London close: Stocks rise further after better-than-expected services data
London stocks rose even further by the close on Wednesday, as investors digested better-than-expected Chinese and UK services data.
The FTSE 100 ended the session up 2.61% at 6,382.41, and the FTSE 250 was 2.64% firmer at 17,897.08.
Sterling was in a mixed state, however, last rising 0.34% against the dollar to $1.2594, but falling 0.31% on the euro to €1.1202.
“Overnight data from China has helped bolster confidence of an economic rebound in the region, after the privately compiled Caixin services PMI reading jumped into strong expansion,” said analysts at IG.
“China provides a leading gauge of where the likes of Europe and the US could be if a similar path is taken.”
They still said traders should be cautious, given that the rise back into expansion only highlighted month-on-month improvements, rather than making any relative comparison to pre-crisis levels.
“Nevertheless, with the Chinese services sector growing sharply in May, there is a hope that we will see something similar in the UK once businesses can reopen.”
The figures showed that China’s services sector returned to growth in May for the first time since January.
The Caixin/Markit services purchasing managers’ index increased to 55.0 from 44.4 in April, marking the highest level since October 2010 and coming in comfortably above the 50 mark that separates contraction from growth.
It was also above expectations for a reading of 47.3.
In the UK, meanwhile, a survey released earlier showed the dominant services sector remained in a deep downturn in May due to the Covid-19 crisis, but the pace of decline eased.
The IHS Markit/CIPS purchasing managers' index registered 29.0 in May, up from a record low of 13.4 in April but still the second-worst reading on record.
The final reading for May was slightly better than an initial "flash" figure of 27.8 and a touch less gloomy than economists' consensus estimate of 28.0.
There were hints of revival as some parts of the economy such as the construction industry started to reopen from the government lockdown imposed in late March.
But respondents also reported cancelled projects, customer closures and reduced sales capacity with employees on furlough.
“The Covid-19 pandemic continued to have a severe impact on UK service sector activity in May, despite a boost in some areas from the gradual easing of lockdown measures,” said Tim Moore, economics director at IHS Markit.
“Survey respondents noted that deep cuts to corporate spending had been a major factor dragging down business activity in May, leading to a lack of work to replace completed projects.”
In equity markets, British Airways owner IAG ascended 11.41% and budget airline easyJet flew 8.25% higher, amid reports of possible ‘air bridge’ links between the UK and holiday destinations in Europe.
Chemring surged 26.23% after the defence firm backed its full-year expectations and posted a rise in interim profit thanks to strong performances in both of its segments.
Travel company TUI rallied 8.52% as it reached a compensation agreement with Boeing over the grounding of 737 MAX planes.
Drinks company C&C Group was also in the black, by 4.19%, as it reported a 7.8% jump in full-year net revenue.
Ibstock reversed earlier losses to close up 0.7%, after the maker of clay bricks and concrete products said sales volumes slid from late March amid the coronavirus lockdown, and announced it could cut around 15% of its workforce.
In broker note action, Marks & Spencer was lifted 8.18% by an upgrade to ‘buy’ at Jefferies, while B&M European Value Retail was dented 2.01% by a downgrade to ‘hold’ by the same outfit.
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 279.20p 11.41%
Rolls-Royce Holdings (RR.) 328.20p 9.25%
easyJet (EZJ) 784.40p 8.25%
Prudential (PRU) 1,185.00p 7.87%
Whitbread (WTB) 2,651.00p 7.20%
Legal & General Group (LGEN) 229.90p 7.18%
Aviva (AV.) 278.90p 6.90%
Standard Chartered (STAN) 427.30p 6.69%
Intermediate Capital Group (ICP) 1,386.00p 5.96%
Lloyds Banking Group (LLOY) 33.76p 5.73%
FTSE 100 - Fallers
Polymetal International (POLY) 1,498.00p -6.58%
Fresnillo (FRES) 746.80p -5.90%
Hargreaves Lansdown (HL.) 1,694.50p -3.09%
Ashtead Group (AHT) 2,471.00p -1.00%
Antofagasta (ANTO) 903.60p -0.26%
Hikma Pharmaceuticals (HIK) 2,419.00p -0.25%
JD Sports Fashion (JD.) 669.00p -0.18%
BT Group (BT.A) 117.90p 0.26%
Tesco (TSCO) 229.70p 0.26%
Intertek Group (ITRK) 5,552.00p 0.29%
FTSE 250 - Risers
Chemring Group (CHG) 269.50p 26.23%
Hammerson (HMSO) 137.75p 24.27%
Aston Martin Lagonda Global Holdings (AML) 67.30p 17.39%
Senior (SNR) 77.50p 14.31%
Hyve Group (HYVE) 105.00p 13.80%
Marston's (MARS) 69.10p 13.74%
Stagecoach Group (SGC) 74.80p 11.86%
Mitchells & Butlers (MAB) 204.00p 10.27%
Elementis (ELM) 76.50p 10.15%
Virgin Money UK (VMUK) 102.50p 8.76%
FTSE 250 - Fallers
Hochschild Mining (HOC) 192.70p -7.44%
Avast (AVST) 500.50p -3.38%
Softcat (SCT) 1,081.00p -3.22%
Kingfisher (KGF) 201.00p -3.18%
Centamin (DI) (CEY) 158.60p -2.88%
Petropavlovsk (POG) 25.00p -2.53%
B&M European Value Retail S.A. (DI) (BME) 385.00p -2.01%
Apax Global Alpha Limited (APAX) 140.60p -1.82%
Telecom Plus (TEP) 1,450.00p -1.36%
Synthomer (SYNT) 318.00p -1.30%