Stocks in London struggled on Monday, but managed to end higher, even as weakness in the world’s second-largest economy sent oil and mining stocks reeling.
The PBoC on Monday sliced the medium-term lending rate to 2.75%, a reduction of 10 basis points. The interest rate is used a benchmark for one-year loans provided to the banking system.
The move came after factory output and retail sales in China edged up in July but were weaker than analysts’ expectations, as a Covid-19 resurgence and property market jitters cast a pall over hopes for a stronger economic recovery.
The world’s second-biggest economy saw a bounce in business activity as some coronavirus restrictions eased in June, but the boost is fading and Beijing remains welded to a zero-Covid policy of snap lockdowns and long quarantines, which has battered sentiment.
But for July, China’s industrial production rose 3.8% on-year, down from a 3.9% jump in June, the National Bureau of Statistics said Monday. This undershot market expectations, cited by FXStreet, for growth to speed up to 4.6%.
Retail sales grew at a slower-than-expected 2.7% from a year ago, down from 3.1% in June, while the urban unemployment rate fell to 5.4%, the NBS said. Retail sales had been expected to rise 5%, cited by FXStreet.
The FTSE 100 index closed up 8.26 points, or 0.1%, at 7,509.15. The FTSE 250 closed up 43.80 points, or 0.2%, at 20,382.76, and the AIM All-Share closed up 0.91 of a point at 934.11.
The Cboe UK 100 ended up 0.1% at 749.94. The Cboe UK 250 closed down 0.1% at 17,684.28. The Cboe Small Companies ended flat at 14,472.95.
In European equities, the CAC 40 in Paris ended up 0.3%, while the DAX 40 in Frankfurt ended up 0.2%.
In the FTSE 100, RS Group ended the best performer, up 5.0% at 1,142.38 pence, after the Times reported at the weekend that the electrical parts maker could be the subject of a takeover bid.
The Times reported that there has been ‘chat’ that there may be a £15-a-share bid imminently. This would be a significant premium to the present price and above the £12.35 high the company, formerly known as Electrocomponents, hit last November before worries about recession surfaced.
However, the report did not name any potential suitor.
AstraZeneca closed up 2.2% after it said, alongside partner Daiichi Sankyo, that their Enhertu drug met its primary endpoint in a breast cancer trial.
The Cambridge-based pharmaceutical firm said a form of breast cancer in patients treated with Enhertu showed slowed disease progression. The trial involved sufferers of human epidermal growth factor receptor 2-positive unresectable and/or metastatic breast cancer. Participants had been previously treated with trastuzumab emtansine, an existing cancer therapy.
At the other end of the large-caps, miners were among the worst performers following the disappointing China data. Antofagasta closed down 1.5%, Anglo American down 2.4%, Rio Tinto down 2.2% and Glencore down 1.4%.
Meanwhile, Rio Tinto reiterated its proposal to acquire full-ownership of Turquoise Hill Resources for C$34 per share, around $25.48.
The announcement comes after Turquoise Hill said earlier in the day that it was no longer considering Rio Tinto’s takeover offer. The Canadian miner said Rio Tinto’s offer did not ‘fully and fairly reflect the fundamental and long-term strategic value’ of its majority ownership in the Oyu Tolgoi copper-gold project in Mongolia.
As a result, the company said it was not in the best interest of the company or its shareholders to support Rio Tinto’s proposal. Rio Tinto said it was ‘disappointed’ by the decision and asserted that the terms of its proposal would deliver ‘compelling value’ for Turquoise Hill.
In March, the FTSE 100-listed miner announced it was proposing to acquire the remaining 49% of Turquoise Hill that it does not currently own. This represented a 32% premium to the firm’s closing price on the Toronto Stock Exchange at the time.
Oil majors BP and Shell closed down 1.2% and 1.5% respectively, tracking spot oil prices lower.
Brent oil was quoted at $94.22 a barrel at the equities close, down sharply from $97.91 at the close Friday.
In the FTSE 250, Auction Technology ended the worst performer, down 4.7%, after JPMorgan downgraded the platform to ‘neutral’ from ‘overweight’.
The pound was quoted at $1.2075 at the London equities close, down from $1.2121 at the close Friday.
The euro stood at $1.0184 at the European equities close, down from $1.0248. Against the yen, the dollar was trading at JP¥133.07, down from JP¥133.63.
Stocks in New York were lower at the London equities close. The DJIA was down 0.1%, the S&P 500 index down 0.3% and the Nasdaq Composite down 0.2%.
On Wall Street, Moderna was up 2.5% after the UK’s medicines regulator said it had approved an updated version of the drugmaker’s vaccine against Covid-19, that targets the Omicron variant as well as the original form of the virus.
The Medicine & Healthcare products Regulatory Agency said it had approved the vaccine for adult booster doses ‘after it was found to meet the UK regulator’s standards of safety, quality and effectiveness’.
It was the first such ‘bivalent’ Covid-19 vaccine to be approved by the UK regulator.
Gold stood at $1,778.71 an ounce at the London equities close, lower against $1,797.13 late Friday.
The economic events calendar on Tuesday has UK unemployment data at 0700 BST and Germany ZEW indicator of economic sentiment at 1000 BST.
The UK corporate calendar on Tuesday has annual results from miner BHP Group and interim results from Bank of Georgia. Authorised Rolex dealer Watches of Switzerland puts out first-quarter numbers.
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