LONDON MARKET OPEN: Miners lift FTSE 100 after robust China PMI

(Alliance News) - Stock prices in London opened higher on Tuesday following the long bank holiday weekend, with miners among the best performers in the FTSE 100.

The FTSE 100 index was up 28.44 points, or 0.4%, at 7,051.05. The mid-cap FTSE 250 index was up 150.06 points, or 0.7%, at 22,834.01. The AIM All-Share index was up 5.91 points, or 0.5%, at 1,262.02.

The Cboe UK 100 index was up 0.3% at 702.70. The Cboe 250 was up 0.2% at 20,509.76, and the Cboe Small Companies was up 0.1% at 15,009.25.

In the FTSE 100, miners Anglo American, Rio Tinto, BHP, Glencore and Antofagasta were up 4.2%, 3.7%, 3.1%, 3.1% and 2.8% respectively, following positive PMI data from China.

China's manufacturing sector continued to expand in May, with firms reporting the strongest increase in new work for five months, data from Caixin and IHS Markit showed.

China's general manufacturing purchasing managers' index - a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy - inched up to 52.0 in May from 51.9 in April. The figure rose further away from the 50.0 threshold that separates expansion from contraction.

Postal operator Royal Mail was up 1.6%. The 505-year-old institution re-entered the flagship index with a market value of GBP5.92 billion after a two-year hiatus, following the takeover of RSA Insurance by Canada's Intact and Scandinavian insurer Tryg. RSA shares will be cancelled from trading on Wednesday.

As part of the FTSE Russell index review changes to be announced after the London market close on Wednesday, ITV is likely to be promoted to the FTSE 100 with a market value of GBP5.2 billion. Engineer Renishaw will be relegated from the index of large-caps with a market capitalisation of GBP4.1 billion.

JD Sports Fashion was up 1.1%. The athletic apparel noted a media report about the position of Executive Chair & Chief Executive Peter Cowgill. The Times said the blue-chip retailer has stepped up succession planning for Cowgill, after coming under pressure from institutional investors. Cowgill has been executive chair of JD since 2004 and assumed CEO responsibilities in 2014.

However, the Times reported that investors are becoming increasingly concerned about Cowgill's joint roles, which flout usual corporate governance standards.

"JD can confirm to both investors and to its international brand partners that the board is not engaged in a process to recruit a chief executive officer or chairman. JD can also confirm that it is continually reviewing the depth of its management team to ensure that the senior operational leadership team in the business has the necessary skills and experience to exploit the ongoing global development opportunities," the company said.

In the FTSE 250, Biffa was the best performer, up 6.2%. The waste management firm said it delivered a resilient financial performance in the year just past despite the damage of pandemic lockdowns.

For the financial year that ended March 26, Biffa posted revenue of GBP1.04 billion, down 10% from GBP1.16 billion last year, as it swung to a pretax loss of GBP52.8 million from a GBP56.4 million profit. Biffa declared no dividend for financial 2021, having paid out 2.47p in financial 2020.

Looking ahead, Biffa said full-year expectations for financial 2022 remain unchanged, and it has been encouraged by recent trading.

The Japanese Nikkei 225 index closed down 0.2%. In China, the Shanghai Composite ended up 0.3%, while the Hang Seng index in Hong Kong was up 0.8%.

The growth rate of the Japanese manufacturing sector was sluggish in May, but still saw "moderate improvement" according to the au Jibun Bank PMI.

The au Jibun Bank Japan manufacturing PMI edged lower to 53.0 in May from 53.6 in April. The figure fell closer to the 50.0 threshold, "signalling a softer but still moderate improvement in the health of the manufacturing sector".

The dollar was lower against major counterparts. The pound was quoted at USD1.4235 early Tuesday, up from USD1.4175 at the London equities close Friday.

The euro was priced at USD1.2227, up from USD1.2185. Against the yen, the dollar was trading at JPY109.51, down from JPY110.00.

In commodities markets, the OPEC group of oil-producing countries and its allies look set to boost production further when they meet Tuesday, as pandemic-hit demand for crude recovers.

The OPEC+ alliance, consisting of 23 countries, implemented sharp output cuts to support prices after the coronavirus pandemic crushed the global economy last year.

But since early May the cartel has started implementing more generous production increases as oil prices have recovered and the health situation improves in developed economies.

Currently the production roadmap for OPEC+ members consists of a series of increases between May and July adding up to some 1.2 million barrels per day. On the agenda at Tuesday's OPEC meeting, expected to start at 1100 GMT, will be whether this can be extended into August.

Brent oil was trading at USD70.40 a barrel Tuesday morning, up sharply from USD69.77 late Friday.

Gold was quoted at USD1,915.60 an ounce, higher from USD1,895.00.

The economic events calendar on Tuesday has manufacturing PMI readings from the UK at 0930 BST and the US at 1445 BST. Eurozone inflation figures are due at 1000 BST.

Ireland's manufacturing sector continued to grow in May, marking an improvement for the seventh time in eight months. The headline AIB Ireland manufacturing PMI rose to 64.1 points in May from 60.8 in April - setting a new survey high. The sharp growth was attributed to "booming" demand, benefiting from Covid restrictions lifting and the economy - in Ireland and Europe - beginning to reopen.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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