(Alliance News) - Stocks in London ended Tuesday firmly in the green, with miners getting a boost from forecast-beating economic data from China.
"It took them a while, but it seems that investors decided Tuesday's Chinese data was worth celebrating after all," SpreadEx analyst Connor Campbell said.
The FTSE 100 index closed up 70.29 points, or 1.3%, at 6,105.54 on Tuesday. The mid-cap FTSE 250 index added 138.12 points, or 0.8%, to finish at 17,815.38. The AIM All-Share index closed up 0.8% at 968.84.
The Cboe UK 100 index closed up 1.4% at 609.21. The Cboe 250 ended up 0.9% at 15,183.35, and the Cboe Small Companies closed up 0.5% at 9,522.52.
In mainland Europe, the CAC 40 in Paris was up 0.3% and the DAX 30 in Frankfurt was 0.2% higher on Tuesday evening.
Chinese industrial output, which has recovered more quickly than retail sales, strengthened further last month. It grew 5.6% from a year ago, better than economists expected and more than the 4.8% increase in July.
Blue-chip miners such as Glencore, Anglo American, Rio Tinto and BHP Group closed up 2.4%, 2.2%, 2.7% and 1.9%, respectively.
Tempering this, however, was US industrial production coming up short of expectations.
The US saw its fourth consecutive month growth in August, official data showed Tuesday. Industrial production rose 0.4% in August compared to the previous month, following 3.5% monthly growth in July. Market consensus, according to FXStreet, was hoping for 1% growth in August, however.
SpreadEx's Campbell added: "Investors clearly weren't interested in the troubling longer-term outlook for the UK jobs market, instead focusing on the short-term beats in the morning's latest report."
The UK unemployment rate edged up in July, official figures showed, as the Covid-19 pandemic continues to throttle the labour market.
The UK unemployment rate was 4.1% for the May to July period, up 0.2 of a percentage point from the three months to May. Estimates for the three-month period showed 1.4 million people out of work, up 104,000 on a year ago and 62,000 more than the prior quarter.
More worryingly, early indicators for August suggest that the number of employees in the UK on payrolls was down around 695,000, or 2.4%, compared with March, the Office for National Statistics said.
Sterling was quoted at USD1.2858 on Tuesday evening, down from USD1.2888 at the London equities close on Monday.
IG Senior Market Analyst Johsua Mahony said: "UK-listed stocks have been outperforming their mainland European counterparts, with sterling underperformance and hopes of another jobs scheme helping to drive the FTSE higher.
"While fears of a spike in bankruptcies and job losses had been holding back sentiment ahead of the ending of furlough next month, comments from Rishi Sunak over his willingness to support jobs 'in a creative way' shows the potential for further action in the weeks ahead."
In London, Ocado was heading up the blue-chip gainers as it reported a promising start to its retail tie-up with Marks & Spencer.
Ocado ended the session 11% higher, M&S gained 4.4%.
The FTSE 100-listed online grocer said that for the 13 weeks to August 30, Ocado Retail revenue rose by 52% to GBP587.3 million, compared to GBP386.4 million in the 13 weeks to September 1, 2019.
Average orders per week also rose 9.6% to GBP345,000. Ocado highlighted that while the average order size has continued to normalise from Covid-related peaks to GBP141, it remains above pre-crisis levels.
Shoppers have responded favourably to the switchover to M&S products on September 1, Ocado said, adding that the weighting of M&S products in the average Ocado basket is higher than for Waitrose products prior to the switchover.
RSA Insurance gained 4.7%, and midcap peer Hiscox ended the day the best performer in the midcaps - advancing 17% - after the UK's financial services regulator on Tuesday said a court has ruled in favour of policyholders in a business interruption claims test case against insurers.
Hiscox and RSA Insurance, two of the eight firms that were defendants in the case, said the ruling will result in a financial hit of around GBP100 million. The duo also briefly updated the market on their third quarter trading, which to date has been promising.
The Financial Conduct Authority said it brought the test case to court in a bid to "resolve the lack of clarity and certainty" for policyholders aiming to make business interruption claims as a result of the Covid-19 pandemic.
Premier Oil added 7.9% after it confirmed it is in talks with North Sea oil and gas producer Chrysaor Holdings and other parties as it looks to secure long-term debt refinancing.
