London market open: Stocks Look To Build On Strong November Gains
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| UK manufacturing sector has shown resilience across recent months even as services have shown signs of weakening |
A London stocks got off to a promising start to the month, the FTSE 100 adding more than 75 points in opening trade on Tuesday following some strong economic data from China.
The FTSE 100 index was up 76.37 points, or 1.2%, at 6,342.56 early Tuesday. The mid-cap FTSE 250 index was up 199.00 points, or 1.0%, at 19,535.32. The AIM All-Share index was up 0.5% at 1,056.08.
The Cboe UK 100 index was up 0.7% at 631.85. The Cboe 250 also was up 0.7%, at 16,830.40. The Cboe Small Companies was up 0.2% at 11327.95.
In mainland Europe, the CAC 40 in Paris was up 0.2% while the DAX 30 in Frankfurt was up 0.4% early Tuesday.
"After a phenomenal November run-up European markets are broadly resuming gains at the start of December, a traditionally strong month for equities. Vaccine optimism, impressive Chinese factory data and the prospect of continuing fiscal and monetary stimulus is keeping the mood upbeat," said Fiona Cincotta at City Index.
Chinese manufacturers signalled the strongest improvement in operating conditions for a decade in November, as growth of both output and new orders accelerated to ten-year highs.
The Caixin China headline seasonally adjusted purchasing managers' index increased to 54.9 in November from 53.6 in October, to signal the sharpest improvement in conditions since November 2010 and well clear of the neutral mark of 50.
Firms surveyed frequently attributed the increase to greater new order volumes, IHS Markit said, as well as a further recovery from the Covid-19 related disruptions seen earlier in the year. Underlying data suggested that the upturn continued to be led by firmer domestic demand, as growth in new export work was not as marked as that seen for total new orders.
In China on Tuesday, the Shanghai Composite ended up 1.8%, while the Hang Seng index in Hong Kong closed up 0.9%.
In Tokyo, the Nikkei 225 index closed up 1.3%. Against the yen, the dollar was flat at JPY104.28 versus JPY104.27 late Monday.
City Index's Cincotta said: "Manufacturing PMIs will remain in focus with data due from the UK and the Eurozone. The UK manufacturing sector has shown resilience across recent months even as services have shown signs of weakening. The flash estimate for UK manufacturing PMI was firmly in expansionary territory at 55.2 and this isn't expected to change."
Tuesday's economic events calendar has manufacturing PMI readings from Germany, the eurozone, the UK and the US at 0855 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively.
Ahead of the data, sterling was quoted at USD1.3404 early Tuesday, higher than USD1.3343 at the London equities close on Monday. The euro traded at USD1.1976, rising from USD1.1948 late Monday.
In London, Smith & Nephew shares rose 3.0% after Barclays initiated the medical technology firm with an Overweight rating.
Lloyds rose 3.3%. The lender said Chief Executive Antonio Horta-Osorio will step down at the end of April 2021 to take up the role of chair at Credit Suisse.
Horta-Osorio - whose departure from Lloyds after 10 years at the helm was announced in June - will succeed Urs Rohner as chair of the Swiss bank's board of directors. Rohner became full-time chair in 2009 and will step down in 2021 once he has reached his statutory 12-year term.
Lloyds said it has agreed for Horta-Osorio to depart the UK bank on April 30, so that he can take up the chair of Credit Suisse on May 1. Previously, he was intending to leave Lloyds by the end of June 2021.
On Monday, Lloyds said it had appointed HSBC's Wealth & Personal Banking head Charlie Nunn to be its new CEO.
Lloyds had said that Nunn's start date depends on agreement with HSBC. It noted that Nunn's contract calls for a six-month notice period and up to six months post-termination restrictions. The bank said that if Horta-Osorio steps down before Nunn's arrival, then Chief Financial Officer William Chalmers will be acting CEO.
Credit Suisse was down 0.7% in Zurich.
AstraZeneca rose 1.4% after agreeing to sell the rights to Crestor in over 30 countries in Europe, except the UK and Spain, to Grunenthal.
Crestor is a statin approved for the treatment of dyslipidaemia and hypercholesterolaemia.
AstraZeneca said the deal is set to close in the first quarter of 2021, at which point Grunenthal will make an upfront payment of USD320 million for Crestor and may also make future milestone payments of up to USD30 million.
The London-listed pharmaceutical firm said the Crestor sale will not impact its financial guidance for 2020.
Elsewhere in London, Hyve shares rose 4.8% despite the firm turning to a chunky annual loss.
Revenue for the financial year ended September 30 more than halved to GBP105.1 million from GBP220.7 million the year prior, with the London-based exhibitions and conferences organiser swinging to a hefty pretax loss of GBP312.9 million from a GBP8.7 million profit.
Impairment charges of GBP263.0 million were recognised in respect of "a number" of business units, the company said.
"The pandemic has had a severe impact not just on Hyve, but the event industry as a whole," Hyve said.
Despite starting to see signs of optimism, underpinned by vaccine progress, the company expects continued disruption to its event schedule and a "gradual" return of customer participation.
Hyve said it has created two trading scenarios for the 2021 financial year.
"The first, our 'Recovery' scenario, assumes that events in China, Russia, Ukraine and Turkey are able to go ahead. However, they will be smaller than in previous years driven by a largely domestic customer base. This scenario assumes that events in western markets will take place during the second half of the financial year. The second, our 'East-West' scenario, assumes that no western events take place throughout the financial year," said Hyve.
The company is "hopeful" of returning to a normalised schedule of events in the 2022 financial year.
Gold was quoted at USD1,793.60 an ounce early Tuesday, higher than USD1,772.60 on Monday.
Brent oil was trading at USD47.72 a barrel, flat on USD47.75 late Monday.
The OPEC oil producers' club will hold a second day of talks on Tuesday, as they attempt to reach agreement on extending production cuts introduced as the coronavirus pandemic weighs on global demand.
"2020 continues to be a year of immense challenges caused by the Covid-19 pandemic," said Abdelmadjid Attar, who currently holds the rotating presidency of the Organisation of the Petroleum Exporting Countries. Attar, who is also Algeria's energy minister, was speaking in a live broadcast at the beginning of the group's videoconference meeting.
In April, OPEC members agreed to cut production by 7.7 million barrels per day, which was meant to be eased to 5.8 million barrels in January 2021. However, most observers expect the cut instead to be extended by three to six months to take into account the ongoing effects of the virus.
Monday's talks were adjourned with no decision and Tuesday's discussions "won't be easy", said Iran's oil minister Bijan Namdar Zanganeh.
London-listed oil majors were higher in early trade. BP shares were up 1.6% while Royal Dutch Shell 'A' and 'B' shares were both up 2.0%.