London's FTSE 100 jumped on Thursday as investors temporarily shrugged off an underwhelming set of minutes from the Federal Reserve and instead focused on improving data from across the world which brightened the global economic outlook.
The FTSE 100 ended the day at 6,446.87, up 56.03 points on the day after closing at a six-week low of 6,390.84 on Wednesday. The last time the index closed lower than that was July 5th when it finished at 6,375.52.
Data shows improving picture
Markets started out strongly this morning after the Chinese manufacturing purchasing managers' index (PMI) improved from 47.7 to 50.1 in August, well ahead of the 48.2 consensus forecast - the 50-point mark separates expansion from contraction.
The preliminary Eurozone composite PMI (which measures activity in both manufacturing and services sectors) rose from 50.5 to 51.7 in August, the largest expansion in the last 26 months. Analysts were expecting a smaller riser to 50.9.
The 'flash' US manufacturing PMI also rose this month from 53.7 to 53.9 as growth picked up, though this slightly missed the consensus forecast of 54.2.
FOMC minutes underwhelm
Minutes from the Federal Open Market Committee's July 30-31st meeting failed to shed any more light on a timeframe for the central bank's imminent tapering of quantitative easing (QE). Policymakers said they were "broadly comfortable" with the plan to taper stimulus by the end of the year, as they have said in the past, with the labour market having "improved substantially" and economic growth expected to "strengthen further" in the second half.
Stocks have been choppy over recent weeks in anticipation of the minutes as expectations increased that the Fed would begin to withdraw stimulus in September. While the outcome of this impending decision is still uncertain, these expectations have (arguably) now been priced into markets.
"Investors are coming to terms with the likelihood that the market might already be moving on from the tapering bonanza and is concerned more with how money will move once the asset purchases slow," said David White, Financial Trader from Spreadex.
"Equities have today demonstrated that the appetite for risk is much improved now compared with the previous two times markets were faced with an ending, something likely as a result of improved underlying conditions. Bottom line, investors seem to be happier in the market than out."
FTSE 100: IMI jumps on upbeat outlook
rallied after the engineering company forecast an improvement in trading for the second half as it takes on higher-margin contracts at its Severe Service business. Revenues were flat at £1.09bn in the first half and while pre-tax profit rose 1% to £170.1m.
Plumbers merchant Wolseley was making gains after UBS upgraded its rating for the stock from 'neutral' to 'buy', saying it is optimistic about growth in the US after positive readacross from the company's peers.
Mining stocks were broadly higher after the better-than-expected manufacturing data from top metals user China. Rising metals prices today were also doing their bit to lift equities.
Vedanta Resources rebounded following a slump on Wednesday after reports four Indian tribal councils voted against the company's plan to mine bauxite in eastern India's Niyamgiri Hills. Glencore Xstrata was performing well as the miner continues to recover after disappointing the market with its first-half report earlier this week.
Sugar and sweeteners producer Tate & Lyle slumped on the back of concerns over the recent falls in sugar prices due to the weakness in emerging-market currencies.
FTSE 250: Hochschild Mining rebounds strongly as brokers lift targets
Precious metals producer Hochschild Mining was rebounding strongly after falling sharply the day before as it suspended its interim dividend. Nevertheless, Westhouse Securities, JPMorgan Cazenove and RBC Capital Markets all upgraded their target prices for the stock today with the latter citing the company's cost savings programme which should have a positive impact going into the second half.
Newsagent chain WH Smith was on shopping lists after saying it expects full-year results to be in line with market expectations as it continues focus on tight cost control and improving margins.
Carillion, the building and support services firm, was the worst performer of the day despite reporting a 13% increase in pre-tax profits as revenues fell 9% in the first half. The decline was mainly due to the planned rescaling of the UK construction business.
Premier Oil was also a heavy faller after record half-year financials still came up short of estimates. The company said that its full-year production target of 63,000 barrels of oil equivalent per day depends on the performance of its Huntington field in the second half.
FTSE 100 - Risers
IMI (IMI) 1,491.00p +5.82%
Fresnillo (FRES) 1,215.00p +4.38%
Wolseley (WOS) 3,330.00p +4.26%
RSA Insurance Group (RSA) 123.60p +3.00%
Glencore Xstrata (GLEN) 313.85p +2.99%
Vedanta Resources (VED) 1,194.00p +2.93%
Royal Bank of Scotland Group (RBS) 343.00p +2.66%
International Consolidated Airlines Group SA (CDI) (IAG) 311.80p +2.60%
GKN (GKN) 345.30p +2.52%
Serco Group (SRP) 621.50p +2.22%
FTSE 100 - Fallers
Experian (EXPN) 1,169.00p -1.18%
Eurasian Natural Resources Corp. (ENRC) 225.20p -0.84%
Burberry Group (BRBY) 1,574.00p -0.76%
Hargreaves Lansdown (HL.) 991.50p -0.50%
William Hill (WMH) 430.00p -0.46%
Prudential (PRU) 1,121.00p -0.36%
Croda International (CRDA) 2,567.00p -0.35%
National Grid (NG.) 737.50p -0.34%
Old Mutual (OML) 187.10p -0.32%
Tate & Lyle (TATE) 812.00p -0.25%
FTSE 250 - Risers
Diploma (DPLM) 636.50p +6.08%
Hochschild Mining (HOC) 237.80p +5.92%
Ferrexpo (FXPO) 185.20p +5.05%
Cable & Wireless Communications (CWC) 41.46p +4.72%
WH Smith (SMWH) 850.00p +4.55%
Ashmore Group (ASHM) 340.00p +4.04%
Man Group (EMG) 84.70p +3.93%
Home Retail Group (HOME) 150.30p +3.58%
IP Group (IPO) 138.00p +3.45%
Smith (DS) (SMDS) 260.00p +3.30%
FTSE 250 - Fallers
Premier Oil (PMO) 346.50p -2.94%
Carillion (CLLN) 289.80p -2.52%
NMC Health (NMC) 350.00p -2.51%
Ultra Electronics Holdings (ULE) 1,892.00p -2.42%
Rathbone Brothers (RAT) 1,585.00p -1.55%
Phoenix Group Holdings (DI) (PHNX) 735.00p -1.34%
Synergy Health (SYR) 1,110.00p -1.25%
Brewin Dolphin Holdings (BRW) 268.40p -1.18%
Beazley (BEZ) 206.20p -1.15%
Menzies(John) (MNZS) 737.00p -1.14%