LONDON MARKET MIDDAY: Stocks Rally On Upbeat Chinese Economic Data

(Alliance News) - Stocks in London were higher at midday on Friday, supported by positive 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 FTSE 100 index was up 56.60 points, or 0.7%, at 7,668.41. The mid-cap FTSE 250 index was up 135.50 points, or 0.6%, at 21,856.73. The AIM All-Share index was up 0.4% at 973.97.

The Cboe UK 100 index was up 0.8% at 12,993.74. The Cboe 250 was 0.4% higher at 19,723.53, and the Cboe Small Companies up 0.1% at 12,510.18.

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

"Stock markets in Europe are higher as the bullish move in Asia overnight has influenced traders in this part of the world. China released some broadly positive economic reports, which has boosted sentiment around the globe," said CMC Markets analyst David Madden.

On the London Stock Exchange, International Consolidated Airlines Group was the best blue-chip performer, up 7.0%.

The British Airways parent said it will remove a policy which meant the company would need a limit on the maximum number non-European Union shareholders. As of Friday, IAG said just short of 40% of its shareholders were non-EU, though the percentage was as high at 48% on February 11, 2019.

Last February, IAG decided it was "necessary to specify a maximum aggregate number" of stock attributed to non-EU shareholders. It was policy added to its bylaws. IAG said that although the policy has been withdrawn, it will continue to "monitor its number of relevant non-EU shareholders".

NMC Health was up 6.3% 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 was up 4.5% after Morgan Stanley raised the equipment rental firm to Overweight from Equal Weight. The stock hit a fresh record high of 2,547.00 pence in early trade.

At the other end of the large cap index, TUI was down 1.0% after Goldman Sachs started coverage on the Anglo-German tour operator with a Sell rating. The US bank thinks TUI has a number of issues to contend with, not least the continued grounding of Boeing's 737 MAX aircraft.

In the FTSE 250, Cranswick was the best performer, up 6.5% 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, Hastings Group was the worst performer, down 6.3% after the insurer warned of a steep drop in annual profit, with claims in the last-quarter of 2019 rising.

Hastings reported "elevated" claims in the fourth-quarter, meaning its annual loss ratio, before a change in the Ogden rate last July, will be between 81% and 82% and adjusted operating profit will be GBP110 million, suggesting a 42% fall from 2018. This compares to a loss ratio in 2018 of 75%.

The firm also warned of a lower dividend for 2019 than the prior year.

AJ Bell's Russ Mould said: "Hastings arguably has greater sensitivity to rising premiums than some of its rivals as it wants to expand and use price comparison sites as its main method of distribution. People tend to make more use of these sites and do more switching of policies when their bills are increasing."

The pound was quoted at USD1.3038 at midday, lower than USD1.3070 at the London equities close Thursday, after disappointing UK retail sales figures.

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%.

"December's outright fall in retail sales, despite a boost from the lateness of Black Friday, does not bode well for GDP growth in December and could nudge the [Bank of England] yet closer still to cutting rates at the end of the month," said analysts at Capital Economics.

The euro stood at USD1.1111 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.

Against the yen, the dollar was trading at JPY110.12, flat from JPY110.10 late Thursday.

Stocks in New York were set for a higher open on Friday looking to set more records as the stock market rally continues.

The DJIA was called up 0.3%, the S&P 500 index up 0.4% and the Nasdaq Composite up 0.3%. All three major indices ended at fresh record highs on Thursday after the US Senate approved President Donald Trump's revised North American Free Trade Agreement.

The S&P 500 closed above the 3,300 mark for the first time after index constituent Alphabet became the fourth US company to breach the USD1 trillion market capitalisation barrier. The Google parent follows fellow tech stocks Apple, Amazon and Microsoft in achieving the record-breaking feat.

Financial markets in the US will be closed on Monday for the Martin Luther King Day holiday.

In commodities, Brent oil was quoted at USD64.95 a barrel at midday, flat from USD64.90 at the London equities close Thursday.

Gold was quoted at USD1,556.83, firm against USD1,550.05 late Thursday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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