1st May 2015 09:41
LONDON (Alliance News) - London stock indices are trading slightly lower Friday recovering from a weaker open after a heavy sell-off on Wall Street on Thursday, while the pound is lower against its major counterparts after UK Markit manufacturing Purchasing Managers' Index came in well short of expectations.
At mid-morning, the FTSE 100 is trading down 0.1% at 6,952.85, the FTSE 250 is down 0.2% at 17,444.31, and the AIM All-Share index is down 0.1% at 752.58.
In New York Thursday, the DJIA ended down 1.1%, the S&P 500 closed down 1.0%, and the Nasdaq Composite lost 1.6%. Frankfurt and Paris are closed Friday for Labour day.
Manufacturing output in the UK rose at its slowest pace since November according to Markit and the Chartered Institute of Procurement and Supply, creating a gloomier picture on the health of the UK economy less than a week before the General Election. The PMI reading for April fell to 51.9, down from the revised figure of 54.0 in March. Economists had estimated PMI to move up to 54.6 from the original March reading of 54.4.
"A key challenge for the next government is to revive manufacturing and help it at least regain its pre-crisis peak, as any signs of rebalancing the economy towards manufacturing and exports remain frustratingly elusive," says Rob Dobson, senior economist at Markit.
The pound fell sharply against other major currencies following the release, slumping to a low of USD1.5282 from a high of USD1.5397. Sterling also fell to its lowest level against the euro in almost a month, hitting a low of EUR1.3570.
However, UK stock indices were boosted by better-than-expected UK consumer credit figures for March. The report, released by the Bank of England, shows the amount of money borrowed by individuals over the month. The reading for March came in at GBP1.24 billion, much higher than February's upwardly revised figure of GBP785 million. Economists had expected consumer credit to edge higher to GBP800 million from the original February reading of GBP740 million.
Lloyds Banking Group leads FTSE 100 gainers, up 4.4% after it upped its guidance for 2015 and said its underlying performance in the first three months of the 2015 was strong as first-quarter pretax profit fell.
Lloyds said a GBP660 million net charge related to the disposal of its stake in TSB Banking Group played a big part in causing the group's first-quarter pretax profit to fall to GBP1.21 billion from GBP1.80 billion. On an underlying basis, which strips out costs related to operating and selling TSB and other provisions, first-quarter profit increased to GBP2.18 billion from GBP1.80 billion.
Miners also are helping to prop up the FTSE 100 after a marginal beat in Chinese manufacturing PMI. The manufacturing sector in China continued to barely expand in April, with a manufacturing PMI score of 50.1. That beat expectations for 50.0, and was unchanged from the March reading. It also remained just above the line of 50 that separates expansion from contraction. China's National Bureau of Statistics also said that its non-manufacturing PMI came in at 53.4, down from 53.7 but still well into expansion territory.
Anglo American is up 4.2%, Rio Tinto is up 3.6%, and BHP Billiton is up 2.7%, all amongst the best performers in the index.
Rentokil Initial said revenue rose in the first quarter, with solid performances in most of its regional operations offsetting continued weakness in parts of Europe. The business services company, which provides pest control, hygiene services and supplies workwear, said its revenue in the quarter to the end of March was GBP417.8 million, up 1.4% year-on-year. Its shares trade up 1.9%.
Virgin Money Holdings is up 1.5%, as the lender said that profitability improved in the first quarter as mortgage lending increased. It grew its gross mortgage lending in the first quarter of the year, and said it received a "high number" of applications in the three months.
Pure Wafer shares have surged up 79%, making it the best performer in the AIM All-Share index. The company announced that it has received a settlement from its insurers following a fire at its Swansea premises last December, which it plans to return to shareholders.
Still ahead in the economic calendar, is US Markit manufacturing PMI at 1445 BST, before ISM manufacturing PMI and Reuters/Michigan Consumer Sentiment Index, both at 1500 BST.
US stock futures point to a higher open, with the DJIA and S&P 500 are expected to open up 0.3% and the Nasdaq 100 is pointed up 0.1%.
By Neil Thakrar; [email protected]; @NeilThakrar1
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