9th Oct 2020 08:45
(Alliance News) -Â US stimulus hopes were keeping markets buoyant into the end of the week, with the FTSE 100 adding 20 points in early trade on Friday, while the pound firmed despite some disappointing UK economic growth data.
The blue-chip FTSE 100 was up 21.60 points, or 0.4%, at 5,999.63 early Friday. The mid-cap FTSE 250 index was up 73.72 points, or 0.4%, at 18,019.88. The AIM All-Share index was up 0.3% at 981.32.
The Cboe UK 100 index was up 0.1% at 596.67. The Cboe 250 was up 0.3% at 15291.55, and the Cboe Small Companies down 0.1% at 9496.86.
In mainland Europe, the CAC 40 in Paris was up 0.6% while the DAX 30 in Frankfurt slipped 0.3% early Friday.
"Fresh hopes of fiscal stimulus in the US provided another boost to stocks in what has been a generally positive, if challenging, week," said Richard Hunter at Interactive Investor.
After tweeting on Tuesday that he had called off talks over a US stimulus package with Democrats, President Donald Trump appeared to shift gears and said he would support targeted handouts.
Optimism over a new package was wiped out after Trump ruled out any new stimulus spending until after the November 3 election, sending US stocks tumbling on Tuesday. However, Trump then returned to Twitter to call for stand-alone measures to help airlines and provide new stimulus checks to individuals.
House Speaker Nancy Pelosi rejected the call for piecemeal measures and insisted a broad deal was needed, though acknowledged Thursday that discussions were ongoing with Treasury Secretary Steven Mnuchin.
In the US on Thursday, Wall Street ended in the green, with the Dow Jones Industrial Average ending up 0.4%, the S&P 500 up 0.8% and Nasdaq Composite closing 0.5% higher.
In the UK early Friday, figures showed the economy grew less-than-expected in August.
Gross domestic product grew 2.1% month-on-month in August, slower than the 6.4% seen in July. Consensus, according to FXStreet, had seen growth of 4.6% in August.
August's reading did, though, mark the fourth consecutive monthly increase following a record fall of 20% in April. August GDP was 22% higher than its April low, though remains 9.2% below the levels seen in February, before the Covid-19 pandemic battered activity.
In August, the UK index of services grew 2.4% month-on-month - though with the ONS noting that services output is still 9.6% lower than in February - production rose 0.3% and manufacturing increased 0.7%. Construction advanced 3.0%.
"The accommodation and food services sub-sector contributed 1.25 percentage points to the 2.1% growth in GDP for August 2020, as the combined impact of easing lockdown restrictions, Eat Out to Help Out Scheme and "stay-cations" boosted consumer demand," the ONS noted.
Even with the 'Eat Out to Help Out' discount running in August, accommodation and food services output was 14% lower than its February level.
Sterling was quoted at USD1.2966 after the data, higher than USD1.2932 at the London equities close on Thursday.
Rising in London on Friday was British Land Co, up 4.3% on plans to resume dividends after suspending payouts back in March.
Dividends will be paid semi-annually, as opposed to quarterly, and will be announced alongside its interim and full-year results. Future dividends will be paid at 80% of underlying earnings per share.
British Land intends to declare an interim dividend at its results in November.
The property company noted that rent collection for the June quarter stands at 74% versus 67% for the March quarter. British Land said it has seen "encouraging" rent collection progress for September, standing at 69% thus far.
London Stock Exchange Group edged up 0.5% after agreeing to sell the parent company of Borsa Italiana to Euronext for an equity value of EUR4.33 billion.
LSEG back in September said it had entered into exclusive discussions with peer Euronext over the sale of Borsa Italiana, the operator of the Milan stock exchange. The two signed a share purchase agreement on Friday.
The London Stock Exchange operator said it thinks a sale of Borsa Italiana or a material part of it will be a condition to any European clearance for its Refinitiv acquisition.
"Whilst the principal benefit of the transaction is to facilitate the completion of the Refinitiv Transaction, the divestment, which represents an enterprise valuation multiple of 16.7x 2019 adjusted Ebitda, allows LSEG to achieve an attractive valuation for Borsa Italiana," said LSEG.
The FTSE 100 constituent expects to receive the EUR4.33 billion in cash on closing, plus an additional amount reflecting cash generation to completion. LSEG plans to use the funds from the deal to repay debt related to its Refinitiv buy.
LSEG agreed to buy financial markets data and trading platform provider Refinitiv a year ago for USD27 billion.
"We continue to make good progress on the highly attractive Refinitiv transaction and we are pleased to have reached this important milestone. We believe the sale of the Borsa Italiana group will contribute significantly to addressing the EU's competition concerns," said Chief Executive David Schwimmer.
In Asia on Friday, the Japanese Nikkei 225 index ended down 0.1%. In China, the Shanghai Composite closed up 1.7% as markets in mainland China re-opened from the 'Golden Week' holiday. The Hang Seng index in Hong Kong is down 0.3% in late trade.
Data from IHS Markit and Caixin on Friday showed that China's services sector rose in September as new business increased on higher demand, marking a continued recovery from the Covid-19 pandemic.
The headline seasonally adjusted business activity index inched higher to 54.8 in September from 54.0 in August. Any number above 50.0 denotes growth.
Looking ahead, business confidence for the next 12 months remained positive in September, in fact being firmer than the figure recorded in August and broadly in line with the historical average.
The euro traded at USD1.1771 early Friday, up from USD1.1753 late Thursday. Against the yen, the dollar was quoted at JPY105.96 versus JPY105.99.
Gold was quoted at USD1,908.43 an ounce early Friday, rising from USD1,889.10 on Thursday.
Brent oil was trading at USD43.41 a barrel, higher than USD42.80 late Thursday.
"Oil prices have moved higher on short-term supply disruptions, with the broader global supply/demand picture unchanged. Therefore, oil's rally is built on sandy foundations, and not structural ones. The correction lower could be ugly if the above comes to pass," said Jeffery Halley, senior market analyst at Oanda.
Hurricane Delta gained strength Thursday as it churned across the western Gulf of Mexico towards the US, threatening to batter part of the Louisiana coast still recovering from a separate storm just weeks ago.
After lashing Mexico's Caribbean coastline, Delta, now a Category 3 storm, is located 345 miles, or 555 kilometres, south of Louisiana and packing winds of 115 miles an hour, the US National Hurricane Center said in its 2100 GMT bulletin.
The NHC warned that "life-threatening storm surge" was expected along portions of the northern Gulf Coast on Friday, where the storm is predicted to make landfall in the afternoon or evening.
By Lucy Heming;Â [email protected]
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