London close: Stocks rally as miners gain on China stimulus
London stocks ended firmly in the green on Tuesday as miners were boosted by news of China's latest stimulus plans, while the CBI delivered a better-than-expected survey on the UK's manufacturing sector.
The FTSE 100 ended up 0.7% at 7,709.05, while the pound was up 0.3% against the dollar and the euro at 1.3142 and 1.1245, respectively.
In its monthly Industrial Trends survey, the CBI found the balance of manufacturing companies reporting higher orders had fallen to +11 in July from +13 in June, but not as bad as the +8 that the market had expected. Moreover, the quarterly business optimism balance edged up to -3 in Q3, from -4 in Q2, above the consensus -6.
The fall in total orders balance is "just noise" said economist Samuel Tombs at Pantheon Macroeconomics: "The recovery in the manufacturing sector remains brisk, but firms still aren’t confident enough to increase investment."
He said his seasonally adjusted version of the total orders balance actually increased slightly, reaching its highest level since December, which on past form was consistent with year-over-year growth in manufacturing output of about 4%.
Miners rather than manufacturers were the main driving force on the London Stock Market, however, thanks to news of fresh China stimulus measures to boost growth, offsetting simmering trade war fears between Beijing and Washington.
Glencore, BHP Billiton, Anglo American and Rio Tinto were the standout gainers after China's State Council said it would pursue a "more proactive" fiscal policy a day after providing a record injection of funding for banks.
In an announcement posted overnight, the council said it will adopt "a combination of fiscal and financial measures in an effort to boost domestic demand and bolster support for the real economy", with the more proactive fiscal policy including a focus on introducing deeper tax cuts.
CMC Markets analyst David Madden said: "The second-largest economy in the world is a major importer of minerals, and traders are snapping up commodity companies as they feel that China’s appetite for metals will rise."
Miners were also lifted by rebounding copper prices, as supply concerns increased amid a dispute in Chile's Escondida mine, which is a major source of copper.
The overall mood was also underpinned by a strong session on Wall Street, where solid earnings from Google parent Alphabet propelled the tech-heavy Nasdaq to a fresh record high.
Banks were on the rise as surging US and Japanese government bond yields were supported by expectations of monetary policy tightening. RBS led the sector, with HSBC, Barclays and Lloyds all higher. Also helping sentiment was a strong set of second-quarter figures from continental rival UBS.
As banks gained, utilities fell, with SSE, United Utilities, National Grid and Centrica all lower as a steeper rate curve weighs on the sector.
In individual company news, fizzy drinks maker Britvic bubbled higher as it reported solid third-quarter sales growth of 3.4% despite being held back due to the UK shortage of carbon dioxide.
BT was up for a second day as the telecoms group said it has offered discounts to encourage communication providers to upgrade customers to faster broadband over the next five years. The company said the offer, made by its Openreach infrastructure arm, should bring superfast and ultrafast broadband to most homes and businesses.
ConvaTec climbed after it won clearance from the US medical regulator for its Aquacel dressing for wound management.
AstraZeneca ticked just a touch higher as it agreed to sell the commercial rights to Atacand and Atacand Plus in Europe to Cheplapharm Arzneimittel for $200m on completion of the agreement, plus a time-bound payment of $10m and sales-contingent milestones. The deal is expected to complete in the third quarter.
Glaxosmithkline slipped even as its ViiV Healthcare joint venture reported positive results from trials of two of its key HIV treatments.
Sainsbury's nudged down as its sales were shown to still be lagging behind its big supermarket rivals as all of the big four enjoyed their best period of growth so far this year. Data from Kantar Worldpanelshowed supermarket sales expanded 3.6%, their fastest rate this year, which Kantar put down to the World Cup and prolonged hot weather.
Walmart's Asda led the Big Four, with Morrisons and Tesco both chugging along nicely. Tesco was reported by Sky News to be examining plans to challenge German discounters Aldi and Lidl with a new retail format called Jack’s. Ocado shares fell as its sales growth slowed.
Superdry shares slid as the fashion chain's founder Julian Dunkerton sold a 6.7% stake for £71m, while Drax tumbled even as it reported half-year pre-tax losses of £11.3m, an improvement on the previous year's loss of £103.7m.
Spectris shares fell 7% despite half year results largely in line with expectations. Analysts were disappointed that further details of management's Uplift programme will not be forthcoming until later in the year.
In broker action, Royal Mail was lifted as HSBC upgraded the stock to 'buy' from 'hold', while Superdry was cut to 'hold' at Liberum and Ascential was downgraded to 'neutral' at Citi.
Market Movers
FTSE 100 (UKX) 7,709.05 0.70%
FTSE 250 (MCX) 20,852.87 0.40%
techMARK (TASX) 3,582.42 0.08%
FTSE 100 - Risers
BHP Billiton (BLT) 1,702.40p 5.73%
Anglo American (AAL) 1,695.00p 5.63%
Glencore (GLEN) 327.40p 5.61%
Evraz (EVR) 549.00p 4.97%
Rio Tinto (RIO) 4,256.50p 4.75%
Antofagasta (ANTO) 974.40p 3.44%
Royal Bank of Scotland Group (RBS) 250.30p 3.43%
Standard Chartered (STAN) 698.10p 3.27%
Mondi (MNDI) 2,062.00p 2.64%
Micro Focus International (MCRO) 1,278.00p 2.49%
FTSE 100 - Fallers
National Grid (NG.) 820.40p -2.32%
United Utilities Group (UU.) 706.60p -2.00%
SSE (SSE) 1,336.50p -1.91%
Centrica (CNA) 150.45p -1.70%
Just Eat (JE.) 862.40p -1.59%
Coca-Cola HBC AG (CDI) (CCH) 2,727.00p -1.16%
Relx plc (REL) 1,689.00p -1.03%
Severn Trent (SVT) 1,884.00p -0.89%
Ocado Group (OCDO) 1,134.50p -0.74%
Next (NXT) 5,926.00p -0.74%
FTSE 250 - Risers
BTG (BTG) 529.50p 6.71%
Kaz Minerals (KAZ) 831.40p 5.27%
Ferrexpo (FXPO) 180.75p 5.06%
Britvic (BVIC) 814.00p 4.49%
AA (AA.) 114.55p 3.24%
Centamin (DI) (CEY) 122.10p 2.99%
Cairn Energy (CNE) 237.20p 2.95%
Petrofac Ltd. (PFC) 574.60p 2.90%
Redrow (RDW) 534.00p 2.79%
Close Brothers Group (CBG) 1,570.00p 2.75%
FTSE 250 - Fallers
Superdry (SDRY) 1,237.00p -9.38%
Spectris (SXS) 2,359.00p -9.27%
Just Group (JUST) 116.30p -6.51%
Drax Group (DRX) 340.80p -4.86%
Telecom Plus (TEP) 1,048.00p -2.96%
Euromoney Institutional Investor (ERM) 1,354.00p -2.88%
Clarkson (CKN) 2,410.00p -2.44%
Syncona Limited NPV (SYNC) 254.50p -2.30%
Daejan Holdings (DJAN) 5,910.00p -2.15%
Pennon Group (PNN) 752.80p -1.93%