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LONDON MARKET MIDDAY: FTSE 100 buoyed by UK manufacturing growth

2nd Apr 2024 11:50

(Alliance News) - The FTSE 100 in London was up at midday on Tuesday, reacting to the UK manufacturing sector returning growth and further PMI data across the globe.

Oil majors and gold miners also soared in the FTSE 100 off the back of rising oil and bullion prices.

The FTSE 100 index was up 23.76 points, 0.3%, at 7,976.38. The FTSE 250 was down 58.37 points, 0.3%, at 19,826.36, and the AIM All-Share was up 0.40 of a point at 743.66.

The Cboe UK 100 was up 0.2% at 797.51, the Cboe UK 250 was down 0.7% at 17,220.34, and the Cboe Small Companies was up 0.2% at 14,590.74.

The UK manufacturing sector crossed the no-change mark into growth territory in March, according to the latest numbers from S&P Global.

The seasonally adjusted S&P Global UK manufacturing purchasing managers' index reading was 50.3 points in March, up from 47.5 in February and beating the earlier flash estimate of 49.9.

The latest figure was above the 50-point no-change mark, meaning the UK manufacturing sector returned to growth territory.

Pantheon Macroeconomics analyst Rob Wood commented: "The long downturn in manufacturing output is over according to the PMI...This isn't just a flash in the pan, with the forward-looking indications from the PMI suggesting growth will improve further.

"Expectations for growth in output over the next 12 months also improved to 75.9 in March from 73.5 in February, above their average level of 72.4 since this question was first asked in 2012 and the highest since April 2023."

UK house prices rose 1.6% in March compared to a year ago, according to the latest Nationwide survey and coming in below FXStreet-cited expectations of a 2.4% rise. In February, this rose by 1.2%.

On a monthly basis, prices fell 0.2% in March from February, compared to a 0.7% rise in February from January. The market expected a 0.3% rise.

"The UK housing market has been doing its best to bounce back, yet latest data from Nationwide would suggest it is still a slog to shift property," said AJ Bell analyst Russ Mould.

"House price growth was subdued in March as many people remain priced out of the market. We really need to see interest rate cuts to prompt a big drop in mortgage rates and improve affordability levels."

Market attention was otherwise dominated by the release of manufacturing PMI data, with more to come on Tuesday.

Growth in the US manufacturing sector continued in March but at a slower rate, final purchasing managers' index survey results from S&P Global confirmed on Monday, while the similar Institute for Supply Management survey showed a swing to growth from contraction.

The S&P Global US manufacturing PMI slipped to 51.9 points in March from 52.2 in February. This was below the flash result for March, released last month, which had shown an improvement to 52.5 points.

The score for last month was still above the neutral 50-point mark, and the expansion in production reached a 22-month-high.

The ISM PMI showed a more striking improvement last month, indicating a swing to expansion from contraction.

The ISM PMI for manufacturing reading was 50.3 points for March, compared to 47.8 for February and 49.1 for January. A less impressive rise to 48.4 points was expected for last month.

The readings came after data showed US inflation pressure eased ever-so-slightly in February to 2.8% on-year from 2.9% in January, according to the Federal Reserve's preferred indicator, the core personal consumption expenditures index. The data, released on Friday, was in line with consensus cited by FXStreet.

The core data excludes food and energy. The annual headline PCE index, which does not, picked up 2.5% in February, accelerating slightly from 2.4% in January. The February outcome was in line with consensus.

Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.3%, while the S&P 500 index and the Nasdaq Composite were both called down 0.2%.

Meanwhile, the eurozone's manufacturing sector sunk to a three-month low in March, numbers on Tuesday showed, though there were "signs of positive momentum building".

The latest Hamburg Commercial Bank manufacturing purchasing managers' index fell to 46.1 points in March, from 46.5 in February. The latest reading was a three-month low, but topped the flash estimate of 45.7 points.

Germany's manufacturing sector remained "firmly in contraction" in March, according to data from the Hamburg Commercial Bank on Tuesday.

The manufacturing purchasing managers' index for Germany registered 41.9 points in March, down from 42.5 points in February and further below the 50 point no-change mark.

A score of 50.0 separates expansion from decline.

In European equities on Tuesday, the CAC 40 in Paris was marginally down, while the DAX 40 in Frankfurt was down 0.2%.

The pound fell to USD1.2564 on Tuesday midday in London, compared to USD1.2640 at the equities close on Thursday last week. The euro stood lower at USD1.0741, against USD1.0803. Against the yen, the dollar was trading higher at JPY151.69 on Tuesday, compared to JPY151.29 late Thursday.

In London's FTSE 100, gold miners and oil majors were among the better large-cap performers.

Fresnillo and Anglo American traded 7.1% and 4.0% higher respectively, while Shell and BP rose 3.2% and 2.9% respectively.

Brent oil rose steeply to USD88.95 a barrel at midday in London on Tuesday from USD86.56 late Thursday last week. Gold rose to USD2,260.27 an ounce against USD2,221.01.

HSBC rose 1.0%, after it announced it sealed the sale of HSBC Bank Canada to Royal Bank of Canada.

The lender will book a USD4.9 billion "estimated gain on sale" in its first quarter, inclusive of the recycling of an estimated USD600 million in foreign currency translation reserve losses.

HSBC intends to declare a special dividend of USD0.21 per share in its first quarter earnings, subject to board approval and finalisation of results. This would be in addition to any proposed interim dividend and payable at the same time in June if approved.

AstraZeneca ticked down 0.1%.

The pharmaceutical firm said its biologics licence application for datapotamab deruxtecan was accepted by the US Food & Drug Administration for the treatment of specific forms of breast cancer.

AstraZeneca said the decision was based on the results of the Tropion-Breast01 phase 3 trial in which Dato-DXd "demonstrated a statistically significant and clinically meaningful improvement" in progression-free survival compared to chemotherapy and at least one systemic therapy.

The prescription drug user fee act date, the FDA action date for its regulatory decision, is during the first quarter of 2025.

Meanwhile, AstraZeneca's Voydeya has been approved in the US to treat extravascular haemolysis in adults suffering from rare blood disease paroxysmal nocturnal haemoglobinuria. The FDA approval comes off the back of positive results from the Alpha phase 3 trial.

In the FTSE 250, Hochschild Mining rose 2.6%, after the gold and silver miner sold its Crespo project in southern Peru for USD15 million to Kina Mining Peru.

Among London's small-caps, CMC Markets rose 3.9% to 226 pence, after RBC raised its price target for the online trading firm to 240p from 190p, rating the stock at 'outperform'.

On Wednesday last week, CMC Markets raised its full-year outlook after a positive fourth quarter.

In a trading update for the financial year ending March, the London-based online trading firm said it expects full-year net operating income to exceed the top end of the previously guided range of between GBP290 million and GBP310 million. This would be up from GBP288.4 million in financial 2023.

On AIM in London, Redx Pharma lost 59%, after it said intends to cancel its shares from trading on AIM in London, subject to shareholder approval.

The clinical-stage biotechnology company said the board unanimously concluded that it is in the best interests of the company to re-register as a private limited company, as it is "still liquidity constrained" on AIM.

A general meeting has been called for April 19 for Redx Pharma shareholders to vote on the cancellation resolution.

By Greg Rosenvinge, Alliance News senior reporter

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