Marks & Spencer Share News (MKS)

LONDON (Alliance News) - The FTSE 100 closed markedly higher Wednesday, its third straight day of gains to open the new month, as investors reacted to a raft of macroeconomic data and corporate news from around the world.

"The overall stock market sentiment has improved first and foremost because of fading concerns about the health of the Chinese economy, which together with the expectations of tighter oil and copper markets have helped to lift commodity-linked stocks," said Fawad Razaqzada, technical analyst at FOREX.com.

Blue-chip stocks in London opened higher and remained in positive territory throughout the day, after some positive news from China overnight went some way to alleviate fears surrounding the growth of the world's second largest economy.

The latest Caixin-Markit services Purchasing Managers' Index reading revealed that the services sector grew at its fastest pace in three months in October, easing some of the concerns over the country's seemingly persistent weakness. China's services PMI rose to 52.0 in October from a 14-month low of 50.5 in September. A reading above 50 indicates growth.

The reading showed that previous stimulus policies have begun to have an effect, while the economic structure steadily improved, He Fan, chief economist at Caixin Insight Group, said. "The economy has started to show signs of stabilizing, reducing the need for a further stimulus," the economist commented.

London-listed miners benefited from the positive data from China. FTSE 100-listed Glencore, Anglo-American, BHP Billiton and Antofagasta were all among the index's leading risers, closing up 6.4%, 5.1%, 2.2% and 2.7%, respectively. The FTSE 350 mining sector index as a whole ended the day up 1.8%.

Multi-commodities miner and trading house Glencore, which ended the day as the biggest blue-chip riser, reiterated its full-year earnings guidance and said it aims to have reduced its net debt by up to 15% before the end of the year. It said it aims to have its net debt down to below USD25.00 billion before the end of 2015 and to have net funding of around USD40.00 billion.

"Investors also appear to be more relaxed about the prospects of an imminent interest rate lift off in the US," said FOREX.com's Razaqzada. "This is in part because of the fact policies at the world’s other major central banks will continue to remain extremely accommodative," he added.

Speaking in Frankfurt late Tuesday, European Central Bank President Mario Draghi signalled that the central bank is ready to do more to fight risks of low inflation engulfed in the euro area.

The FTSE 100 index closed up 0.5% at 6,412.88 points, while the FTSE 250 closed flat at 17,182.50 and the AIM All-Share index closed up 0.4% at 747.06.

In UK data released Wednesday, survey results from Markit showed that the Chartered Institute of Procurement & Supply/Markit services Purchasing Managers' Index rose more-than-expected to 54.9 in October from 53.3 in September. According to FXStreet.com, economists' expectations had been for a more modest increase to 54.5.

The positive UK reading was buttressed by mostly favourable PMI numbers from across Europe.

"Overall it was also a strong morning for the eurozone’s services PMIs, with better than expected performances from Spain and France, and only marginally lower than forecast figures for Italy and the region as a whole," said Connor Campbell, financial analyst at Spreadex.

France's Markit services PMI reading for October climbed to 52.7, having come in at 51.9 in September, exceeding the preliminary estimate of 52.3. The country's composite PMI rose to a four-month high of 52.6 in October, up from 51.9 in September, coming in above the flash reading of 52.3. In Spain, the Markit services PMI reading for October rose to 55.9 from September's reading of 54.6, coming in above the 55.3 that economists had been expecting.

Italy's service sector, meanwhile, expanded for the eighth straight month in October. The headline Markit/ADACI services PMI rose marginally to 53.4 in October from 53.3 in September, narrowly missing economists' expectations of 53.6.

As a whole, final data from Markit revealed that the eurozone's services PMI rose to 54.1 in October from 53.7 in September, coming in fractionally below the preliminary estimate of 54.2. The final composite output index came in at 53.9 in October, marginally below the flash score of 54.0 but above September's 53.6.

Still, it was not all good news for the single currency area, with Germany's services PMI for October rising to 54.5 from September's reading of 54.1, but falling well short of the preliminary reading of 55.2. The final composite PMI reading rose marginally to 54.2 from 54.1 in September, coming in slightly below the flash score of 54.5.

"Germany’s services miss compounded a disappointing morning for the country," said Spreadex's Campbell, referring to the news that German car giant Volkswagen said it found "irregularities" when determining carbon dioxide emissions levels, which could affect about 800,000 cars in Europe. The company said it expects the latest problem to cost the firm about EUR2 billion euros, with the affected brands including VW, Audi, Skoda and Seat.

At the closing bell, the DAX 30 index in Frankfurt was down 1.0%. The CAC 40 in Paris fared significantly better, closing up 0.3%.

In the US, at the UK equity market close, stocks were a little lower. The NASDAQ Composite was down 0.3%, while the S&P 500 was down 0.4% and the DJIA was down 0.3%.

There also was a raft of US data released Wednesday.

According to a report released by the payroll processor Automatic Data Processing, the US private sector added 182,000 jobs in October, compared with forecasts for about 180,000 jobs. The September figure was downwardly revised by an increase of 190,000 jobs, compared with the addition of 200,000 jobs originally reported for the previous month.

