London midday: Stocks push higher after China, UK services data
By Michele Maatouk
Date: Wednesday 03 Jun 2020
(Sharecast News) - London stocks had extended gains by midday on Wednesday as investors digested better-than-expected Chinese and UK services data.
The FTSE 100 was up 1.5% at 6,312.42.
IG said: "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. China provides a leading gauge of where the likes of Europe and the US could be if a similar path is taken.
"However, traders should be cautious given that this rise back into expansion does simply highlight 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. A score of 50 marks the difference between growth and contraction.
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.
Tim Moore, economics director at IHS Markit, said: "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. 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 and budget airline easyJet flew higher amid reports of possible "air bridge" links between the UK and holiday destinations in Europe.
Chemring surged 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 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 as it reported a 7.8% jump in full-year net revenue.
On the downside, Ibstock fell as the maker of clay bricks and concrete products said sales volumes slid from late March after the coronavirus lockdown was imposed, and announced it could cut around 15% of its workforce.
In broker note action, Marks & Spencer was lifted by an upgrade to 'buy' at Jefferies, while B&M European Value Retail was dented by a downgrade to 'hold' by the same outfit.
Market Movers
FTSE 100 (UKX) 6,312.42 1.48%
FTSE 250 (MCX) 17,766.56 1.89%
techMARK (TASX) 3,792.56 1.23%
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 273.60p 9.54%
Rolls-Royce Holdings (RR.) 321.10p 7.06%
Centrica (CNA) 41.09p 6.95%
Lloyds Banking Group (LLOY) 33.74p 5.86%
easyJet (EZJ) 762.60p 5.82%
Aviva (AV.) 272.80p 4.56%
BP (BP.) 343.10p 4.53%
Whitbread (WTB) 2,574.00p 4.33%
Royal Dutch Shell 'A' (RDSA) 1,388.80p 4.08%
Royal Dutch Shell 'B' (RDSB) 1,336.00p 4.02%
FTSE 100 - Fallers
Polymetal International (POLY) 1,510.00p -5.74%
Fresnillo (FRES) 769.00p -3.53%
Antofagasta (ANTO) 883.40p -2.32%
Intertek Group (ITRK) 5,414.00p -2.20%
Ashtead Group (AHT) 2,456.00p -2.04%
Ocado Group (OCDO) 2,122.00p -2.03%
Admiral Group (ADM) 2,270.00p -1.35%
Croda International (CRDA) 5,146.00p -0.96%
Rentokil Initial (RTO) 492.20p -0.93%
Tesco (TSCO) 227.50p -0.92%
FTSE 250 - Risers
Chemring Group (CHG) 269.00p 25.06%
Hammerson (HMSO) 132.55p 20.75%
Vivo Energy (VVO) 90.00p 11.11%
TUI AG Reg Shs (DI) (TUI) 489.20p 9.72%
Marston's (MARS) 67.20p 8.97%
Petrofac Ltd. (PFC) 203.50p 8.93%
Micro Focus International (MCRO) 478.50p 8.75%
Airtel Africa (AAF) 47.85p 8.34%
Investec (INVP) 170.90p 8.21%
Aston Martin Lagonda Global Holdings (AML) 62.10p 8.18%
FTSE 250 - Fallers
Hochschild Mining (HOC) 196.20p -5.86%
Centamin (DI) (CEY) 158.45p -3.09%
Kingfisher (KGF) 202.40p -2.41%
B&M European Value Retail S.A. (DI) (BME) 386.60p -1.40%
Softcat (SCT) 1,101.00p -1.34%
Ibstock (IBST) 197.70p -1.25%
PureTech Health (PRTC) 250.00p -1.16%
BMO Commercial Property Trust Limited (BCPT) 78.00p -1.02%
Avast (AVST) 513.50p -0.97%
Victrex plc (VCT) 2,008.00p -0.89%
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