London close: Stocks higher as investors eye US-China tensions
London stocks finished above the waterline on Monday, following the release of the latest UK manufacturing data, as investors kept an eye on ongoing tensions between the US and China after US President Trump’s news conference last week.
The FTSE 100 ended the session up 1.48% at 6,166.42, and the FTSE 250 was 1.38% firmer at 17,277.53.
Sterling was stronger against both of its major trading pairs, last gaining 1.01% on the dollar to $1.2468, and advancing 0.83% against the euro to €1.1213.
“In that anxiety-inducing address, the president announced the US would be revoking Hong Kong’s preferential treatment status for trade and travel, no longer viewing the region as ‘autonomous’ from China,” said Spreadex analyst Connor Campbell.
“Given what markets were expecting - something that would more explicitly damage the US-China trade deal - this news was actually a relative relief. However, that relief might prove to be short-lived.”
Stocks had pared some gains earlier following a report that Chinese officials had told agriculture companies to halt imports of some US farm goods.
According to Bloomberg, state-owned traders Cofco and Sinograin were ordered to suspend purchases.
On home shores, the latest survey from IHS Markit/CIPS showed the UK manufacturing sector continued to struggle in May, although the pace of decline eased following April's historic fall.
The purchasing managers’ index rose to 40.7 in May from the historic low of 32.6 in April.
That was a marginal improvement on the flash reading of 40.6.
However, the reading just missed consensus expectations of 40.8 and remains well below the key 50.0 mark that separates contraction from expansion.
It was also the seventh lowest reading in the survey’s history as lockdown measures, company shutdowns and social distancing weighed heavily on the manufacturing sector.
Output, new orders and employed all contracted sharply, the survey found.
Where there was growth, it was generally restricted to healthcare and personal protective equipment products.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, conceded the sector was still "a long way from normal" but argued it was moving in the right direction.
"Other indicators, such as daily energy consumption and daily heavy goods vehicle mileage, suggest that the production and transportation of manufactured goods rose steadily over the course of May, albeit from greatly depressed levels in April," he said.
"As a result we are still pencilling in a 4% month-to-month increase in manufacturing output in May, following an assumed 15% decline in April."
In equity markets, Associated British Foods gained 8.02% after saying it was working to reopen all its Primark stores in England on 15 June as the government relaxed coronavirus lockdown rules.
Standard Chartered surged 8.66% after an upgrade to ‘buy’ at Jefferies, while education publisher Pearson was boosted 7.88% by an upgrade to ‘buy’ at Goldman Sachs.
Aerospace and defence giant Rolls-Royce rallied 5.49%, having suffered heavy losses last week following a stake sale by AKO Capital and a downgrade of its credit rating by Standard & Poor’s.
British Airways and Iberia parent IAG added 5.91% and cruise operator Carnival advanced 7.28%, both on the prospect of travel restrictions being lifted.
Petropavlovsk rose 1% as it denied it was in merger talks with fellow miner UGC after weekend speculation the two firms were studying a potential tie-up.
FTSE 100 - Risers
Associated British Foods (ABF) 1,977.00p 8.57%
Standard Chartered (STAN) 399.60p 8.47%
Pearson (PSON) 501.20p 8.16%
Carnival (CCL) 1,139.50p 7.75%
Informa (INF) 483.10p 6.32%
International Consolidated Airlines Group SA (CDI) (IAG) 242.90p 6.30%
Rolls-Royce Holdings (RR.) 286.50p 5.49%
WPP (WPP) 644.40p 5.36%
Next (NXT) 5,122.00p 5.30%
Taylor Wimpey (TW.) 151.05p 5.19%
FTSE 100 - Fallers
Hikma Pharmaceuticals (HIK) 2,489.00p -3.19%
Reckitt Benckiser Group (RB.) 7,098.00p -1.74%
Admiral Group (ADM) 2,297.00p -1.54%
Whitbread (WTB) 2,501.00p -1.07%
Standard Life Aberdeen (SLA) 255.80p -0.97%
Croda International (CRDA) 5,140.00p -0.96%
Halma (HLMA) 2,308.00p -0.94%
Auto Trader Group (AUTO) 553.40p -0.86%
Aveva Group (AVV) 4,053.00p -0.86%
Sage Group (SGE) 685.20p -0.84%
FTSE 250 - Risers
Hammerson (HMSO) 82.48p 12.07%
Airtel Africa (AAF) 38.10p 12.06%
Rank Group (RNK) 157.20p 9.78%
SSP Group (SSPG) 300.60p 7.74%
Playtech (PTEC) 285.10p 7.71%
Wood Group (John) (WG.) 205.90p 7.10%
Equiniti Group (EQN) 141.80p 6.30%
Virgin Money UK (VMUK) 94.60p 6.13%
Micro Focus International (MCRO) 430.80p 5.93%
Savills (SVS) 914.00p 5.91%
FTSE 250 - Fallers
Hyve Group (HYVE) 87.46p -9.64%
Bakkavor Group (BAKK) 73.60p -5.64%
Future (FUTR) 1,304.00p -5.51%
Cineworld Group (CINE) 80.00p -5.21%
Paragon Banking Group (PAG) 336.60p -4.97%
PureTech Health (PRTC) 245.50p -3.91%
UK Commercial Property Reit Limited (UKCM) 59.70p -3.55%
Stagecoach Group (SGC) 65.50p -3.25%
GCP Student Living (DIGS) 134.60p -2.89%
PPHE Hotel Group Ltd (PPH) 1,190.00p -2.46%