3rd Dec 2020 11:56
(Alliance News) -Â The FTSE 100 was back to posting mild gains by midday on Thursday, recovering after a stint in the red in the morning, with the mood tepid across markets after a raft of services PMIs from Europe.
The FTSE 100 index was up 6.65 points, or 0.1%, at 6,470.04 midday Thursday. The mid-cap FTSE 250 index was up 48.88 points, or 0.3%, at 19,926.65. The AIM All-Share index was down 0.1% at 1,065.87.
The Cboe UK 100 index was up 0.2% at 644.39. The Cboe 250 was up 0.4% at 17,234.28, and the Cboe Small Companies up 0.8% at 11,606.19.
In mainland Europe, the CAC 40 in Paris was down 0.2% and the DAX 30 in Frankfurt down 0.3% Thursday afternoon.
"A more cautious mood has descended on stock markets in Europe this morning, after final PMI readings provided a less than stellar outlook for the region," said IG chief market analyst Chris Beauchamp.
While the UK's services PMI for November confirmed the all-important sector contracted last month, the rate was not quite as bad as first feared.
The IHS Markit/Chartered Institute of Procurement & Supply UK services purchasing managers' index dropped to 47.6 in November from 51.4 in October. This marked the first time in five months the index has registered below the no-change mark of 50, indicating the services sector shrank in November.
However, the reading was higher than the flash estimate of 45.8 and signalled a much slower downturn in activity than the April's record low of 13.4.
The service sector reading for November dragged down the UK's composite reading - a weighted average of the manufacturing and services PMIs - to 49.0 in November from 52.1 in October.
The eurozone suffered a steeper fall in November, with its business activity index falling to 41.7 in November from October's reading of 46.9.
The bloc's manufacturing purchasing managers' index, released on Tuesday, registered 53.8 for November, above the flash reading of 53.6 but below October's 54.8.
The deterioration in the eurozone's service sector resulted in the composite PMI falling to 45.3 from 50.0 in October. Again, this was slightly better than November's preliminary reading of 45.1.
IG's Beauchamp commented: "Losses on stock markets are still relatively modest, since like the downturn earlier in the year, today's figures have very much been a reflection of existing information – everyone can see it will have been tough month thanks to lockdown measures bearing down on economic performance."
And despite the glum data, the pound and euro were buoyant at midday.
Sterling was quoted at USD1.3437 midday Thursday, up from USD1.3343 at the London equities close on Wednesday. The euro traded at USD1.2126 on Thursday, higher than USD1.2086 late Wednesday.
Ricardo Evangelista, senior market analyst at ActivTrades, said: "The dollar's losing streak versus other major currencies has carried on into early Thursday trading. The greenback, the go-to currency during the darkest moments of 2020, is no longer in such high demand, as investors are increasingly optimistic about the vaccines and the prospect of political consensus in Washington enabling the release of a much-needed economic stimulus package."
Against the yen, the dollar dipped to JPY104.31 versus JPY104.57 late Wednesday.
Gold was quoted at USD1,840.65 an ounce on Thursday, up on USD1,827.01 on Wednesday and benefiting from dollar weakness. Brent oil was trading at USD47.97 a barrel, firm against USD47.90 late Wednesday.
Still to come is a US PMI at 1445 GMT and a ISM report at 1500 GMT.
Wall Street is pointed to a mixed open on Thursday. The Dow Jones is called down 0.1%, the S&P 500 seen flat and the Nasdaq pointed up 0.2%.
In London, shares in J Sainsbury were up 3.1% after the supermarket followed rival Tesco in forgoing business rates relief.
In March, the UK Chancellor of the Exchequer Rishi Sunak said the UK government would grant all retail, hospitality and leisure businesses a 100% business rates holiday for the next 12 months, with the intention of helping companies get through the Covid-19 pandemic.
The grocer's sales and profit was stronger than originally expected since the beginning of England's second national lockdown, hence the decision to forego business rates relief on all stores. Sainsbury's noted that due to this, it now expects an underlying pretax profit of at least GBP270 million of the financial year to March, which includes the assumption it will forgo around GBP410 million in business rates relief.
On Wednesday, Wm Morrison Supermarkets said it was planning to waive GBP274 million of business rates for the 2021 financial year, following Tesco's announcement that it will repay GBP585 million of business rates relief received that same day. Aldi on Thursday also said it will repay GBP100 million of rates relief.
Shares in Tesco were up 1.5% at midday and Wm Morrison down 1.0%.
In the FTSE 250 Hochschild shares fell 14% after Chair Eduardo Hochschild sold a 12% stake in the gold miner, banking GBP123 million.
Hochschild sold 61.7 million shares via Pelham Investment at 200 pence per share, 15% below the stock's closing price on Wednesday of 235.59 pence each. Following the sale, run by JPMorgan, Hochschild will still own 197 million shares in the miner, a 38% stake.
Tui shares were down 5.5%.
On Wednesday, Tui said it reached an agreement for a EUR1.8 billion support package, shoring up its finances further in the face of the Covid-19 pandemic. Commerzbank on Thursday cut the Anglo-German tour operator to Hold from Buy.
Elsewhere in London, MJ Gleeson shares rose 13% after the housebuilder said it is "minded" to resume dividend payments in 2021 on the back of a "strong" interim performance to date.
MJ Gleeson, hosting its annual general meeting on Thursday, had decided against a dividend in its year ended June 30.
Trading so far this in the new financial year has been promising, helped by the housing sector being deemed an essential service during the latest lockdown in England. MJ Gleeson now expects its annual performance to top current expectations.
By Lucy Heming;Â [email protected]
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