2nd Jan 2020 12:13
(Alliance News) - Stock prices in London were in the green at midday on Thursday, following Asian stocks higher after China's central bank moved to boost a slowing economy and the US promised to sign a trade deal with its economic rival this month.
The large-cap FTSE 100 index was quoted up 72.05 points, or 1.0%, at 7,614.49 at midday Thursday, the first trading day of 2020.
The mid-cap FTSE 250 index was up 170.14 points, or 0.8%, at 22,053.56. The AIM All-Share index was up 0.3% at 960.99.
The Cboe UK 100 index was up 0.7% at 12,892.28. The Cboe 250 was 0.7% higher at 19,956.65 and the Cboe Small Companies up 0.3% at 12,272.09.
Sterling was quoted at USD1.3194 Tuesday midday, marginally off from USD1.3200 at the London equities close on Tuesday.
The euro was quoted at USD1.1190, down from USD1.1230 at the European equities close on Tuesday, prior to Wednesday's New Year's Day holiday. Against the yen, the dollar was quoted at JPY108.79, higher versus JPY108.55 late Tuesday.
In mainland Europe, the CAC 40 in Paris was up 1.1% and the DAX 30 in Frankfurt 0.8% higher in early afternoon trade.
"European equities have made a bright start to the New Year with sizeable rallies of more than 1% seen in several of the major benchmarks across the continent. 2019 was a good year on the whole for stock markets and they seem to be wasting little time in attempting to push higher again with the bourses following the lead of their Asian peers which gained overnight. Expectations that a 'Phase One' trade deal between the US and China will be signed in less than two weeks have boosted sentiment but the main driving force appears to be the announcement of a further easing of monetary policy from China's central bank," XTB Market Analyst David Cheetham said.
China's central bank announced it was cutting the reserve requirements for banks, freeing up about USD114 billion to boost lending in the hopes of invigorating the world's number two economy.
The People's Bank of China will cut the reserve requirement ratio on January 6 by 50 basis points, reducing the amount of cash banks must hold. Lowering the ratio frees up more money for banks to lend to small businesses.
The central bank cut the requirement three times in 2019 to bolster the Chinese economy, which grew at the slowest rate in three decades last year.
Elsewhere, UK manufacturing data showed the sector contracted at the fastest pace in almost seven-and-a-half years in December.
The IHS Markit/Chartered Institute of Procurement & Supply purchasing managers' index fell to 47.5 in December from 48.9 in November. The final reading for December was slightly better than the flash reading of 47.4.
The factory PMI has read below the neutral mark of 50.0 in each of the past eight months.
"The UK manufacturing sector took a turn for the worse at the end of 2019. Output fell at the quickest pace in seven-and-a-half years as new order inflows decreased and Brexit safety stocks were reduced," said IHS Markit Director Rob Dobson.
The eurozone's manufacturing slump also continued, with the December reading coming in at 46.3, down from 46.9 in November, IHS Markit data showed.
Germany ended 2019 in "deep" contraction, IHS Markit noted. The manufacturing PMI there read 43.7 points in December, down from 44.1 in November.
"Eurozone manufacturers reported a dire end to 2019, with output falling at a rate not exceeded since 2012. The survey is indicative of production falling by 1.5% in the fourth quarter, acting as a severe drag on the wider economy," said IHS Markit Chief Business Economist Chris Williamson.
China's manufacturing sector continued to grow, IHS Markit reported, though not as fast as in the prior month.
There was a "strong" rise in output during December, though the rate of new order growth eased to a three-month low. Export sales were up "slightly", Caixin said. The Caixin purchasing managers' index, released by IHS, was 51.5 in December, from 51.8 in November.
Still ahead Thursday, the US manufacturing PMI reading is at 1445 GMT.
Wall Street is primed for a strong open. The Nasdaq Composite index is called 0.7% higher, and both the S&P 500 and Dow Jones Industrial Average are seen opening up 0.6%.
In China, Hong Kong's Hang Seng index closed 1.3% higher and the Shanghai Composite up 1.2%. Financial markets in Japan are closed until Monday.
