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LONDON MARKET OPEN: Stocks green after bold moves from China

24th Sep 2024 09:07

(Alliance News) - Stock prices in London opened higher on Tuesday morning, following news of stimulus measures from China's central bank and ahead of the US consumer confidence reading.

The FTSE 100 index opened up 35.02 points, 0.4%, at 8,294.73. The FTSE 250 was up 11.61 points, 0.1%, at 20,856.73, and the AIM All-Share was up 1.96 points, 0.3%, at 746.28.

The Cboe UK 100 was up 0.4% at 829.49, the Cboe UK 250 was slightly lower at 18,355.30, and the Cboe Small Companies was down 0.1% at 16,806.25.

China has unveiled some of its boldest measures in years, boosting morale in markets, as it looks to turbocharge its struggling economy. Among the measures was a cut to the reserve requirement ratio, which dictates the amount of cash banks must hold in reserve.

"It is tempting to describe these measures as a monetary 'bazooka', but...there is much work to be done to get Chinese demand back on its feet," ING analysts said. "However, these measures have delivered decent 3-4% gains in local equity markets and a similar jump in iron ore, seen as a key benchmark for the Chinese property sector."

Miners, sensitive to China's economic outlook, were among the biggest winners in London on Tuesday morning. China is a major buyer of minerals.

Anglo American led the FTSE 100 with a 6.1% rise. Rio Tinto wasn't far behind, gaining 4.4%, while Antofagasta rose 4.4% and Glencore rose 4.3%.

Luxury retailer Burberry, recently demoted to the FTSE 250, rose 4.3%. Luxury retail is also sensitive to the to and fros of the Chinese economy.

In European equities on Tuesday, the CAC 40 in Paris, supported by lxuury retail, was up 1.2%, while the DAX 40 in Frankfurt was up 0.6%.

Luxury retailer Kering led the way in Paris, up 4.8%. LVMH added 3.7%.

In Asia on Tuesday, the Nikkei 225 index in Tokyo ended 0.6% higher. In China, the Shanghai Composite rose 4.2%, while the Hang Seng index in Hong Kong was up 4.1% in late trade. The S&P/ASX 200 in Sydney closed down 0.1%.

Back in London, Smiths Group was the FTSE 100's worst performer, losing 5.9%.

The engineering firm said its pretax profit increased to GBP372 million in the year ended July 31, from GBP360 million the year before. Revenue rose 3.1% to GBP3.13 billion, and the total dividend rose 5.2% to 43.75 pence per share.

Analysts however had forecast organic growth of 5.2%, above the mid-point of the 4% to 6% guidance given in March, and predicted that revenue would rise 3.6% to GBP3.15 billion.

Smiths also announced two acquisitions in North America, worth up to GBP110 million in total.

Elsewhere in London, Capital & Regional fell 1.7%, while NewRiver edged marginally higher.

NewRiver REIT and real estate investment trust Capital & Regional have agreed on a recommended cash and share offer, for NewRiver to take over the latter company. Shareholders will be entitled to receive 31.25 pence in cash and 0.41946 new NewRiver shares per C&R share.

Capital & Regional shareholders will own approximately 21% of the enlarged company. NewRiver said it has the support of just over 69% of Capital & Regional shareholders, including its largest, Johannesburg-listed Growthpoint Properties. Both NewRiver and Capital & Regional invest in retail assets.

Based on NewRiver's share price in May, before an offer period commenced, the deal values Capital & Regional at GBP147 million. The company has a market capitalisation of GBP142.9 million.

The pound was quoted at USD1.3344 early on Tuesday in London, lower compared to USD1.3357 at the equities close on Monday. The euro stood at USD1.1125, down against USD1.1135. Against the yen, the dollar was trading at JPY144.38, up from JPY143.77.

The Labour Party sought to strike a more upbeat note about the UK's economic future at its annual conference on Monday, against a backlash at proposed cuts to welfare payments.

Chancellor Rachel Reeves said her first budget next month would open the way for business investment that would provide the country with "lasting growth".

Reeves also said employer concerns about a new workers' rights package have been "addressed and understood", insisting that the government does not want to make it harder for companies to hire temporary workers or students.

Business activity growth in Japan decelerated in September, preliminary purchasing managers' index survey results released by S&P Global showed on Tuesday.

The flash composite output index slipped to 52.5 points in September from 52.9 in August. Getting closer to the neutral 50-point mark separating growth from contraction, it indicates the pace of growth slowed.

"Growth in new orders was little-changed in the latest survey period, broadly matching the magnitude of the increases seen earlier in the third quarter. A sustained fall in the levels of outstanding business was also recorded, though this was largely due to a solid reduction in backlogs in the manufacturing sector," commented Usamah Bhatti, economist at S&P Global Market Intelligence.

"While positive sentiment levels remained elevated, the overall degree of confidence eased to the lowest since April 2022, according to the future output index."

The Reserve Bank of Australia meanwhile has left its policy rate unchanged at 4.35%.

In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.1%.

Brent oil was quoted at USD74.79 a barrel early in London on Tuesday from USD73.80 late Monday.

Gold was quoted at USD2,623.55 an ounce against USD2,630.09.

Still to come on Tuesday's economic calendar is US consumer confidence data at 1500 BST, after US Fed Governor Michelle Bowman speaks at 1400 BST.

By Emma Curzon, Alliance News reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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