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LONDON MARKET OPEN: FTSE 100 up as oil majors and gold miners shine

2nd Apr 2024 09:09

(Alliance News) - Stock prices in London opened higher on Tuesday, in confident trade following the long Easter weekend, ahead of a UK manufacturing sector reading later in the morning.

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

The FTSE 100 index opened up 48.35 points, 0.6%, at 8,000.97. The FTSE 250 was up 75.55 points, 0.4%, at 19,960.28, and the AIM All-Share was up 3.78 points, 0.5%, at 747.04.

The Cboe UK 100 was up 0.5% at 800.00, the Cboe UK 250 was up 0.3% at 17,393.65, and the Cboe Small Companies was marginally lower at 14,549.67.

In European equities on Tuesday, the CAC 40 in Paris and the DAX 40 in Frankfurt were each up 0.1%.

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.

Capital Economics said the monthly fall suggested that "the rise in mortgage rates since the turn of the year has caused house prices to stall".

"Looking ahead, we think mortgage rates will hover just below 5% until there is firmer evidence that the Bank of England is on the cusp of significant rate cuts, so house prices are likely to flatline over the summer," said Capital Economics analyst Andrew Wishart.

"But if we are right in forecasting a larger reduction in bank rate than most expect into next year, prices are likely to start rising again towards year-end."

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.

In the US on Monday, Wall Street ended largely lower, with the Dow Jones Industrial Average down 0.6%, the S&P 500 down 0.2% but the Nasdaq Composite up 0.1%

The pound fell to USD1.2549 early on Tuesday in London, compared to USD1.2640 at the equities close on Thursday last week. The euro stood lower at USD1.0734, against USD1.0803.

Meanwhile, monthly factory activity in China grew for the first time in half a year, official figures showed, in a positive sign for policymakers seeking to revive the world's second-largest economy.

The PMI came in at 50.8 points in March, according to the National Bureau of Statistics, up from 49.1 in February. The last expansion in China's monthly PMI was in September, with factory activity consistently negative since then, according to NBS data.

The trend of improvement was confirmed by the Caixin manufacturing PMI, which edged up to 51.1 from 50.9.

In Asia on Tuesday, the Nikkei 225 index in Tokyo inched up 0.1%. In China, the Shanghai Composite slipped 0.1%, though the Hang Seng index in Hong Kong gained 2.2%. The S&P/ASX 200 in Sydney closed down 0.1%.

The downturn in Japan's manufacturing sector slowed in March, according to survey data. The au Jibun Bank PMI rose to 48.2 points in March from 47.2 in February, confirming a prior flash estimate.

Against the yen, the dollar was trading higher at JPY151.73 on Tuesday, compared to JPY151.29 late Thursday.

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

Frensillo traded 4.9% higher. Shell and BP rose 2.3% and 2.2%.

Brent oil rose steeply to USD88.28 a barrel early in London on Tuesday from USD86.56 late Thursday last week. Gold rose to USD2,254.62 an ounce against USD2,221.01.

HSBC climbed 1.7%, 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 rose 1.0%.

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, RHI Magnesita lost 2.3%, after it said it intends to acquire US-based Resco Group for an enterprise value of up to USD430 million. Resco is a producer of alumina monolithics and wide range of basic and non-basic refractories.

The refractory products for metals processing manufacturer said the deal is subject to customary closing conditions including merger control authority approval, and is expected to be completed in the second half of 2024.

RHI Magnesita has agreed to pay a deposit of USD18 million, which can be offset against the wider transaction amount but is non-refundable if the deal does not complete. It has also agreed to make ticker payments relating to triggering events or completion conditions.

RHI added: "Currently approximately 50% of RHI Magnesita's US sales are not produced in the country. The acquisition will increase RHI Magnesita's local production in the US and Canada by transferring significant volumes of production from non-US plants to the Resco production facilities in the US."

Elsewhere in London, real estate investment trust Custodian Property Income lost 0.9%, after it said it completed the sale of an industrial unit in Weybridge, England for GBP6.0 million.

This was alongside unconditionally exchanging on the disposal of a vacant industrial unit in Warrington for GB9.0 million, which is expected to close in mid-April.

Custodian Property Income said the total GBP15.0 million proceeds would be used towards repaying its existing revolving debt facility, reducing its loan-to-value ratio by around 2%.

Still to come on Tuesday's economic calendar is a UK manufacturing PMI reading at 0930 BST.

By Greg Rosenvinge, Alliance News senior reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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