"The update from the PBoC helped Chinese stocks, and that positive sentiment spilled over to Europe. China has been central to the rally in global stocks in recent weeks as last month it was revealed that Beijing and Washington DC agreed phase one of the trade deal. The two governments will sign the agreement on 15 January," CMC Markets analyst David Madden said.
In a quiet day for FTSE 100 company news, miners were in the green amid promising news on the US-China trade dispute.
US President Donald Trump on New Year's Eve said that he will sign the first phase of a trade deal with China at the White House next month. Trump said he will travel to Beijing at a later date to open talks on other sticking points in the US-China trade relationship.
Glencore was 3.2% higher, Antofagasta was just behind, up 2.6%, and Anglo American was 1.0% higher.
In commodities, gold was quoted at USD1,522.00 Thursday midday, edging slightly higher from USD1,521.04 at the London equities close on Tuesday.
Brent oil was trading at USD66.14, up from USD65.94 at the London close on Tuesday.
Tullow Oil was one of the worst performing FTSE 250 stocks. It was trading 6.8% lower, starting the new year in the red following a difficult end of 2019.
On Thursday, the oil exploration firm said it discovered oil on the Kanuku licence off the coast of Guyana, South America, but the amount was short of pre-drilling estimates. Early results from drilling at the Carapa-1 well found oil in Upper Cretaceous sandstones. Results show the four metres of net oil pay have a sulphur content of less than 1%.
Chief Operating Officer Mark MacFarlane said: "While net pay and reservoir development at this location are below our pre-drill estimates, we are encouraged to find good quality oil which proves the extension of the prolific Cretaceous play into our acreage."
He added: "We will now integrate the results of the three exploration wells drilled in these adjacent licences into our Guyana and Suriname geological and geophysical models before deciding the future work programme."
Tullow is going through a rocky patch. In December, Chief Executive Paul McDade left with immediate effect amid continued underperformance from the TEN and Jubilee fields in Ghana. This led to several production guidance cuts in 2019.
Given weak cash flow forecasts, Tullow also suspended its dividend.
Intellectual property business investor IP Group was one of the best performing mid-cap stocks, up 3.8% after announcing portfolio company Oxford Nanopore Technologies received a total investment of GBP109.5 million from a capital raise and secondary sale of shares.
Oxford Nanopore raised GBP29.3 million of new capital and also facilitated a secondary sale of GBP80.2 million of shares.
Oxford Nanopore noted that funds were raised from both new investors and existing shareholders from the US, Europe and Asia Pacific.
"We're delighted to see another successful fundraising for Oxford Nanopore which rounds off an impressive year of commercial success and technical validation of nanopore sequencing," said IP Group Chief Executive Alan Aubrey.
Among small-caps, Eqtec soared 66%. The Cork, Ireland-based energy company said North Fork Community Power finalised and signed the legal documentation that allows the financial close of the proposed construction and operation of a 2 megawatts biomass plant at the North Fork project in the US.
Back in June, Eqtec said it would buy a 20% interest in North Fork Community Power on financial close of the project. Under the contract, EQTEC said it will invoice to North Fork Community Power a total of EUR2.2 million for the sale of equipment and the supply of engineering and design services.
Tasty was 33% higher after the restaurant operator said fourth-quarter sales to-date are in line with expectations, and it remains confident that current market forecasts for 2019 will be achieved.
In addition, Tasty has sold its dim T More London site for GBP2 million. The move is a part of the company's strategy of reducing exposure where it is experiencing increasing property and labour costs.
Thursday also saw a spate of trading suspensions, amid delayed publication of financial results.
Real estate investment trust KCR Residential REIT, mobile content distributor Mobile Streams, oil & gas explorer Pantheon Resources, and gaming technology platform Nektan all have had trading in their AIM shares suspended on Thursday pending publication of their audited annual results.
Plastic parts manufacturer Carclo also requested the suspension of its shares on the London Main Market, having failed to publish its interim results. This follows delays to the publication of its annual results for its financial year ended March 2019. Carclo said it is at an advanced stage in the preparation of its interim results and these will be published "as soon as possible".
Cash shell Amphion Innovations, a former medical, life science, and technology business developer, had its shares cancelled as it is yet to publish its 2018 results.
By Eric Cunha; [email protected]
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