London-listed mining stocks were on the rise on Tuesday, after Beijing confirmed that China is on track to meet the government’s 5% economic growth target, while market concern about the volatile political situation in Russia eased.
The FTSE 100 index opened up 25.01 points, or 0.3%, at 7,478.59. The FTSE 250 was up 96.72 points, or 0.5%, at 18,071.39, and the AIM All-Share was up 0.61 of a point, or 0.1%, at 761.47.
The Cboe UK 100 was up 0.3% at 745.89, the Cboe UK 250 was up 0.4% at 15,852.51, and the Cboe Small Companies was up 0.4% at 13,022.74.
UK shop price inflation decelerated in June, with price cuts for basket staples such as milk and eggs easing some pressure on the consumer.
According to the latest British Retail Consortium-NielsenIQ tracker, annual shop price inflation in the UK ebbed to 8.4% in June from 9.0% in May. June’s reading was also below the three-month average inflation rate of 8.7%.
Food inflation, recently a major driver of price pressure for the UK consumer, abated to 14.6%, from 15.4%.
BRC Chief Executive Helen Dickinson said that if the current situation continues, food price inflation should drop to single digits later this year.
Miners were among the top blue-chip performers in early morning trade in London. Anglo American was up 1.0%, Glencore up 1.0%, and Antofagasta up 1.9%.
Chinese Premier Li Qiang said the country is on course to achieve its 5% target for economic growth in 2023 set by Beijing earlier this year.
China is the world’s second-largest economy and a large consumer of commodities, so the prospect of solid economic growth in the country, and any stimulus to achieve that, helps to bolster the outlook for demand.
Asia-focused insurer Prudential also got a lift, up 1.5%.
Meanwhile, JD Sports Fashion was the worst-performing stock in the FTSE 100 in early morning trade, down 4.1%.
The retailer reported a moderation in organic sales growth at constant currency in May, reflecting tougher comparatives in the year prior as the supply chain normalised and the availability of product improved.
It also noted that there has been some softening of trade in North America, which partially offset positive trends in the UK, Europe and the Asia Pacific region.
Nonetheless, JD Sports said that profit before tax and adjusting items in the financial year ending February 3, 2024 will be in line with market consensus, which it put at £1.04 billion. This would be up from £991.4 million in financial 2023.
Shore Capital said i t will keep its ’buy’ recommendation on JD Sports shares due to the company’s ‘strong structural position’. The broker said JD Sports has a strong balance sheet, which will allow it to out-invest peers, particularly in the US.
Shore noted the next catalyst for JD Sports shares will be annual results from sportswear firm Nike on Thursday.
In the FTSE 250, PZ Cussons fell 3.8%, making it the index’s worst performer on Tuesday morning.
The consumer goods firm welcomed the recent policy announced by the Central Bank of Nigeria to ‘liberalise’ the foreign exchange regime, which the firm said is ‘highly likely’ to remove some of the cash challenges faced by multi-national companies.
However, it also noted that the policy has resulted in a devaluation of the Nigeria’s currency, which PZ Cussons said will hurt its future performance in financial 2024.
At the top of the FTSE 250, Telecom Plus surged 9.1% after it reported an ‘outstanding’ year, with sharp rises in both annual profit and revenue.
The multi-utilities firm posted a pretax profit of £85.5 million, up sharply from £47.2 million the year prior, and revenue of £2.5 billion, more than double the £967.4 million achieved the previous year.
Telecom Plus said the ‘record’ revenue and profit reflected the strong double-digit growth in customer and service numbers and significant rises in the Ofgem energy price cap over the period.
Carnival jumped 6.3%, reversing some of its 12% decline on Monday.
The cruise ship operator on Monday reported revenue of $4.91 billion for the second quarter ended May 31, up markedly from $2.40 billion a year earlier, and a net loss of $407 million, narrowed from $1.83 billion.
Carnival said that its total bookings made during the quarter reached an all-time high.
Elsewhere in London, Wise jumped 17% after it reported a significant surge in annual profit in the financial year that ended March 31, supported by solid growth in active customers.
The money transfer firm reported pretax profit of £146.5 million, multiplied from £43.9 million the year prior. Revenue climbed 51% to £846.1 million from £559.9 million.
This came as the company upped its active customer number by 34% year-on-year to around 10 million.
Looking forward, Wise said it expects active customer growth to be the primary driver of income growth in financial 2024. It expects active customer growth to be between 28% and 33% in financial 2024.
In European equities on Tuesday, the CAC 40 index in Paris was up 0.6%, while the DAX 40 in Frankfurt was up 0.5%.
In Tokyo on Tuesday, the Nikkei 225 index closed down 0.5%. In China, the Shanghai Composite closed up 1.2%, and the Hang Seng index in Hong Kong was up 1.9% near the close.
The S&P/ASX 200 in Sydney finished 0.6% higher.
In the US on Monday, Wall Street ended lower. The Dow Jones Industrial Average closed flat, the S&P 500 down 0.5% and the Nasdaq Composite down 1.2%.
The dollar was weaker on Tuesday morning, as markets looked past the weekend crisis in Russia and refocused on the more hawkish tone at the moment of the European Central Bank and Bank of England compared to the US Federal Reserve.
The pound was quoted at $1.2739 at early on Tuesday in London, up compared to $1.2719 at the equities close on Monday. The euro stood at $1.0938, up against $1.0913. Against the yen, the dollar was trading at JP¥143.48, down slightly than JP¥143.52.
‘When [foreign exchange] conversations revolve around rate hikes, the most aggressive central bank would lead to a stronger currency even if the growth outlook weakens. And this should put sterling and the euro at the top of the G-10 pack,’ said Stephen Innes, managing partner at SPI Asset Management.
Brent oil was quoted at $74.60 a barrel at early in London on Tuesday, up from $74.12 late Monday. Gold was priced at $1,927.47 an ounce, higher against $1,926.27.
Still to come on Tuesday’s economic calendar, the US consumer confidence survey is released at 1500 BST.
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