London close: Stocks finish higher as PM relaxes lockdown further
London stocks closed higher on Tuesday, as investors welcomed the release of encouraging PMIs and confirmation that a trade deal between the US and China is still on.
The FTSE 100 ended the session up 1.21% at 6,320.12, and the FTSE 250 was 0.45% firmer at 17,652.80.
Sterling was in a mixed state, however, last trading 0.48% stronger against the dollar at $1.2529, but weakening 0.07% on the euro to €1.1065.
“Stocks are in positive territory as traders have welcomed the news that lockdown restrictions in England will be eased from 4 July,” said CMC Markets UK analyst David Madden, referring to the confirmation from Prime Minister Boris Johnson earlier in the day of a further loosening in Covid-19 restrictions.
“The changes will allow pubs, restaurants, cinemas and galleries to re-open.
“In addition to that, the social distancing rule of staying two metres away from people, will be reduced to one metre.”
Madden said the update did not come as a shock, as there had been speculation for some time, though it was welcomed by markets nonetheless.
“Stocks were already up on the session in advance of the lockdown announcement.
“President Trump had to clarify that US-China trade relations were intact after Peter Navarro, one of his trade advisors, said otherwise.
“The confirmation that trading relations were good acted as a boost to sentiment, and it helped distract traders from the health crisis.”
It wasn’t all rosy, however, with Madden noting that a region of Germany was going back into lockdown as more than 1,500 workers at a meat packing plant there had tested positive for Covid-19.
On the macroeconomic front, flash data released earlier showed the downturn in UK business activity eased in June, with the manufacturing sector returning to growth as some Covid-19 restrictions were lifted.
The Markit/CIPS manufacturing purchasing managers’ index rose to 50.1 from 40.7 in May, coming in above consensus expectations for a reading of 45.0 and just over the 50.0 mark that separates contraction from expansion.
Meanwhile, the services PMI increased to 47.0 in June from 29.0 the month before, beating expectations of 41.2.
The composite PMI - which measures activity in both the manufacturing and services sectors - rose to 47.6 in June from 30.0.
Although it was below the 50.0 threshold, it signals the slowest pace of decline since the start of the downturn in March.
“Overall, the economy seems to be recovering a little quicker from its nadir in April than we had first expected,” said Thomas Pugh, UK economist at Capital Economics.
“This trend should continue in July as bars, restaurants and cinemas will probably be able to open from 4 July and a reduction in the official social distancing measure from two metres to one metre would allow those firms that are open to serve significantly more customers.
“As a result, the risks to our -23% quarter-on-quarter second quarter GDP forecast are to the upside.”
In equity markets, M&G closed up 4.11% after Berenberg initiated coverage of the stock at ‘buy’ and said it was its "top pick" in UK Life.
Pub chains Wetherspoon gained 0.99% and Cineworld added 3.17%, after Boris Johnson confirmed the relaxation of restrictions in England from 4 July.
Mitchells & Butlers reversed earlier gains in late trading, however, to end the session down 2%.
Hikma Pharmaceuticals was also in the red, sliding 5.65% after major shareholder German pharmaceutical group Boehringer Ingelheim exited its investment in the company.
William Hill closed down 3.08% after the US state of California said it was pulling a bill that would have legalised sports betting in person and online.
Property portal Rightmove was in the red by 4.14% after it said revenues would be hit further as it continues to support its agents with discounts following disruption from the Covid-19 outbreak.
Market Movers
FTSE 100 (UKX) 6,320.12 1.21%
FTSE 250 (MCX) 17,652.80 0.45%
techMARK (TASX) 3,817.33 0.91%
FTSE 100 - Risers
Evraz (EVR) 310.60p 7.85%
Standard Life Aberdeen (SLA) 269.60p 6.31%
Fresnillo (FRES) 852.40p 4.61%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,216.00p 4.56%
M&G (MNG) 167.80p 4.48%
Kingfisher (KGF) 226.90p 4.23%
Glencore (GLEN) 172.24p 3.63%
London Stock Exchange Group (LSE) 8,332.00p 3.50%
Lloyds Banking Group (LLOY) 32.71p 3.38%
BHP Group (BHP) 1,677.40p 2.97%
FTSE 100 - Fallers
Hikma Pharmaceuticals (HIK) 2,342.00p -5.56%
Rightmove (RMV) 566.80p -3.77%
Ocado Group (OCDO) 1,981.00p -3.46%
International Consolidated Airlines Group SA (CDI) (IAG) 251.90p -2.74%
Auto Trader Group (AUTO) 537.00p -2.01%
Land Securities Group (LAND) 594.80p -1.65%
Taylor Wimpey (TW.) 148.05p -1.56%
Tesco (TSCO) 230.00p -1.33%
Informa (INF) 478.70p -1.20%
Severn Trent (SVT) 2,509.00p -1.14%
FTSE 250 - Risers
PureTech Health (PRTC) 293.50p 8.70%
Kaz Minerals (KAZ) 482.90p 8.23%
Bodycote (BOY) 625.00p 5.22%
Wood Group (John) (WG.) 219.00p 5.09%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,216.00p 4.56%
Future (FUTR) 1,274.00p 4.08%
Herald Investment Trust (HRI) 1,534.00p 3.93%
RHI Magnesita N.V. (DI) (RHIM) 2,628.00p 3.87%
Energean (ENOG) 483.50p 3.64%
Just Group (JUST) 58.15p 3.47%
FTSE 250 - Fallers
AO World (AO.) 138.00p -4.56%
FirstGroup (FGP) 53.35p -4.05%
TUI AG Reg Shs (DI) (TUI) 416.80p -3.63%
St. Modwen Properties (SMP) 353.00p -3.55%
BMO Commercial Property Trust Limited (BCPT) 70.10p -3.18%
Petropavlovsk (POG) 31.00p -3.12%
Avon Rubber (AVON) 3,220.00p -3.01%
TalkTalk Telecom Group (TALK) 88.20p -2.86%
William Hill (WMH) 134.05p -2.79%
Bellway (BWY) 2,623.00p -2.78%