Improved manufacturing data from China spurs FTSE higher
The FTSE 100 has re-established itself firmly above the 5,200 marker once again following improved sentiment about manufacturing in China and strong GDP figures from Australia. The UK’s top share index climbed 57 points higher at 10:00BST, adding 1.1 per cent to yesterday’s close value to sit at 5,282.
Rob Hull
shareprices.com - Wednesday, September 01, 2010
China’s improved manufacturing data – the official purchasing managers’ index rose to 51.7 in August from 51.2 in the month previous – ultimately resulted in a mining surge.
Metal prices have gained on the back of the data after weeks of stale activity with fears mounting that demand for metals in the manufacturing world leader was set to shrink.
Fresnillo (LON:FRES) topped the gainers, adding 3.5 per cent to the share price. The Mexican-based precious metal miner rose by 38p heading fellow sector giants Kazakhmys (LON:KAZ) and Xstrata (LON:XTA) which both posted share price additions at the rate of 2.2 per cent.
The strong purchasing manager results in China were not echoed in the UK however. In fact, manufacturing PMI in the UK has fallen to its lowest since November, dropping to 54.3 in August compared to 56.9 in July.
The fall is due to a 12-month low expansion in new orders and is likely to hit midcaps and smaller groups who don’t outsource work to Asia like the blue chip companies, but will be used as an indicator of the state of the British economy.
But despite being downbeat, investor confidence has been lifted by results from down under with Australia’s economy growing at its fastest rate in three years according to recent data.
Despite the growing talk of miners and manufacturing, it’s a travel stock that heads the gainers this morning.
TUI Travel (LON:TT.), the parent group of Thomson Holidays and First Choice, has hit the headlines in the Financial Times Deutschland with Europe’s biggest tour operator reportedly interested in investing in the firm. TUI AG, already the parent group of TUI Travel, is considering buying the shares it doesn’t already own in the British arm, according to the report. The share price surged as a result, gaining over five per cent.
Also helping urge the FTSE 100 higher is telecom firms on the back of Vivendi raising its annual profits target. Europe’s biggest telecoms firm posted better-than-predicted first-half results and raised sentiment in the sector with UK-based groups Immarsat (LON:ISAT) and Vodafone Group (LON:VOD) recording strong share price gains – two per cent and 0.5 per cent respectively.
Banks remain in favour, boosted by global economy positives taken from the manufacturing data from China and Australia’s GDP figures. Barclays (LON:BARC) and Royal Bank of Scotland (LON:RBS) are the most sought after at the moment, up by almost one per cent each.
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