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(Alliance News) - Stocks in London were higher at midday on Friday after a report said China would speed up purchases of US farm products to honour the first phase of its trade agreement with the US.
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.
Stocks in New York look set for a higher open on Friday, reacting positively to the news. The DJIA was called up 1.0%, the S&P 500 index up 0.9% and the Nasdaq Composite up 0.8%.
The FTSE 100 index was up 85.12 points, or 1.5%, at 6,309.19 and is on track to end the week up 4.0%. The mid-cap FTSE 250 index was up 134.55 points, or 0.8%, at 17,652.81.
The AIM All-Share index was up 2.33 points, or 0.3%, at 890.20. London's junior market celebrates its 25th anniversary after being launched on this day back in 1995.
The Cboe UK 100 index was up 1.5% at 10,678.80. The Cboe 250 was up 0.6% at 15,134.29, and the Cboe Small Companies flat at 9,930.79.
In Paris the CAC 40 was up 1.4%, while the DAX 30 in Frankfurt was up 1.1%.
"The rise in infection rates over the past two weeks has increased the levels of uncertainty as to the effect this might have on any recovery and whether it will be V-shaped, as markets appear to be currently pricing, or whether it will be a much longer U-shaped type of rebound. Despite these concerns markets here in Europe have opened higher, after China said it plans to accelerate the purchases of US farm goods as it looks to comply with the phase one of its recently completed phase one trade deal with the US," said CMC Markets analyst Michael Hewson.
On a light day of UK company news, Hyve Group was up 4.5% 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 was down 4.0% 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 USD1.2382 at midday, down from USD1.2421 at the London equities close on Thursday, after the Office for National Statistics data showed UK public borrowing was larger than the country's entire economy in May for the first time since 1963.
The UK ended May with public sector borrowing at 100.9% of gross domestic product. 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.
Meanwhile, UK retail 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%. In value terms, retail sales were 12% higher in May. Market consensus, according to FXStreet, was for a 5.7% volume rise on April. Despite May's strong rise, the ONS noted sales were still down 13% compared to February, before the coronavirus pandemic hit the UK.
"Investors would probably welcome an uneventful day with little new news on a spike in fresh infections in Beijing to create any significant Covid-related nervousness. The better-than-expected bounce back in UK retail spending in May provided some reasons for positivity. However, the month-on-month increase is worth keeping in perspective given April represented the height of the lockdown and spend remains well down on pre-pandemic levels," said AJ Bell's Russ Mould.
The euro stood at USD1.1200 at midday in London, lower from USD1.1220 the European equities close Thursday.
The euro area's current account surplus narrowed in April, data from the European Central Bank showed. The surplus in April was EUR14.41 billion, down by 47% from EUR27.37 billion in March.
"Amid the coronavirus pandemic and the measures implemented to contain its spread, exports and imports of goods and services continued to decrease compared with the previous month and stood at significantly lower levels than in April 2019," the ECB said.
In the 12 months to April, the current account surplus was EUR334 billion, compared with EUR329 billion in the year ended April 2019.
Against the yen, the dollar was trading at JPY106.93, up from JPY106.77 late Thursday.
Brent oil was quoted at USD42.40 a barrel at midday, up from USD41.20 at the London close on Thursday. Gold was at USD1,730.45 an ounce at midday, higher against USD1,721.16 late Thursday.
Ahead, Federal Reserve Chair Jerome Powell has a virtual speech planned for 1800 BST at the Federal Reserve Bank of Cleveland's "Discussion on Building a Resilient Workforce During the Covid-19 Era".
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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