Premier, noting earlier media reports, said there can be no guarantee that an agreement can be made during the discussions.
Back in August, Premier announced that it had agreed heads of terms for a long-term refinancing of over 45% of its debt facilities. The company planned to raise a further USD300 million in equity, in addition to the USD230 million it already announced to fund the proposed acquisitions of certain BP assets. Premier Oil plans to acquire BP's interests in the Andrew area and the Shearwater field in the North Sea.
Premier Oil's debt refinancing is conditional on at least a USD325 million take-up of the equity raise.
Defense systems manufacturer Chemring added 7.2% after guiding to an outturn for its current financial year towards the top end of market expectations.
For the year ending October 31, adjusted operating profit is expected to be at the upper end of consensus expectations, which is in the range of GBP47 million to GBP53 million. For the year before, adjusted operating profit was GBP44.0 million.
Order intake to August 31 was up 4% from the same period a year before, with the order book on the same date being GBP452 million, compared to GBP449 million at the end of October 2019.
"This has been a busy period in which the resilience of the group has been demonstrated as we continue to make good progress despite the challenges presented by Covid-19. Our expectations for FY20 are towards the upper end of current analyst expectations," said Chief Executive Michael Ord.
Marshalls ended the worst performer in the FTSE 250 after it posted a sharp swing to loss for the first half of 2020, caused by crashing revenues and restructuring costs.
For the six months ended June 30, Marshalls posted a pretax loss of GBP16.0 million, swinging from a profit of GBP39.0 million a year prior. This was as revenue fell 25% to year-on-year to GBP210.0 million, and GBP17.6 million of restructuring costs and asset impairments were recognised.
Earlier in May, the West Yorkshire-based company said that to mitigate the effects of the pandemic, it had taken further steps to restructure its operations, putting forward proposals which include selective site closures, changes in shift patterns, and also to the size and structure of support functions. It noted that 400 positions - which represents 15% of its workforce - could be at risk from these changes. As part of the restructuring, it also permanently shut three manufacturing facilities and a number of Premier Mortars locations.
The euro traded at USD1.1847 at Tuesday's close in London, soft against USD1.1884 late Monday. Against the yen, the dollar was soft at JPY105.48 versus JPY105.64.
Gold was quoted at USD1,951.10 an ounce on Tuesday, lower than USD1,961.00 on Monday. Brent oil was trading at USD40.16 a barrel, up from on USD39.56 late Monday.
Wall Street was continuing to rally Tuesday, with the Dow Jones up 0.5%, the S&P 500 up 0.9% and the Nasdaq was up 1.4%.
Oanda's Craig Erlam said: "Stock markets are advancing cautiously on Tuesday, as investors await the outcome of this weeks central bank meetings, with particular focus on the Fed, who's two day meeting gets underway today."
"Ultimately though, it's the Fed meeting on Wednesday that could be the difference maker this week. The central bank modified its framework last month and this is its first opportunity to act upon it. In allowing for an inflation overshoot, the Fed has given itself to be patient in considering tightening, when the time comes, or even ease further. With some economic data improving faster than expected, policy makers may err towards the former and monitor price pressures in the near-term."
The US Federal Reserve is expected this week to signal no US interest rate rises for the foreseeable future in line with its strategy review decisions unveiled last month at Jackson Hole.
The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1900 BST. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 BST.
At the end of August, Powell presented the results of the US central bank's strategy review, revealing that the Fed has shifted to a "flexible form of average inflation targeting".
The change means inflation can stay above the 2.0% target "for some time" before the Fed will need to act by raising interest rates, Powell said in a speech to the annual Jackson Hole central bank symposium, this year held virtually.
Elsewhere in the international events calendar Wednesday, there is Japanese import and export reading overnight, with UK consumer and producer price index prints at 0700 BST. Later in the morning, there is eurozone trade balance data at 1000 BST, with US retail sales in the afternoon at 1330 BST.
A busy UK corporate calendar on Wednesday has half-year results from cafe and restaurant operator Loungers, mobile payments platform Boku, ticketing software firm accesso Technology and life sciences investor BioPharma Credit.
By Paul McGowan; paulmcgowan@alliancenews.com
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