LONDON MARKET OPEN: Stocks Rise; Melrose Sees Signs Of Recovery

(Alliance News) - Stock prices in London opened higher on Thursday as investors reacted positively to new vaccine hopes, while Melrose Industries led the FTSE 100 after seeing signs of life in some of its key markets.

The Trump administration has urged US states to get ready to distribute a potential Covid-19 vaccine by November 1, media reported Wednesday, in the latest sign of the accelerating race to deliver a vaccine by year's end.

"CDC urgently requests your assistance in expediting applications for these distribution facilities," read a letter from Robert Redfield, director of the Centers for Disease Control and Prevention, quoted by The Wall Street Journal.

In addition, US top infectious diseases official, Anthony Fauci, on Wednesday told NBC: "I believe that by the time we get to the end of this calendar year that we will feel comfortable that we do have a safe and effective vaccine."

In London, the blue-chip FTSE 100 index was up 47.24 points, or 0.8%, at 5,988.19. The mid-cap FTSE 250 index was up 70.89 points, or 0.4%, at 17,775.31. The AIM All-Share index was up 0.5% at 972.57.

The Cboe UK 100 index was up 0.8% at 596.69. The Cboe 250 was up 0.5% at 15,096.68, and the Cboe Small Companies was down 0.1% at 9,373.25.

In mainland Europe, the CAC 40 index in Paris was up 1.5%, while the DAX 30 in Frankfurt was up 1.1%.

On the London Stock Exchange, Melrose Industries was the best blue-chip performer, up 7.5% after the industrial turnaround specialist said it saw positive signs for a recovery as coronavirus lockdown measures ease.

For the half year ended June 30, revenue fell 26% to GBP4.12 billion from GBP5.57 billion last year and its pretax loss widened to GBP685 million from GBP109 million a year before.

The company has high exposure to the battered aerospace and automotive sectors following its acquisition of GKN in 2018.

Melrose said trading over the summer months has been at the higher end of expectations, particularly in automotive and key Nortek markets. The company also backed its business model to "once again deliver" in the challenging circumstances brought about by the pandemic.

"With the support of our banks, shareholders and employees, we have been successful in positioning our group to emerge well from the crisis. Organically, we see some early signs of recovery in certain geographies, although GKN Aerospace will continue to experience market uncertainty," the company said.

At the other end of the large caps, Admiral Group and BHP were the worst performers, down 3.6% and 2.8% respectively after the stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.

Next was down 2.5% after Morgan Stanley cut the clothing and homewares retailer to Underweight from Equal Weight.

The pound was quoted at USD1.3280 Thursday morning, down from USD1.3302 at the London equities close Wednesday ahead of the UK's services PMI.

"The UK is expected to confirm the initial reading of 60.1 which indicates that activity in UK’s dominant sector remains strong. However, the waters are expected to get much choppier over the coming months as the government continues to withdraw from the furlough scheme and as tax hikes are implemented," said Fiona Cincotta at City Index.

The UK services PMI is due at 0930 BST. Before this is the eurozone services PMI, at 0900 BST, and the US follows later at 1445 BST.

The euro stood at USD1.1803 early Thursday, lower from USD1.1834. Against the yen, the dollar was trading at JPY106.33, up from JPY106.14.

Gold was lower, quoted at USD1,934.41 an ounce early Thursday from USD1,941.20 at the London equities close Wednesday. Brent oil was quoted at USD44.35 a barrel, down from USD44.82.

The Japanese Nikkei 225 index ended up 0.9%. In China, the Shanghai Composite closed down 0.7%, while the Hang Seng index in Hong Kong is down 0.5%.

Growth in China's service sector eased by a hair in August, data showed, though the industry is continuing its recovery from lows seen earlier in the year due to Covid-19.

The headline seasonally adjusted business activity index slipped to 54.0 in August from 54.1 in July, Caixin said. Any number above 50.0 denotes growth.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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