LONDON MARKET MIDDAY: China Data And Bank Gains Give December Boost

(Alliance News) - The FTSE 100 shot up on Tuesday, with some strong data overnight from China providing London's blue-chip index with some early festive cheer.

Share price gains for banks and housebuilders helped the index of large-caps to its near 130-point rise.

"December has started on the front foot, with solid gains across the board for stock markets," said Chris Beauchamp, chief market analyst at IG.

The FTSE 100 index was up 128.24 points, or 2.1%, at 6,394.43 Tuesday midday. The mid-cap FTSE 250 index was up 225.76 points, or 1.2%, at 19,562.08. The AIM All-Share index was up 1.1% at 1,061.80.

The Cboe UK 100 index was up 1.5% at 636.65. The Cboe 250 was up 0.9% at 16,852.36, and the Cboe Small Companies was up 0.6% at 11,369.78.

In mainland Europe, the CAC 40 in Paris was up 1.2%, while the DAX 30 in Frankfurt was up 1.1% Tuesday afternoon.

IG's Beauchamp commented: "The FTSE 100 in particular is roaring ahead, gaining over 100 points as investors took heart from the China PMI numbers that showed there was a solid recovery in play in the world's manufacturing heart. As a global index and not one just focussed on the UK, the FTSE 100 is well-placed to benefit as China recovers and the rest of the global economy moves slowly towards the post-virus world."

Chinese manufacturers signalled the strongest improvement in operating conditions for a decade in November, as growth of both output and new orders accelerated to ten-year highs.

The Caixin China headline seasonally adjusted purchasing managers' index increased to 54.9 in November from 53.6 in October, to signal the sharpest improvement in conditions since November 2010 and well clear of the neutral mark of 50.

And there was also good news at home, with the UK also recording an improvement in its manufacturing sector in November.

The IHS Markit/Chartered Institute of Procurement & Supply PMI rose to a near three-year high of 55.6 points in November, up from 53.7 in October. Any reading above the no-change mark of 50 indicates expansion, and the PMI has now signalled growth for six successive months.

Manufacturers saw higher inflows of new work from overseas, in part boosted by EU clients bringing forward purchases before the Brexit transition period ends on December 31.

"The upcoming end to the Brexit transition period also affected the trends in purchasing, stocks and supplier lead times. Input buying volumes increased to the greatest extent since March 2019, mainly to achieve the steepest growth in stocks of purchases for over a year," said IHS Markit.

The eurozone saw its own manufacturing recovery flag, however. The bloc's PMI came in at 53.8 for November, above the flash reading of 53.6 but below October's 54.8.

Top of the pack was Germany with a manufacturing PMI of 57.8, though this did mark a two-month low. The Netherlands, meanwhile, posted a near two-year high of 54.4.

Italy posted a five-month low of 51.5, from 53.8 in October, and Spain was also at five-month low, at 49.8, versus 52.5 the month before. Also slipping into contraction territory in November with a sub-50 score was France, with a PMI of 49.6 for November - though this did mark an improvement on the 49.1 flash reading - which was down from 51.3 in October.

Sterling was quoted at USD1.3342 Tuesday after the data, flat on USD1.3343 at the London equities close on Monday. The euro traded at USD1.1965, rising from USD1.1948 late Monday.

The economic calendar still has a US manufacturing PMI at 1445 GMT.

In London, banks were helping to drive up the FTSE 100.

"Coming off the back of a thirteen year high in mortgage approvals yesterday it is clear that demand for housing remains resilient, providing a decent boost to banks as well, as higher asset prices reduce the pressure on any impairment provisions," said CMC Markets's Michael Hewson.

Nationwide's latest house price index showed UK house prices surged in November to post their fastest growth since the start of 2015.

House prices jumped 6.5% year-on-year in November, accelerating from growth of 5.8% in October to achieve the highest rate since January 2015. The average UK house price stood at GBP229,721 in November versus GBP227,826 in October.

Hewson added: "It is therefore not surprising that the best performers are Barclays, Lloyds and NatWest as are the two biggest house builders in Taylor Wimpey and Berkeley Group."

Barclays was up 4.2% at midday and Lloyds Banking up 4.6%, with NatWest up 4.4%. Taylor Wimpey advanced 3.7% and Berkeley 4.5%.

Credit Suisse on Tuesday said it has chosen outgoing Lloyds Chief Executive Antonio Horta-Osorio to be its new chair.

Horta-Osorio will succeed Urs Rohner as chair of the Swiss bank's board of directors. Rohner became full-time chair in 2009 and will step down in 2021 once he has reached his statutory 12-year term.

Credit Suisse will propose Horta-Osorio's election to shareholders at its April 30 annual general meeting. His departure from Lloyds after 10 years at the helm was announced in June.

Credit Suisse shares were up 0.9% on Tuesday.

Lloyds on Tuesday said it has agreed for Horta-Osorio to depart the UK bank on April 30, so that he can take up the chair of Credit Suisse on May 1. Previously, he was intending to leave Lloyds by the end of June 2021.

Lloyds on Monday said it had picked HSBC's Wealth & Personal Banking head, Charlie Nunn, as its next chief executive.

In the retail sector, JD Sports Fashion was up 2.5% amid more turmoil on the UK high street.

The FTSE 100-listed athleisurewear retailer confirmed that discussions with the administrators of Debenhams for a potential takeover of the on-the-brink UK department store chain have been terminated.

JD Sports was the last remaining bidder for Debenhams, which has been in administration since April, and the department store subsequently said that its administrators have decided to start a wind-down of Debenhams UK.

Administrators will continue to seek offers, but operations of the UK business will close if no alternative offers are received by the end of the wind-down process.

Debenham's collapse comes after Philip Green's Arcadia Group - which runs the Topshop, Dorothy Perkins and Burton fashion store brands and operates a large number of concessions within Debenhams - late Monday hired administrators from Deloitte.

Shares in Sports Direct owner Frasers Group - which had a GBP50 million loan offer to Arcadia rejected on Monday, and also said it would be interested in any sale process should Arcadia enter administration - were up 4.4% at midday.

Online fashion retailer boohoo, seen as a potential suitor for some of Arcadia's brands, was up 2.2%.

In the US, Wall Street is called for a strong open on Tuesday. The Dow Jones is pointed up 1.2% and the S&P up 1.1%, while the Nasdaq is on course to rise 0.9%.

Brent oil was trading at USD47.95 a barrel at midday, up on USD47.75 late Monday.

There were mixed fortunes for the Japanese yen and gold, both safe haven assets.

Against the yen, the dollar rose to JPY104.42 versus JPY104.27 late Monday. Meanwhile, gold was quoted at USD1,805.27 an ounce on Tuesday, higher than USD1,772.60 on Monday.

By Lucy Heming; lucyheming@alliancenews.com

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