Separately, a Commerce Department report showed that the US trade deficit narrowed more than expected in the month of September, driven by an increase in exports and a decrease in imports. The report said the trade deficit narrow to USD40.80 billion in September from a revised USD48.00 billion in August. Economists had expected the deficit to narrow to USD41.10 billion from the USD48.33 billion originally reported for the previous month.

Moreover, in a report released by the Institute for Supply Management, US service sector unexpectedly grew at a faster rate in October. The ISM said its non-manufacturing index climbed to 59.1 in October from 56.9 in September, surprising to economists who had expected the index to dip to 56.5.

In the foreign exchange market, at the close of the UK equity market, the euro traded at USD1.0861, while the pound stood at USD1.5378, having traded at USD1.0952 and USD1.5397, respectively, at the same time Tuesday. As for commodities, Brent oil traded at USD48.68 a barrel, having edged over USD50 a barrel earlier in the day, while gold was at USD1,112.99 per ounce.

Marks & Spencer Group was among the leading risers in the FTSE 100, closing up 3.3%. The clothing, food and homewares retailer reported a drop in profit in the first half of its financial year, but a slight rise in sales as its food business once again outperformed the weaker general merchandise division.

M&S said pretax profit in the 26 weeks ended September 26 fell 23% to GBP216.0 million from GBP279.4 million the year before, although revenue grew 1% to GBP4.95 billion from GBP4.90 billion. M&S said that its food business delivered sales growth of 3.3%, offsetting a 0.4% decline in general merchandise.

At the other end of the spectrum, Persimmon, closed down 3.3%. The housebuilder's shares fell even though it said activity in the UK housing market improved as expected into the autumn season, driving up its private sales rate in the second half so far and keeping pricing robust across its regional markets.

The group said its private sales rate has increased 12% year-on-year in the weeks since it published its interim results on August 18, building on the 5.0% increase it posted in the summer weeks following the end of the first half at the end of June.

Despite the robust trading, other housebuilders followed Persimmon lower, with Taylor Wimpey closing down 3.7% as the biggest loser in the FTSE 100, Berkeley Group Holdings down 3.3% and Barratt Developments down 1.3%.

The housebuilders had suffered a similarly negative performance on Tuesday after Liberum Capital warned that valuations on the companies are currently too optimistic to withstand the gross margin pressure which will emerge in coming years as house price inflation is suppressed by greater regulation and as build-cost inflation returns.

In the FTSE 250, Countrywide ended the day as the heaviest faller in the mid-cap index, closing down 11%. Shares in the estate agent fell after it said its housing sales transaction volumes are set to fall year-on-year after the expected uptick in activity following the UK General Election in May has not materialised.

Countrywide said it has traded well across its portfolio, but said housing transactions remain at lower levels year-on-year. For the third quarter to the end of September, total house exchanges fell 8.0% year-on-year and were down 10% for the nine months to the end of September.

Fellow estate agent Foxtons Group followed Countrywide lower, closing down 6.3%.

In another busy day in the data calendar Thursday, German factory orders readings for September are scheduled to be released at 0700 GMT, ahead of the European Central Bank's economic bulletin at 0900 GMT and eurozone retail sales data for September at 1000 GMT. ECB President Draghi is expected to give a speech at 1145 GMT.

The Bank of England will release its quarterly Inflation Report at 0930 GMT, ahead of its interest rate decision and monetary policy committee meeting minutes at 1100 GMT. The central bank also will issue its monetary policy statement Thursday, while Governor Mark Carney is due to give a speech at 1245 GMT.

Analysts do not expect the Bank of England to make changes to its monetary policy at Thursday's meeting, but some believe the central bank will send the message that UK interest rates will start rising sooner than market participants are currently pricing.

In the US, jobs data and non-farm productivity data are due to be published at 1330 GMT. Federal Reserve Bank of Atlanta President Dennis Lockhart will give a speech after the UK equity market close at 1730 GMT.  In her testimony before the House Financial Services Committee on Wednesday, Fed Chair Janet Yellen assured lawmakers that the central bank will raise US interest rates only gradually once it begins to tighten monetary policy.

In the corporate calendar, FTSE 100-listed AstraZeneca, Coca-Cola HBC, Randgold Resources and Schroders are scheduled to release third-quarter updates Thursday, while fellow blue-chips WM Morrison Supermarkets and RSA Insurance Group publish interim management statements. In addition to this, easyJet is expected to provide its traffic statistics for October.

In the FTSE 250, Cable & Wireless Communications, Dairy Crest, Croda International and Tate & Lyle all are due to report half-year results. Lancashire Holdings is scheduled to publish third-quarter results, while Synthomer, Supergroup, Howden Joinery, Cobham, Kennedy Wilson Europe Real Estate, Rentokil Initial and Just Retirement Group are due to release trading statements.

Also of note, UK blue-chips Barclays and Admiral Group are joined by mid-caps Ashmore Group, Laird and Morgan Advanced Materials, amongst others, in going ex-dividend Thursday, meaning new buyers no longer qualify for the latest dividend payout.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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