London midday: Stocks extend gains as pound hit by weak PMIs
London stocks had risen further by midday on Friday as sterling fell after the release of weak PMI data, with sentiment underpinned by renewed optimism about a China-US trade deal.
The FTSE 100 was up 1% at 7,312.18, while the pound was down 0.2% against the dollar and the euro at 1.2886 and 1.1651, respectively, as data showed that business activity in the UK fell to its lowest level in November since after the referendum in July 2016, with Brexit uncertainty and the upcoming general election taking their toll.
The IHS Markit/CIPS flash services business activity index fell to a 40-month low of 48.6 from 50.0 in October, missing expectations for an unchanged reading and below the 50.0 level that separates contraction from expansion.
Meanwhile, the manufacturing purchasing managers’ index printed at a two-month low of 48.3 this month, down from 49.6 in October and below expectations of 49.0.
The composite output index - which measures activity in both sectors - was 48.5 in November versus 50.0 the month before, also marking a 40-month low.
Chris Williamson, chief business economic at IHS Markit, said: "With an upcoming general election adding to Brexit-related uncertainty about the outlook, it’s no surprise to see UK businesses reporting falling output and orders in November. The decline signalled by the flash PMI follows stagnation in October and adds to what has been the survey’s worst spell since the recession of 2008-9.
"The weak survey data puts the economy on course for a 0.2% drop in GDP in the fourth quarter, and also pushes the PMI further into territory that would normally be associated with the Bank of England adding more stimulus to the economy."
A weaker pound tends to boost the top-flight index, as around 70% of its constituents derive most of their earnings from overseas.
Elsewhere, receding fears about Sino-US trade relations helped to boost the mood after Chinese President Xi Jinping said the country wants to work towards a phase one deal with the US on the "basis of mutual respect and equality". He also said that China would fight back if needs be.
Spreadex analyst Connor Campbell was sceptical.
"A convincing case could be made for this being completely meaningless. Yet given investors are devouring every morsel of trade deal news, it was enough to send the markets back into the green," he said.
In equity markets, miners racked up strong gains, with Glencore, BHP, Antofagasta and Rio Tinto all higher.
Online real estate agent Rightmove ticked higher as it announced the appointment of Andrew Fisher as non-executive chairman with effect from January 1, 2020.
On the downside, chemicals company Johnson Matthey was weaker for a second day running after saying on Thursday that half-year pre-tax profit declined 8% and net debt rose.
Housebuilder Berkeley Group retreated, with traders pointing to the Conservatives’ pledge to make foreign buyers pay 3% more in stamp duty than UK residents.
Coats Group was sharply lower after the industrial thread maker said that sales in the four moths to the end of October slowed, while Playtech fell as the gambling software development company issued a profit warning.
Market Movers
FTSE 100 (UKX) 7,312.18 1.02%
FTSE 250 (MCX) 20,434.28 0.32%
techMARK (TASX) 4,032.56 0.81%
FTSE 100 - Risers
Centrica (CNA) 82.10p 3.50%
Glencore (GLEN) 247.05p 3.11%
Compass Group (CPG) 2,051.00p 2.29%
Vodafone Group (VOD) 155.46p 2.25%
Smith & Nephew (SN.) 1,707.00p 2.18%
Associated British Foods (ABF) 2,531.00p 2.14%
Bunzl (BNZL) 2,013.00p 2.13%
Coca-Cola HBC AG (CDI) (CCH) 2,477.00p 2.10%
Mondi (MNDI) 1,676.00p 2.04%
Rightmove (RMV) 631.20p 2.04%
FTSE 100 - Fallers
Johnson Matthey (JMAT) 2,911.00p -2.61%
Berkeley Group Holdings (The) (BKG) 4,393.00p -1.61%
Ocado Group (OCDO) 1,139.50p -1.34%
Fresnillo (FRES) 590.80p -1.30%
Kingfisher (KGF) 196.90p -0.30%
Barclays (BARC) 167.76p -0.25%
NMC Health (NMC) 2,467.00p -0.20%
Reckitt Benckiser Group (RB.) 5,926.00p -0.20%
Halma (HLMA) 2,041.00p -0.20%
British Land Company (BLND) 551.40p -0.18%
FTSE 250 - Risers
Aston Martin Lagonda Global Holdings (AML) 496.00p 4.42%
Wood Group (John) (WG.) 356.40p 2.83%
Pets at Home Group (PETS) 204.60p 2.66%
Stagecoach Group (SGC) 132.50p 2.47%
Euromoney Institutional Investor (ERM) 1,254.00p 2.45%
Dixons Carphone (DC.) 122.55p 2.42%
IP Group (IPO) 60.40p 2.37%
SSP Group (SSPG) 667.00p 2.30%
Marston's (MARS) 125.90p 1.94%
Ascential (ASCL) 325.60p 1.81%
FTSE 250 - Fallers
Coats Group (COA) 68.45p -7.50%
PureTech Health (PRTC) 274.00p -3.86%
HICL Infrastructure (HICL) 165.00p -3.17%
Sirius Minerals (SXX) 3.31p -2.99%
Hochschild Mining (HOC) 181.40p -2.84%
Playtech (PTEC) 400.10p -2.53%
Bank of Georgia Group (BGEO) 1,400.00p -1.75%
Riverstone Energy Limited (RSE) 421.00p -1.75%
International Public Partnerships Ltd. (INPP) 158.00p -1.62%
Card Factory (CARD) 156.30p -1.57%