LONDON MARKET CLOSE: Miners Propel FTSE 100 To Six Month High

Fri, 17th Jan 2020 17:02

(Alliance News) - Stocks in London ended higher on Friday, with a rise in mining stocks sending the FTSE 100 to its highest level in six months thanks to upbeat economic data from China.

China's economic growth stabilised at 6.0% in the last three months of 2019, the same pace as in the third quarter, according to the National Bureau of Statistics.

In addition, China's industrial production grew 6.9% year-on-year, beating economists' forecast for 5.9% growth. The figure was up from the preceding month's reading of 6.2%.

"The fact that GDP was in line with expectations an offered no nasty surprises, despite the US-China trade dispute running across the year, has left investors relieved. The data comes just two days after the signing of the US-China trade deal which should help to put a floor under risks to the manufacturing sector," said Gain Capital's Fiona Cincotta.

The FTSE 100 index closed up 64.75 points, or 0.9% at 7,674.56, ending the week up 1.1%. The UK flagship index touched an intraday high of 7,689.67 - its highest level since July.

The FTSE 250 ended up 164.85 points, or 0.8% at 21,886.08, ending the week up 1.5%, and the AIM All-Share closed up 4.80 points, or 0.5% at 974.85, ending the week up 1.3%.

The Cboe UK 100 ended up 0.9% at 13,004.81, the Cboe UK 250 closed up 0.8% at 19,742.98, and the Cboe Small Companies ended flat at 12,500.91.

In Paris the CAC 40 ended up 1.0%, while the DAX 30 in Frankfurt ended up 0.7%.

On the London Stock Exchange, NMC Health ended the best performer, up 8.1% after the UAE-focused private healthcare company called upon a firm founded by a former US Federal Judge and FBI director to review allegations made by short-selling firm Muddy Waters Capital.

NMC said it appointed Freeh Group International Solutions, founded by Louis Freeh, to "provide a completely independent, unbiased, comprehensive and transparent report that will address all of these allegations". Freeh was head of the FBI, the US's intelligence and security arm, between 1993 and 2001 and had a stint as the assistant US attorney in the country's department of justice.

In December, Carson Block's Muddy Waters launched a scathing attack on NMC over "serious doubts" regarding financial statements. NMC hit back called the allegations "unfounded, baseless and misleading".

Ashtead Group closed up 5.2% after Morgan Stanley raised the equipment rental firm to Overweight from Equal Weight. The stock hit a fresh record high of 2,559.00 pence in early trade.

"On the back of new and granular analysis of the US data centre construction market, we raise Ashtead to join United Rentals at Overweight. Ashtead's mid-cycle valuations belie a structural growth opportunity in equipment rental to data centre construction sites with a large and defensive maintenance, repair and operations opportunity thereafter," the US investment bank said.

In addition heavyweight mining stocks ended in the green, buoyed by the positive Chinese data.

Anglo American closed up 3.2%, Rio Tinto up 2.8%, Glencore up 0.9% , Antofagasta up 1.6% and BHP up 2.3%. Russian steelmaker Evraz closed up 6.4%.

"UK listed miners have been driving a significant chunk of the FTSE 100 gains today, with the US-China trade deal ramping up hopes of a resurgence after an uncertain period. The push towards an environment with less tariff and more global trade can only be a good thing for commodities, with China showing signs it is ending a multiyear slide in economic data. With fixed asset investment and industrial production both beating market expectations, it is clear that base metal demand will likely increase in the months following this trade deal," said IG Group.

At the other end of the large cap index, Whitbread ended the worst performer, down 2.3% after Berenberg downgraded the Premier Inn hotel chain owner to Hold from Buy.

"The UK market remains challenging, with weak RevPAR, particularly in the regions, denting Whitbread's operational performance. We fear that this pressure will continue moving into 2020

despite the resounding general election result as the recovery in RevPAR usually lags any broader economic recovery, while there is a material uptick in cost pressure following the third quarter trading update," the German bank said.

In the FTSE 250, Cranswick ended the best performer, up 9.4% after the pork products producer said it expects profit for its current financial year to beat market expectations, buoyed by exceptionally high export sales.

For the year ending March 31, Cranswick expects adjusted pretax profit to be higher than current market forecasts, driven by positive revenue growth across Cranswick's operations despite a competitive market environment. In the prior year, Cranswick reported adjusted pretax profit of GBP92.0 million. The group said export sales remained exceptionally strong as the African Swine Fever outbreak in China created opportunities to increase sales in the region, so long as the UK remained free of the outbreak.

At the other end of the midcap index, Restaurant Group ended the worst performer, down 7.5% after UBS cut the casing dining chain operator to Sell from Neutral.

The pound was quoted at USD1.3030 at the London equities close, down from USD1.3070 at the London equities close Thursday, after disappointing UK retail sales data.

According to the Office for National Statistics, the volume of sales fell 0.6% month-on-month in December, a more moderate rate of decline than November's 0.8%. The figure was below economist expectations of 0.7% growth.

This marked the fifth consecutive month of no growth.

Annually, sales were up 0.9%, slightly ahead of the previous month's 0.8% growth but again a substantial disappointment versus consensus, which had seen growth of 2.6%.

"The stunningly weak set of UK December retail sales data have strengthened market expectations that the Bank of England will cut interest rates at its January 30 policy meeting. These data follow soft numbers for UK monthly November GDP and CPI inflation and a series of dovish remarks from various MPC members since the start of the year. The decision by the BoE at its January meeting is likely to be key in determining the outlook for GBP/USD in the weeks and months ahead," said analysts at Rabobank.

The euro stood at USD1.1094 at the European equities close, down from USD1.1135 late Thursday.

In economic news from the continent, inflation in the euro area accelerated in December, eurostat reported, amid a rise in the price of services.

Euro area inflation was 1.3% in December on an annual basis, accelerating from 1.0% in November. In the EU as a whole, inflation was 1.6% in December, up from 1.3% in November. The figure was short of the European Central Bank's target of "below, but close to, 2%".

The central bank will be in focus when it announces its first interest rate decision of the decade next Thursday.

Analysts at Danske Bank said: "The thrust of the ECB meeting next week is expected to be the strategic review...We believe ECB's overarching strategy should be to ensure robustness and flexibility in the objective and to keep the focus on its ability to guide end-users with a strong, credible, transparent commitment, but to acknowledge that some flexibility should be expected given the nature of steering inflation. We conclude that the ECB will decide to apply a symmetry with a potential tolerance band around the inflation target mid-point."

Against the yen, the dollar was trading at JPY110.17, flat from JPY110.10 late Thursday.

Stocks in New York were in the green at the London equities close modestly added to record highs amid positive US housing data.

The DJIA was up 0.1%, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.1%.

Construction of new US housing shot to a 13-year high last month, government data showed. The surge was led a sudden boom in apartments, where construction hit its fastest pace in 33 years, according to the Commerce Department figures.

The December jump could support GDP growth in the fourth quarter of 2019 after an extended period in which the housing sector was a drag on the wider US economy.

Brent oil was quoted at USD64.74 a barrel at the London equities close, lower than USD64.90 at the close Thursday.

Gold was quoted at USD1,556.62 an ounce at the London equities close, firm against USD1,550.05 late Thursday.

The economic events calendar on Monday has German producer prices at 0700 GMT. Financial markets in the US will be closed on Monday for the Martin Luther King Day holiday.

The UK corporate calendar on Monday has a trading statement from construction company Henry Boot.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com