3rd Feb 2020 11:52
(Alliance News) -Â Despite stocks in Shanghai plunging overnight, European shares were higher on Monday, with the FTSE 100 the outperformer on account of a weaker pound.
Sterling's decline came as UK Prime Minister Boris Johnson threatened to walk away without a Brexit trade deal rather than accepting EU rules.
The FTSE 100 index was up 26.14 points, or 0.4%, at 7,312.15. The FTSE 250 was down 8.62 points at 21,134.87, and the AIM All-Share was up 1.45 points, or 0.2%, at 952.44.
The Cboe UK 100 was up 0.4% at 12,392.73, the Cboe UK 250 was down 0.2% at 19,119.06, and the Cboe Small Companies up 0.1% at 12,446.02.
In European equities on Monday, the CAC 40 in Paris was up 0.3%, while the DAX 30 in Frankfurt was 0.2% higher.
"Equity markets in Europe have pulled back a small portion of the major ground that was lost last week on the back of the coronavirus situation," said David Madden at CMC Markets.
"The health crisis is worsening but it seems that traders in Europe are keen to snap up bargains," Madden added. "The relatively small rebound in European markets suggests there isn't a huge amount of bullish sentiment circulating."
Stocks in the US are also pointed to a higher open at the start of the week. The Dow Jones and S&P 500 are pointed up 0.4%, while the Nasdaq is seen 0.5% higher.
This stabilisation in Europe and the US follows a sharp 7.7% drop for the Shanghai Composite index as markets in mainland China re-opened following the Lunar New Year holiday, which stretched all of last week.
Since emerging out of Wuhan late last year, a new strain of coronavirus has infected nearly 14,500 people across China and reached 24 nations.
The death toll in China jumped above 360 on Monday to surpass the number of fatalities of its SARS crisis two decades ago, with dozens of people dying in the epicentre's quarantined ground-zero.
The 57 confirmed new deaths was the single-biggest increase since the virus was detected in the central city of Wuhan, where it is believed to have jumped from animals at a market into humans. All but one of the 57 new deaths were in Wuhan and the rest of Hubei province, most of which has been under lockdown for almost two weeks to stop people leaving and transmitting the virus.
SARS, caused by a pathogen similar to the new coronavirus and also originated in China, killed 774 people – with most of the other deaths in Hong Kong.
In the economic calendar on Monday is the US IHS Markit manufacturing PMI at 1445 GMT followed by the ISM manufacturing PMI at 1500 GMT.
Already released, IHS Markit showed the UK manufacturing sector stopped shrinking in January as political uncertainty subsided following the Conservative Party's victory in December's general election.
The IHS Markit/CIPS manufacturing purchasing managers' index reading came in at the neutral mark of 50.0 in January, up from December's figure of 47.5. The score was a nine-month high and also beat the flash estimate of 49.8.
Any reading below 50 indicates contraction, while one above expansion. The UK manufacturing PMI last posted a reading above the neutral 50.0 mark in April 2019.
The eurozone's manufacturing sector continued to contract in January, though at a more moderate pace.
The bloc's PMI rose to 47.9 in January, from 46.3 in December and marginally above the 47.8 flash estimate.
Germany was the eurozone's weakest performer again in January. The manufacturing PMI rose to an 11-month high of 45.3 in January from 43.7 in December, however.
"The index has now risen in three of the past four months from a ten-year low last September, though the latest reading was still firmly inside contraction territory," IHS Markit noted.
The euro was quoted at USD1.1060 on Monday, soft versus USD1.1083 late Friday following the data.
In the UK, Prime Minister Boris Johnson has threatened to walk away without a Brexit trade deal rather than accepting EU rules as battle lines were being drawn up by the two sides.
The PM will use a speech to say there is "no need" for the UK to commit to following the "full panoply" of Brussels' regulations. But the EU's chief negotiator Michel Barnier is likely to stress that the further the UK moves from the EU model, the greater the barriers to trade will be, as he sets out his position in Brussels.
Sterling was quoted at USD1.3060 Monday, down from USD1.3186 at the London equities close on Friday.
"Investors are once again pricing-in heightened chances of the UK crashing out of its existing relationship with the European Union at the end of the year, without a trade deal in place," said Ricardo Evangelista, senior analyst at ActivTrades.
Against the yen, the dollar was quoted at JPY108.52 versus JPY108.40.
In commodities, gold was quoted at USD1,578.50 Monday midday, down from USD1,586.60 on Friday. Brent was quoted at USD56.60 early Monday, soft compared to USD56.86 late Friday.
In London, distiller Diageo was up 2.1% after Kepler Cheuvreux raised the Smirnoff vodka owner to Buy from Hold.
In the FTSE 250, Future was up 6.6% after saying it expects its annual results to be ahead of market expectations despite macroeconomic uncertainty.
In addition, the magazine publisher was rebounding after closing down 16% on Friday in the wake of a short seller report. ShadowFall on Friday said it had shorted the stock, saying Future "is little more than a collection of generally low quality, often distinct and shrinking assets which carries significant execution risk".
Aston Martin was down 4.6% as it gave back some of the previous session's gains. The luxury car maker closed up 24% on Friday after agreeing to sell a GBP182 million stake to a consortium led by Canadian billionaire Lawrence Stroll.
Ryanair rose 4.3% after the airline swung to a third-quarter profit.
In the three months to December 31 - traditionally a weak season for airlines - the budget airline recorded operating profit of EUR91.3 million, compared to a loss of EUR68.0 million for the same period a year before.
Total operating revenue in the third quarter was up 21% year on year to EUR1.91 billion from EUR1.58 billion. Traffic rose 6.2% to 35.9 million, while revenue per passenger grew 13%.
For the current financial year, Ryanair is guiding for profit after tax between EUR950 million and EUR1.05 billion, based on strong Christmas and New Year travel bookings.
Fourth-quarter bookings are up 1% on the year before, the airline said, with "slightly better" than expected average fares. Ryanair expects full-year traffic to grow by 8% to 154 million passengers, with revenue guided 3% to 4% higher.
By Lucy Heming;Â [email protected]
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