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(Alliance News) - Stocks in London were higher at midday on Monday with investors taking heart from inflation data from China and executive actions from the White House on coronavirus economic relief.
Responding to collapsed talks, US President Donald Trump signed four executive orders on the economy on Saturday, following through on a threat to act on his own if Congress did not pass a new stimulus bill.
One order provides enhanced unemployment benefits, while a second would give relief on student loan repayments. A third order is a federal ban on housing evictions. The fourth suspends certain taxes on salaries.
Top Democrats Nancy Pelosi and Chuck Schumer slammed Trump's announcement, calling the measures "unworkable, weak and narrow."
On Friday, last-ditch talks between the Republican White House and Democratic lawmakers broke down. Key sticking points were the size of unemployment insurance and a Democratic demand for federal aid to states.
In addition, sentiment was lifted by economic data from China which showed consumer inflation edged up in July.
The consumer price index, a key gauge of retail inflation, had been pushed up over the past year by livestock prices after China's pig herds were ravaged by African swine fever, with the Covid-19 outbreak later hitting supply chains. Consumer inflation has been easing since January but ticked up again in recent months, with the CPI hitting 2.7% in July, accelerating from 2.5% in June.
The UK flagship FTSE 100 index was up 40.14 points, or 0.6%, at 6,072.32. The mid-cap FTSE 250 index was up 142.69 points, or 0.8%, at 17,765.62. The AIM All-Share index was up 0.2% at 934.48.
The Cboe UK 100 index was up 0.5% at 602.69. The Cboe 250 was up 0.8% at 15,102.68, and the Cboe Small Companies was up 0.4% at 9,300.65.
In mainland Europe, the CAC 40 in Paris was up 0.4%, while the DAX 30 in Frankfurt was up 0.1%.
"European shares are trading higher on Monday as hopes of a US stimulus package and strong macro data from China provided a fresh boost to bullish sentiment. Even if the recent battle between Republicans and Democrats over the new stimulus package scared some investors last week, the four new executive orders recently signed by President Trump aimed at assisting students, tenants and the unemployed is reassuring everybody. In addition, investors are also digesting today's positive data from China as they show the recovery is well on its way, boosting appetite for risk assets," said analysts at ActivTrades.
In the FTSE 100, oil majors BP, Royal Dutch Shell 'A' and 'B' shares were up 2.7%, 1.6% and 1.2%, respectively, after Saudi Aramco said it sees signs of oil market recovery.
Brent oil was quoted at USD44.84 a barrel at midday, up from USD44.60 at the London equities close Friday.
Saudi Aramco said on Sunday its second-quarter profits plunged 73% due to sharply lower oil prices, as the coronavirus crisis undercuts global demand.
The Saudi Arabian firm, recently dethroned by Apple as the world's most valuable listed company, posted a net profit of USD6.6 billion for the three months to June 30, down from USD24.7 billion for the same period of 2019.
The results are in line with analysts' expectations and stand in contrast to the losses reported by its rival energy giants, which are reeling from a drop in oil demand since the start of the novel coronavirus pandemic.
Aramco's results reflected its "financial resilience", Chief Executive Amin Nasser said, as the company presses ahead with a plan to pay USD75 billion in dividends this year.
Nasser also voiced optimism over what he called a "partial recovery in the energy market" amid an easing of virus restrictions in some countries.
Saudi Aramco shares were trading 0.2% higher in Riyadh on Monday at SAR33.10 each, around GBP6.80 each.
"Oil & gas stocks are helping to boost the FTSE 100 today, with crude oil on the rise after a somewhat disappointing end to last week. Saudi Aramco optimism over the Asian demand outlook going forward helped avoid a cut to their dividend, with deeper cuts from Iraq helping to build a more optimistic demand-supply picture," said IG Group's Josh Mahony.
In the FTSE 250, Clarkson was up 13% after the shipping services provider company said it saw a robust first-half performance in 2020, despite the "unprecedented challenges" faced by the shipping industry.
For the half-year ended June 30, revenue was up 7.5% at GBP180.4 million from GBP167.8 million the year before, and pretax profit was up 9.0% at GBP20.9 million from GBP19.2 million. The shipping services provider said it has a robust balance sheet, with GBP88.8 million of free cash resources.
In light of the strong cash position, Clarkson has decided to pay the equivalent of the deferred 2019 final dividend of 53 pence per share as an interim dividend. The company also declared a further interim dividend for 2020 of 25p per share, unchanged from last year.
FirstGroup and Go-Ahead Group were up 8.5% and 3.5% respectively after both transport firms noted the UK Department of Transport's announcement for a funding round of GBP218.4 million on Saturday.
The funding package - which is under the Covid-19 Bus Service Support Grant Restart - will last for eight weeks, after which weekly funding of up to GBP27.3 million will be made available "until a time when the funding is no longer needed".
In addition, the UK government has announced plans to publish a National Bus Strategy, setting out plans for supporting continued bus services across the country. The government is also looking for ways that ensure that the bus sector can operate independently and become viable.
FirstGroup said the funding programme has already helped to improve bus service capacity, with First Bus operations across England having increased operated mileage to 90% of pre-pandemic levels from 40%, while passenger volumes have increased to 40% from 10% of normal levels since the low point in March.
The pound was quoted at USD1.3056 at midday, flat from USD1.3050 at the London equities close Friday.
The euro stood at USD1.1761 at midday, lower from USD1.1789 at the European equities close Friday. Against the yen, the dollar was trading at JPY106.00, firm from JPY105.86 late Friday.
Gold was quoted at USD2,030.54 an ounce at midday, soft from USD2,032.40 late Friday.
Stocks in New York look set to a flat to higher open against a backdrop of heightened tensions between the US and China.
The DJIA was called up 0.4%, the S&P 500 index up 0.2% and the Nasdaq Composite called flat.
In the latest developments, China has sanctioned 11 Americans, including senators Marco Rubio and Ted Cruz, in retaliation for similar US moves against Chinese officials over Beijing's crackdown in Hong Kong.
"China has decided to impose sanctions on some people that behaved badly on Hong Kong-related issues," foreign ministry spokesman Zhao Lijian said Monday, with Human Rights Watch director Kenneth Roth and National Endowment for Democracy president Carl Gershman also on the list.
Washington had announced on Friday it was freezing the US assets of Hong Kong Chief Executive Carrie Lam and 10 other senior Chinese officials, in the toughest US action on Hong Kong since China imposed a sweeping new security law on the territory.
The US accused Lam and the other sanctioned officials of being "directly responsible for implementing Beijing's policies of suppression of freedom and democratic processes."
On the corporate front, Twitter shares were up 4.7% in pre-market trade after the Wall Street Journal reported over the weekend that the social media platform is in preliminary discussions for a possible combination with TikTok.
Microsoft has been the primary suitor for TikTok - a platform Trump has called a threat to national security - saying it was in talks to buy the company's US, Canada, Australia and New Zealand operations.
The Financial Times reported Thursday that Microsoft has expanded negotiations and was now after the app's entire global operations. As a smaller company, Twitter would have a long-shot bid for TikTok, but the social media platform believes it would come under less antitrust scrutiny than larger corporations such as Microsoft, the WSJ said, citing people familiar with the talks.
Microsoft was down 0.3% in pre-market trade in New York.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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