Better-than-expected data from China and the Eurozone sparked a rebound on equity markets on Thursday morning with the FTSE 100 bouncing off a six-week low despite an underwhelming set of minutes from the Federal Reserve last night.
London's benchmark index snapped a three-day losing streak today after the HSBC/Markit flash purchasing managers' index (PMI) for the Chinese manufacturing sector 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.
Meanwhile, 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.
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 - the Dow Jones in New York fell for the sixth consecutive day on Wednesday after the statement - 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.
"This morning's rally in risk assets is largely as a result of better than expected manufacturing data out of China that has given cyclical names a boost and called into question a lot of negativity around Chinese growth forecasts we've seen over the past weeks," said Matt Basi, Head of UK Sales Trading at CMC Markets.
"That said, one swallow doesn't make a spring so the market will be keeping a close eye on numbers out of Beijing before getting excited enough to forget its QE concerns."
FTSE 100: IMI impresses with first-half results
Engineering firm IMI was a high riser this morning after giving a confident outlook for the full-year after an in-line first half. With the full-year result expected to be second half-weighted, investors were assured that the group "anticipate[s] better trading conditions in the remainder of the year". Revenues were flat at £1.09bn 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.
In contrast, oil and gas services firm Wood Group was heading the other way after HSBC downgraded its rating from 'overweight' to 'neutral', saying it sees a "more benign medium-term outlook" post first-half results.
Glencore Xstrata was performing well this morning as the miner continues to recover after disappointing the market with its first-half report earlier this week. JPMorgan cut its target price but maintained its 'overweight' position on the stock today, highlighting the group's "best-in-class free cash flow".
FTSE 250: WH Smith rises on pre-close update
Newsagent chain WH Smith was on shopping lists after reporting that it expects full-year results to be in line with market expectations as it continues focus on tight cost control and improving margins.
Premier Oil was a heavy faller after coming up short of estimates in despite registering record half-year financials. 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.
techMARK 2,538.27 +0.52%
FTSE 100 6,443.68 +0.83%
FTSE 250 14,826.49 +0.57%
FTSE 100 - Risers
IMI (IMI) 1,477.00p +4.83%
Wolseley (WOS) 3,307.00p +3.54%
RSA Insurance Group (RSA) 123.60p +3.00%
International Consolidated Airlines Group SA (CDI) (IAG) 312.50p +2.83%
Antofagasta (ANTO) 917.50p +2.51%
Royal Bank of Scotland Group (RBS) 342.40p +2.48%
Aberdeen Asset Management (ADN) 365.00p +2.44%
Glencore Xstrata (GLEN) 312.00p +2.38%
Whitbread (WTB) 3,131.00p +2.19%
Vedanta Resources (VED) 1,185.00p +2.16%
FTSE 100 - Fallers
Experian (EXPN) 1,168.00p -1.27%
Eurasian Natural Resources Corp. (ENRC) 224.40p -1.19%
Wood Group (John) (WG.) 802.50p -0.99%
Petrofac Ltd. (PFC) 1,228.00p -0.49%
Intertek Group (ITRK) 3,225.00p -0.37%
Prudential (PRU) 1,121.00p -0.36%
WPP (WPP) 1,187.00p -0.34%
Hargreaves Lansdown (HL.) 994.00p -0.25%
FTSE 250 - Risers
Home Retail Group (HOME) 152.70p +5.24%
Evraz (EVR) 122.40p +4.88%
Man Group (EMG) 84.40p +3.56%
Ashmore Group (ASHM) 336.20p +2.88%
Halfords Group (HFD) 377.70p +2.69%
WH Smith (SMWH) 833.50p +2.52%
Bovis Homes Group (BVS) 795.50p +2.45%
Ferrexpo (FXPO) 180.60p +2.44%
Thomas Cook Group (TCG) 148.40p +2.42%
Ocado Group (OCDO) 290.10p +2.29%
FTSE 250 - Fallers
Premier Oil (PMO) 344.60p -3.47%
Bumi (BUMI) 203.50p -3.10%
Carillion (CLLN) 290.10p -2.42%
African Barrick Gold (ABG) 152.00p -2.12%
Ultra Electronics Holdings (ULE) 1,899.00p -2.06%
Cairn Energy (CNE) 268.70p -1.50%
COLT Group SA (COLT) 99.50p -1.29%
PayPoint (PAY) 1,076.00p -1.28%
Imagination Technologies Group (IMG) 265.30p -1.16%
NMC Health (NMC) 355.50p -0.97%
FTSE TechMARK - Risers
Gresham Computing (GHT) 104.00p +4.26%
Optos (OPTS) 158.50p +2.59%
Wolfson Microelectronics (WLF) 160.00p +1.27%
CML Microsystems (CML) 542.50p +1.12%
NCC Group (NCC) 138.00p +0.73%
Filtronic (FTC) 65.00p +0.39%
SDL (SDL) 352.25p +0.36%
Sepura (SEPU) 148.00p +0.34%
Kofax (KFX) 347.50p +0.29%
E2V Technologies (E2V) 132.00p +0.19%
FTSE TechMARK - Fallers
Vectura Group (VEC) 97.50p -5.11%
BATM Advanced Communications Ltd. (BVC) 14.00p -3.45%
Consort Medical (CSRT) 822.00p -2.03%
Triad Group (TRD) 12.50p -1.96%
Microgen (MCGN) 128.50p -0.39%
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