15th Apr 2015 09:27
LONDON (Alliance News) - UK equities have reversed a lower opening to trade higher mid-morning Wednesday, with miners benefiting from the expectation of further stimulus from the People's Bank of China, and oil related stocks trading strongly on the back of a rise in oil prices.
The FTSE 100 trades up 0.4% at 7,103.73, having hit a new record intraday high of 7,111.72 earlier in the session. The FTSE 250 is up 0.2% at 17,894.50, also having hit a new record intraday high of 17,904.33. The AIM All-Share is up 0.3% at 744.18.
Hopes for more stimulus from the Chinese central bank were further supported after the world's second largest economy grew at its slowest pace since 2009. China's gross domestic product expanded 7.0% on the year in the first quarter of 2015, the National Bureau of Statistics said, meeting the expectation of economists. On an annualized quarterly basis, GDP gained 1.3%, below expectations for 1.4% growth and down from 1.5% in the fourth quarter.
The reading comes after much weaker-than-expected Chinese export and import figures on Monday.
"The Chinese government has already shown signs of concern about slowing economic momentum, and many China watchers expect further easing by the country's central bank this year," says Shore Capital analyst Yuen Low.
"In January 2015, it was widely reported in the press that China was accelerating 300 infrastructure projects valued at CNY7 trillion (USD1.1 trillion) to prevent growth from slipping below 7%. The projects in question are part of a broader 400 venture CNY10 trillion plan running from late 2014 to 2016. The investments are being focused on seven industries, including oil and gas pipelines, health, clean energy, transportation? and mining," Low says. "We see these measures as providing support for metal prices, even though the underlying need for such measures is negative."
Mining companies are amongst the best performers in London stock indices for the second day in a row. Glencore, up 3.3%, leads the FTSE 100 gainers. Anglo American is up 2.7%, and Antofagasta up 1.9%. The FTSE 350 mining sector index, up 2.2%, is the best performing sector index in London.
Oil companies also are performing well with Brent oil rising beyond the USD60 a barrel mark for the first time in over a month. Brent currently trades at USD60.67 a barrel, continuing its momentum from Tuesday night when it initially passed the mark. West Texas Intermediate trades at USD54.10 a barrel.
BP is up 1.6% and Royal Dutch Shell 'B' shares are up 1.5%. In the FTSE 250, Premier Oil is up 6.1%, the best performer in the index, Ophir Energy is up 4.2% and Tullow Oil, which also was upgraded to Buy from Neutral by Goldman Sachs, is up 4.1%.
Bunzl is the worst performing stock in the FTSE 100, down 3.0%. The acquisitive distribution and outsourcing company said revenue rose 6% in the first quarter of 2015 from a year earlier, buoyed mainly by acquisitions as it also said it has bought a personal protection equipment company in Turkey. However, Shore Capital is disappointed by the results, saying it was expecting slightly higher growth.
Fresnillo is trading up 3.0% after it said gold and silver production increased sharply in the first quarter, putting it on track to achieve its 2015 production guidance. The Mexico-based precious metal miner said silver production in the three months to end-March was 12.4 million ounces, up 18.9% on the year as increased processed ore volume and higher ore grade at the Saucito mine more than offset lower production at the Fresnillo mine.
JD Sports Fashion is one of the best FTSE 250 performers, up 4.6%. The retailer reported growth in profit in its recent financial year, boosted by strong sales in sports fashion, and despite a difficult second half following a "very mild autumn and winter"
Vesuvius is the biggest midcap faller, down 5.4%, after JP Morgan cut the company to Neutral from Overweight.
Virgin Money is the next worst performer, down 4.9%. Funds run by US investor Wilbur Ross and Stanhope Investments are looking to sell off a big stake in Virgin Money, the Financial Times reported on Tuesday. According to the report, which cited people familiar with the situation, Ross and Stanhope Investments had been seeking to sell 45 million shares but the size of the offer increased to 60 million shares.
Investors will now turn their focus to the afternoon's monetary policy decision and press conference by the European Central Bank. Economists forecast no change in monetary policy following signs of a modest recovery in the eurozone.
"Signals that the eurozone is enjoying something that can easily be referred to as an economic recovery are mounting," says David Kohl, chief currency economist and chief economist Germany at Julius Baer.
"Despite all this evidence, we expect European Central Bank President Mario Draghi to continue to stress the downside risks for the eurozone growth outlook at the press conference after today's council meeting. The main reason for the negative tilt is to suppress expectations of a premature end of the just-started asset-purchasing programme," Kohl adds.
Ahead of the ECB decision, European stocks are performing strongly with the CAC 40 in Paris and the DAX 30 in Frankfurt both up 0.6%.
The ECB will make its policy interest rate decision at 1245 BST, with the subsequent press conference at 1330 BST. Later in the day, there are US industrial production data at 1415 BST and EIA crude oil stocks at 1530 BST.
Futures indicate Wall Street for a higher open, with the DJIA and S&P 500 pointed up 0.2%, while the Nasdaq 100 is expected to open up 0.1%.
By Neil Thakrar; [email protected]; @NeilThakrar1
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