue-chip performer, up 4.4% at 4,151 pence, after Goldman Sachs hiked its price target on the software company to 4,100p from 3,600p.
In the FTSE 250, Hyve Group ended up 6.0% in the FTSE 250 after the events organiser plans to run all its events scheduled in Shanghai from the end of July, as it also received its first insurance payment for cancelled events.
Hyve said that while events in Shanghai are currently set to run as planned, a lack of clarity in markets outside China regarding restrictions on large gatherings has resulted in it cancelling events previously just postponed.
At the other end of the midcaps, Ferrexpo ended down 5.9% after the Baar, Switzerland-based iron ore miner said a district court in Kiev, Ukraine, has prohibited the transfer of the company's 50% stake in Ferrexpo Poltava Mining.
The Kiev court has placed the restriction on Ferrexpo AG Switzerland, the sole shareholder in Ferrexpo Poltava Mining. Ferrexpo AG intends to appeal against the court order. Ferrexpo said it has no intention, and never has had any intention, to transfer its shareholding in Ferrexpo Poltava Mining, the company's iron ore unit in Ukraine.
Ferrexpo's operations remain unaffected as the share freeze does not affect ownership of the shares but prohibits their transfer. The company believes the restriction is in connection with investigations in Ukraine involving former chief executive Kostyantin Zhevago and Bank Finance & Credit, a commercial bank he owned until 2015.
The pound was quoted at USD1.2368 at the London equities close, sharply lower from USD1.2421 at the close Thursday, after data showed UK government borrowing had hit record highs to contend with economic damage caused by Covid-19.
The pound had taken a hit on Thursday after the Bank of England showed hesitance to add too much additional support to UK economy, upping its quantitative easing programme by GBP100 billion, as widely anticipated by markets, in a less-dovish-than-expected meeting.
"Investors showed their unhappiness towards the Bank of England's decision to slow the pace of its asset purchase programme and refusal to contemplate negative interest rates. The market disappointment is understandable, as the country is affected by the deadliest coronavirus outbreak in Europe, its shell-shocked economy may soon be facing a no-deal Brexit and potentially a second wave of the disease. Further downside risk for the pound may lie ahead," said analysts at ActivTrades.
Compounding the pound's woes, the UK ended May with public sector borrowing at 100.9% of gross domestic product, data from the Office for National Statistics showed Friday. This is the first time UK government debt exceeded the size of the entire economy since the financial year ended March 1963.
Public sector debt ended May at GBP1.950 trillion, GBP173.2 billion higher than a year before. The 21% rise was the highest year-on-year jump recorded by the ONS since it started keeping records in 1993.
Sterling received no help from positive UK retail sales data, which showed sales partly rebounded in May from the record fall seen in April, the ONS said. The volume of retail sales in May jumped 12% versus the previous month, when sales volume plunged 18%. Market consensus, according to FXStreet, was for a 5.7% volume rise on April. In value terms, retail sales were 12% higher in May.
Despite May's strong rise, the ONS noted sales were still down 13% compared to February, before the coronavirus pandemic hit the UK.
The euro stood at USD1.1204 at the European equities close, marginally lower than USD1.1220 late Thursday.
Meanwhile, divided EU leaders will meet in person next month to negotiate how to raise and then distribute a major recovery fund to revive a European economy ravaged by the coronavirus pandemic.
The 27 held a video summit Friday to discuss a proposal from European Commission chief Ursula von der Leyen for a EUR750 billion rescue fund that - if accepted - would mark a historic milestone for EU unity.
The plan is to help EU countries fight the devastating recession caused by the virus outbreak whose effects are expected to grow worse and be felt for years to come.
Leaders agreed that a solution should be found by the end of July, with summit host Charles Michel, president of the European Council, wanting a face-to-face meeting around mid-month - if coronavirus restrictions allow - to push a deal over the finish line.
Michel, a former Belgian prime minister, faces sniping from countries known as the "frugal four" - the Netherlands, Sweden, Denmark and Austria. The quartet have promised to fight to trim the von der Leyen plan.
In addition, sceptical Dutch leader Prime Minister Mark Rutte poured cold water on hopes for a rapid decision at a July summit.
"It is uncertain whether it would be finalised then or whether we would need more sessions, or whether they should be during the summer or later. We are going to look at all of that," he said.
Against the yen, the dollar was trading at JPY106.92, up from JPY106.77 late Thursday.
Stocks in New York were higher at the London equities close, pushing the Nasdaq back above 10,000 points as investors continue to shrug off concerns about rising coronavirus cases in many US states.
The DJIA was up 0.6%, the S&P 500 index up 0.5% and the Nasdaq Composite up 0.9%.
In addition, Friday marks the 'Juneteenth' - a portmanteau of June and nineteenth - to honour the end of slavery in the US.
The day commemorates Union army general Gordon Granger announcing federal orders in Galveston, Texas, on June 19, 1865, proclaiming all people held as slaves in Texas were liberated, despite President Abraham Lincoln's Emancipation Proclamation executive order being signed two years earlier.
Many US companies including Nike, Twitter have said they would observe Friday as a paid company holiday to commemorate 'Juneteenth'.
Brent oil was quoted at USD42.66 a barrel at the London close, up from USD41.20 at the close Thursday.
"Globalization is also important for crude demand and if the US and China can continue a healthy trade relationship that should also be positive for oil prices," said OANDA markets analyst Edward Moya.
Gold was quoted at USD1,742.20 an ounce at the London equities close, higher against USD1,721.16 late Thursday.
The economic events calendar on Monday has eurozone consumer confidence data at 1500 BST.
The UK corporate calendar on Monday has annual results from Polar Capital Holdings. In addition, the latest FTSE Russell index review changes take effect on Monday with antivirus software provider Avast, DIY retailer Kingfisher, gambling company GVC and home emergency cover provider HomeServe joining the FTSE 100.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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