Stock prices in London closed up on Wednesday as private sector expansion proved stronger than expected, and amid a host of strong PMI data from around the world.
The FTSE 100 index closed up 41.94 points, 0.6%, at 7,527.67. The FTSE 250 ended up 179.06 points, 0.9%, at 19,171.68 and the AIM All-Share closed up 5.93 points, 0.8%, at 744.85.
The Cboe UK 100 ended up 0.5% at 752.68, the Cboe UK 250 closed up 1.1% at 16,607.40, and the Cboe Small Companies ended up 0.1% at 14,880.38.
The UK’s private sector expansion was stronger than anticipated at the start of 2024, preliminary data suggested, although the Red Sea crisis is showing early signs of reigniting inflationary pressures.
The S&P Global flash composite purchasing managers’ index rose to a seven-month high of 52.5 points in January, from 52.1 in December. Rising further about the 50-point no-change mark, it shows the pace of expansion sped up slightly. The reading was higher than FXStreet-cited market consensus of 52.2.
US businesses showed ‘a stronger upturn in activity’ in January, with service providers mainly driving the expansion, S&P Global data showed.
US composite output PMI growth accelerated to 52.3 in January from 50.9 in December, a seven-month high that ‘signalled the fastest rise in business activity since June 2023’ and ‘a notable uptick in performance’.
The US services business activity index was at 52.9 in January, another seven-month high and up from 51.4 the prior month.
The manufacturing PMI achieved a 15-month high at 50.3 following last month’s 47.9, signalling ‘the first improvement in operating conditions at goods producers in nine months’.
Stocks in New York were higher at the London equities close, with the DJIA up 0.3%, the S&P 500 index up 0.6%, and the Nasdaq Composite up 0.9%.
Sterling was quoted at $1.2744 on Wednesday at the London equities close, higher than $1.2660 on Tuesday. The euro traded at $1.0904, higher than $1.0835. Against the yen, the dollar was quoted at JP¥147.33, down versus JP¥148.54.
In European equities on Wednesday, the CAC 40 in Paris ended up 0.9%, while the DAX 40 in Frankfurt ended up 1.6%.
The eurozone private sector economy remained in contraction territory at the start of 2024, though the pace of decline eased, a survey revealed.
The latest Hamburg Commercial Bank flash purchasing managers’ index rose slightly to 47.9 points in January, from December’s final tally of 47.6. Clawing closer to the 50-point no-change mark, the latest data suggests the pace of decline eased. The figure also represented a six-month high.
The composite data is calculated using a weighted average of the services and manufacturing readings.
In the FTSE 100, miners were some of the top performers, including Antofagasta up 5.5% and Anglo American up 4.0%.
China said it would next month cut the amount banks must hold in reserve in order to boost lending, state media reported.
The decision comes as the world’s second-largest economy faces multiple headwinds, including a prolonged crisis in the property sector, sluggish domestic consumption and weakening foreign demand.
The move will provide ‘¥1 trillion, or $140 billion, of liquidity to the market’, it added.
The central bank’s governor also said Wednesday that more policies to offer support for the country’s struggling property sector will be announced tomorrow.
Fresnillo rose 4.7%, after reporting fourth quarter production data.
The gold and silver miner in Mexico said annual silver equivalent production met guidance of 105.1 million ounces, with gold, lead, and zinc also coming within guided ranges. Silver production rose 4.7% year-on-year, following the ramp up at Juanicipio and higher ore grade at San Julian Vein, but was below expectations.
Miner Rio Tinto rose 1.6%.
It has been informed by authorities that a plane carrying its employees crashed on its way to the Diavik mine, near Forth Smith, Northwest Territories, Canada. The crash resulted in fatalities, Rio Tinto said.
‘We are working closely with authorities and will help in any way we can with their efforts to find out exactly what has happened,’ said Chief Executive Jakob Stausholm.
Separately, Rio Tinto said it has agreed to buy all electricity from the 1.1 gigawatt Upper Calliope solar farm to provide renewable power for its Gladstone operations.
easyJet added 3.2%. The budget airline said it reduced its losses in its first-quarter, despite suffering a £40 million hit from the Hamas-Israel conflict.
easyJet recorded a headline pretax of £126 million in the quarter ended December 31, slimming from £133 million a year prior 2022. Passenger numbers increased by 14% year-on-year.
The airline said it expects to suffer a ‘direct impact of £40 million’ in the six months to the end of March due to the war between Israel and Hamas.
Elsewhere, abdrn shares closed 2.3% higher as it outline a transformation programme to bring about annualised cost savings of at least £150 million by the end of next year.
The investment company said the programme will include removing management layers, increasing spans of control, efficiencies in outsourcing and technology areas, as well as cutting overheads in group functions and support services.
While most of the savings will come from non-staff costs, abdrn expects to cut around 500 roles.
At the end of the second half of 2023, assets under management and administration eased to £494.9 billion, down from £495.7 billion at the end of June. Meanwhile, net outflows widened to £12.4 billion in the second half from £5.2 billion in the first half.
Elsewhere in London, Revolution Bars shares slumped 22%. It said its recovery will take longer than previously forecast, as younger drinkers are feeling the squeeze of the cost of living crisis in the UK.
The Tameside, England-based operator of 58 premium bars reiterated that like-for-like sales in the four weeks to December 31 from December 4 were up 9.0% year-on-year, ‘the best festive period since 2019’.
However, citing ‘soft’ January trade, the company expects IAS 17 earnings before interest, tax, depreciation and amortisation for financial 2024 of between £3.0 million and £3.5 million, down at least 47% from £6.6 million in financial 2023, which had ended on July 1, 2023. IAS 17 is an alternative performance measure.
Revolution Bars said younger customers are still feeling the disproportionate effect of the cost-of-living crisis.
Gold was quoted at $2,012.59 an ounce on Wednesday at the London equities close, down from $2,023.60 on Tuesday. Brent oil was trading at $80.44 a barrel, higher than $79.92.
In Thursday’s UK corporate calendar, IG posts its half-year results, alongside Wizz Air releasing its third quarter results.
The economic calendar has US gross domestic product data out at 1500 GMT after an interest rate decision from the South African Reserve Bank at 1300 GMT.
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