LONDON MARKET OPEN: FTSE 100 Gets Boost From Strong China PMI Data

Fri, 01st Nov 2019 08:54

(Alliance News) - Stocks in London were higher Friday morning, staging a partial rebound after Thursday's sharp losses, as strong manufacturing data from China boosted the FTSE 100.

The FTSE 100 index was 20.19 points higher, or 0.3%, at 7,267.64 early Friday. The FTSE 250 was up 82.99 points, or 0.4%, at 20,103.57, with the AIM All-Share up marginally at 889.74.

The FTSE 100 index had closed down 1.1% on Thursday.

The Cboe UK 100 index was flat at 12,322.53. The Cboe UK 250 was up 0.2% at 18,045.67 and the Cboe UK Small Companies was down 0.2% at 11,171.05.

In European equities, the CAC 40 index in Paris and the DAX 30 in Frankfurt were both 0.4% higher in early trade.

In Asia on Friday, the Japanese Nikkei 225 index closed down 0.3%. In China, the Shanghai Composite is up 1.0%, while the Hang Seng index in Hong Kong is up 0.6%.

October's Chinese manufacturing data showed the strongest improvement in conditions since 2017, the latest figures from Caixin showed on Friday.

The Caixin China General Manufacturing purchasing managers' index rose to 51.7 in October from 51.4 in September. The index has now signalled an improvement in operating conditions for three months running, Caixin noted, with the latest improvement the strongest seen since February 2017.

Total new work received by Chinese firms rose "solidly" in October, with the rate of expansion the quickest recorded for 81 months. Notably, new export business increased for the first time in five months, albeit marginally.

"China's manufacturing economy continued to recover at a relatively quick pace in October. New orders placed with companies improved substantially, and new export orders rose at the fastest pace since the Sino-US trade war broke out," said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group.

Still to come, manufacturing PMI prints are due from the UK at 0930 GMT and the US at 1345 GMT.

Looking to the likely UK PMI score, CMC Market's David Madden said: "The consensus estimate is 48.1, which would be a decline from the 48.3 in the previous update. The past five reports have shown the sector is in contraction territory as Brexit anxiety has taken its toll on the industry."

The pound was quoted at USD1.2966 early Friday versus USD1.2927 at the London close on Thursday.

In London, Rentokil was 1.1% higher after the firm acquired Florida Pest Control, which serves both commercial and residential customers.

The London-listed pest control and hygiene firm said Florida Pest Control had USD66 million in revenue in 2018. The Gainesville-based company was established in 1949 and today employs 600 people in 20 branches throughout central and northern Florida.

Rentokil did not give any financial details of the acquisition, but said that the deal is expected to complete later Friday or shortly thereafter. It said Florida Pest Control will contribute towards it North American revenue and margin targets.

Blue-chip car marketplace Auto Trader was down 2.4% following the profit warning from smaller peer Lookers.

Lookers itself was 22% lower. The car dealership said its first half was "challenging", and Chief Executive Officer Andy Bruce and Chief Operating Officer Nigel McMinn will be leaving the company immediately.

Lookers said Chair Phil White will become executive chair until permanent successors for Bruce and McMinn are found, while Non-Executive Director Richard Walker will take on a part-time executive role until the end of 2019.

Lookers expects to report 2019 underlying pretax profit of GBP20 million. The company reported an adjusted pretax profit of GBP67.3 million in 2018.

It said the UK new vehicle market was weak in the third quarter, including the normally highly profitable plate-change month of September. Like-for-like unit sales of new cars were down 3.2% in the quarter, accelerating the 1.2% decline seen in the first half of 2019.

As a result of the poor sales performance, Lookers said it will "accelerate" its portfolio consolidation in order to finance the future of the company.

Back in the FTSE 100, Russian steel maker Evraz was 1.0% lower after its steel production fell during the third quarter of 2019 due to repairs at its metal plant in Siberia and weaker demand in North America.

Crude steel production in the three months to September fell by 3.4% quarter-on-quarter to 3.4 million tonnes from 3.5 million tonnes. Nine-month output stands at 10.4 million tonnes, representing a 4.5% year-on-year climb from 9.9 million tonnes a year before.

Evraz said its total sales of steel products stayed broadly flat quarter-on-quarter at 3.4 million tonnes.

In the midcaps, Homeserve was 2.9% higher after Peel Hunt upgraded the stock to Add from Hold.

BBA Aviation added 2.5% in early trade following the completion of the USD1.37 billion sale of its aerospace manufacturing business Ontic to CVC Fund VII.

BBA is planning to return USD835 million of the proceeds to shareholders and rename itself Signature Aviation.

At the other end of the FTSE 250, Euromoney Institutional Investor and Crest Nicholson were suffering after Swiss bank UBS cut the pair Neutral from Buy.

Euromoney was down 3.5% and Crest Nicholson 3.0%.

Elsewhere in the economic calendar, the key October US jobs report is released at 1230 GMT, with the US oil rig count due at 1700 GMT.

CMC's Madden said: "The non-farm payrolls report will be closely watched. The headline figure is expected to be 89,000, which would be a decline from the 136,000 posted in September. Unemployment is tipped to creep up from the 50-year low of 3.5% to 3.6%. Average earnings are expected to edge up to 3% from 2.9%."

By Paul McGowan; paulmcgowan@alliancenews.com