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(Alliance News) - The FTSE 100 rocketed on Monday, supported by news of a phase one trade deal between the US and China and continuing to be spurred on by Prime Minister Boris Johnson's UK election victory late last week.
The FTSE 100 index closed up 165.61 points, or 2.3%, at 7,519.05 on Monday, its best closing price since the beginning of August. The index had closed up 1.1% on Friday in the wake of Johnson's election win.
The FTSE 250 ended up 412.90 points, or 1.9%, at 21,920.69, and the AIM All-Share closed up 11.74 points, or 1.3%, at 929.45.
The Cboe UK 100 ended up 2.6% at 12,788.89, the Cboe UK 250 closed up 2.1% at 19,831.04, and the Cboe Small Companies ended up 1.2% at 11,811.76.
In European equities on Monday, the CAC 40 in Paris ended up 1.2%, while the DAX 30 in Frankfurt closed up 0.9%.
"Choosing to ignore the more eyebrow-raising elements of the US-China 'phase one' trade agreement – a healthy dose of scepticism has greeted the deal – the markets donned their Santa hats and celebrated their early Christmas present," said Connor Campbell at Spreadex.
"The gains only ramped up as the session went on," he continued. "The FTSE led the charge, boosted by a mix of the trade relief and residual goodwill related to last Friday's election result."
The FTSE 100, made up of a large number of overseas earners, was also helped as the pound softened.
The IHS Markit/Chartered Institute of Procurement & Supply flash UK composite output index fell to 48.5 in December from 49.3 in November. This marked nearly a three-and-a-half year low for the index.
Any reading below 50 indicates contraction, while one above expansion.
By sector, the services business activity index fell to a nine-month low of 49.0 in December, versus November's 49.3. Consensus, according to FXStreet, was for a reading of 49.5.
Meanwhile, the manufacturing purchasing managers' index fell to a four-month low of 47.4 in December, from a reading of 48.9 in November. Consensus had been looking for a reading of 49.3.
The pound was quoted at USD1.3329 at the London equities close Monday, lower compared to USD1.3346 at the close on Friday.
"The latest decline in the Markit/CIPS UK PMIs is another stark reminder that the British economy is unlikely to be on the cusp of a sharp turnaround after last week's election result," commented ING.
There were also PMI results from the eurozone.
The flash eurozone composite purchasing managers' index came in at 50.6 for December, unchanged on the month before. The manufacturing PMI was 45.9 from 46.9 in November, meaning the eurozone's manufacturing contraction has deepened. IHS Markit reported a services PMI of 52.4, improved from 51.9 in November.
By country, France was most supportive, but Germany remains in a "mild" downturn due to a deepening manufacturing recession.
And in the US, PMIs painted a brighter picture. US business activity hit a five-month high in December, flash data showed, as the services sector accelerated.
The composite output index rose to 52.2 in December from 52.0 in November. Any reading above 50 indicates expansion, while one below signals contraction.
The services business activity index rose to 52.2 in December from 51.6 the month before, while the flash manufacturing purchasing managers' index slipped to a two-month low of 52.5, down marginally from 52.6 in November.
Stocks in New York were higher at the London equities close, with the Dow Jones up 0.6%, the S&P 500 index up 0.8%, and the Nasdaq Composite 1.1% higher.
The euro stood at USD1.1139 at the European equities close Monday, up against USD1.1123 at the same time on Friday. Against the yen, the dollar was trading at JPY109.65, higher compared to JPY109.35 late Friday.
Brent oil was quoted at USD65.46 a barrel at the London equities close Monday, higher compared to USD64.58 late Friday.
"Oversupply concerns to drive weaker oil prices over the first half of 2020 is the base case for many investors, but we could finally start to see improved data from the world's two largest economies spearhead calls for a global growth rebound. China's industrial production and retail sales data showed the economy improved in November and it should only get better after the phase-one deal kicks in," said Edward Moya, senior market analyst at Oanda.
Elsewhere in the commodities space, gold was quoted at USD1,473.50 an ounce at the London equities close Monday against USD1,471.61 at the close on Friday.
In London, stocks soared on Monday with the FTSE 100 trading at four-month highs.
"The news relating to China has boosted mining and oil stocks, while the Boris bounce is assisting banks, house builders in addition to retailers," said David Madden at CMC Markets, referring to UK Prime Minister Boris Johnson's general election result.
Miners such as Glencore and BHP Group were up 4.0% and 3.1% respectively, while oil major BP recorded a 1.7% rise and peer Royal Dutch Shell increases of 1.4% and 1.2% respectively for its 'A' and 'B' shares.
In terms of banks, Barclays closed the session 5.4% higher with Lloyds Banking not too far behind, up 4.5%, while housebuilders Berkeley Group and Barratt Developments closed 1.4% and 1.2% higher respectively.
In the FTSE 250, Sports Direct International - soon to be renamed Frasers Group - surged 31% on a solid set of interim results.
Pretax profit in the 26 weeks to October 27 grew 21% to GBP90.2 million from GBP74.4 million reported a year earlier, as revenue rose by 14% to GBP2.04 billion from GBP1.79 billion.
Sports Direct said its revenue growth was largely boosted by acquisitions, growth in Premium Lifestyle and Wholesale & Licensing divisions and the full period of revenue contribution from House of Fraser versus 11 weeks last year.
Looking ahead, company expects its total underlying earnings before interest, taxes, depreciation, and amortization - including House of Fraser but pre IFRS 16 adjustments - to grow between 5% and 15% from the prior year's pre-House of Fraser underlying Ebitda of GBP339.4 million.
"The high street is under increasing pressure on account of the rise in e-commerce, so some traders thought Mike Ashley had over extended himself, but it seems as it things are on the turn," commented CMC's Madden.
At the bottom of the mid-cap index were Tullow Oil and Virgin Money UK, languishing after ratings downgrades.
Tullow Oil was cut to Reduce from Hold by HSBC, while lender Virgin Money UK was downgraded to Hold from Buy by HSBC and to Underweight from Equal Weight by Barclays.
Tullow Oil closed down 10%, and Virgin Money 5.3%.
In the UK corporate calendar on Tuesday, there are trading updates from rail ticketing platform Trainline, oilfield services firm Hunting and distribution company Bunzl.
In the economic calendar is the UK unemployment rate and average earnings at 0930 GMT followed by the eurozone's trade balance at 1000 GMT and US industrial production at 1415 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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