22nd Oct 2021 12:09
(Alliance News) -Â European stock markets charged higher at the end of the week, with London underperforming slightly, supported by relief over China Evergrande and some promising PMI surveys.
The FTSE 100 index was up 35.06 points, or 0.5%, at 7,225.36 midday Friday. The mid-cap FTSE 250 index was up 37.09 points, or 0.2%, at 22,954.14. The AIM All-Share index was down 2.13 points, or 0.2%, at 1,239.24.
The Cboe UK 100 index was up 0.5% at 716.49. The Cboe 250 was flat at 20,672.24, and the Cboe Small Companies down 0.2% at 15,496.14.
In mainland Europe, the CAC 40 in Paris was up 1.1% while the DAX 40 in Frankfurt was up 0.7% on Friday.
European markets started the day brightly on news that Chinese property titan Evergrande made a key offshore interest payment a day ahead of a weekend deadline.
Stock markets then got a further boost from a set of encouraging purchasing managers' index surveys.
"From a UK perspective, the sharp ramp-up in services sector growth brings confidence in the UK growth story. Coming off the back of three consecutive months of slowing growth in UK services, today's rise helps lift the outlook for Q4 GDP," said Joshua Mahony, senior market analyst at IG.
The flash UK composite output index for October rose to a three-month high of 56.8 points, versus September's 54.9. Any reading over the no-change mark of 50.0 denotes expansion, meaning economic activity in the UK accelerated in October.
Firms widely reported "buoyant" business and consumer spending due to a lack of pandemic restrictions.
Driving the recovery was the all-important service sector, with its flash index jumping to 58.0 in October from September's 55.4. Factory performance lagged. The manufacturing PMI edging up to 57.7 in October from 57.1 in September, but the manufacturing output index fell to an eight-month low of 50.6.
The upbeat PMI data helped to offset some disappointing UK retail sales figures.
On a monthly basis, retail sales volumes fell 0.2% in September, following August's 0.6% decline. While this was an improvement on August's result, markets had been expecting a rebound in September, according to FXStreet, as analysts had pencilled in growth of 0.5%.
Darren Morgan, director of Economic Statistics at the ONS, said household goods were the main cause of September's decline.
Sterling was quoted at USD1.3800 on Friday, off intraday lows but soft against USD1.3808 at the London equities close on Thursday.
"Today's UK data presented a mixed picture on the health of the UK recovery," said Rupert Thompson, chief investment officer at Kingswood.
Friday's data comes as the UK central bank's new chief economist told the Financial Times the Bank of England's November policy meeting will have a "live" decision about whether or not to raise interest rates.
Kingswood's Thompson said: "These numbers can only add fuel to the debate over the extent of the slowdown in the pace of the recovery. However, they should have little impact on the Bank of England which seems firmly focused on inflation rather than growth at the moment and looks intent on raising rates either in November or December."
Over in the eurozone, business activity growth continued at a robust pace, though did slow from September. The fash eurozone purchasing managers' composite output index recorded 54.3 points in October, down from 56.2 in September.
Although the October expansion was the weakest since April, the latest reading remains above the survey's pre-pandemic long run average of 53.0 points to signal above-trend growth.
The euro traded at USD1.1641 midday Friday, flat against USD1.1640 late Thursday.
Against the yen, the dollar slipped to JPY113.80 versus JPY113.85.
Gold was quoted at USD1,794.02 an ounce on Friday, higher than USD1,780.15 on Thursday. Brent oil was trading at USD85.16 a barrel, firm against USD84.12 late Thursday.
Wall Street is on course for a lacklustre open, with the Dow Jones pointed up 0.1%, the S&P 500 flat and the Nasdaq Composite down 0.3%.
In London, miners rose amid relief that China Evergrande dodged debt default. Antofagasta rallied 4.2%, BHP rose 2.1% and Rio Tinto gained 1.8%.
JD Sports rose 2.4% after UBS raised the atheleisurewear retailer to Buy from Neutral. Separately, the firm on Friday said it has bought an 80% stake in Crete-based Cosmos Sport.
"We rate JD 'Buy' as new analysis suggests upside to sales and margin estimates in the short and long term," said UBS.
At the bottom of the FTSE 100 was London Stock Exchange Group, losing 3.2% despite reporting solid progress in the third quarter and confirming its full-year outlook.
In the three months to September 30, total income surged to GBP1.78 billion from GBP498 million. Gross profit tripled to GBP1.56 billion from GBP454 million.
Looking ahead, LSEG is guiding for total income to grow by between 4% to 5% in 2021, but noted fourth-quarter income will not grow as fast as the third quarter due to strong comparators. It added that there is no change to cost or capital expenditure guidance, but supply chain pressures "may impact timing of some technology spend" this year.
Steve Clayton, HL Select fund manager, commented: "News that capital investment rates could be impacted by supply shortages show that no one is immune to post-pandemic disruption."
InterContinental Hotels fell 3.1% as it said performance remains some way off pre-virus levels, but is getting there.
IHG reported third-quarter RevPAR, a key hospitality metric, growth of 66% on a year ago, though it remained down 21% on 2019. In its half-year results, IHG reported RevPAR up 20% on 2020 and down 43% on 2019.
"While we remain vigilant to fluctuating Covid restrictions in different markets, the pace of returning demand is very encouraging as travel increasingly re-opens in every region," said Chief Executive Keith Barr.
Elsewhere in London, SIG shares rose 4.3% after the building materials firm lifted its full-year outlook, weathering inflationary and supply chain pressures.
In the third quarter of 2021, sales rose 17% year-on-year on a like-for-like basis. Although the annual climb slowed from 33% in first half, SIG noted like-for-like sales growth accelerated when compared to pre-Covid times.
SIG expects its full-year underlying operating profit to top market current market forecasts.
By Lucy Heming;Â [email protected]
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