London close: Stocks rise as investors shrug off central bank risks
London stocks managed to close in positive territory on Monday, buoyed by a rise at the open for US markets, and after some mixed trade data out of China.
The FTSE 100 ended the session up 0.57% at 7,482.37, and the FTSE 250 advanced 0.33% to 20,118.44.
Sterling was meanwhile in a mixed state, last strengthening 0.18% on the dollar to $1.2095, while it weakened 0.09% against the euro to trade at €1.1845.
“Everyone continues to look for the beginning of the next leg lower, but it stubbornly refuses to begin,” said IG chief market analyst Chris Beauchamp.
“Friday’s [US] jobs report seemed to provide the spark, but the new week has begun with gains as investors continue to take the positive view.
“In a potentially-worrying development, meme stocks are once again surging, a sure-fire sign that risk appetite is just getting a little bit frothy.
“But for now there seems little point in fighting this move.”
In economic news, China's trade surplus hit a record high in July, providing the world's second-largest economy with some much needed support.
The People’s Republic reported a trade balance of $101.0bn last month, with exports growing 18% year-on-year in dollar terms - ahead of expectations for a 14.1% gain.
That strength in exports was primarily driven by vehicles, steel products, and textile-related products, with automobile exports surging 64% year-on-year and 21.2% month-on-month.
However, imports rose by 2.3% in July, compared with a 1% gain in June and lower than estimates for an increase of 4%, while besides an uptick in crude imports, inbound shipments of commodities, such as soybeans, natural gas and copper, all declined on a monthly basis.
Economists also warned that China's strength going forward throughout the rest of 2022 would largely depend on whether or not domestic demand could fill the void left by an export surge that was unlikely to last.
“The latest China trade numbers would appear to in some part support concerns about the economic outlook,” said Michael Hewson at CMC Markets.
“While exports have continued to recover, jumping to 18% in July, and beating expectations after a weak second quarter pushing the trade surplus ever higher, imports are still struggling.”
Hewson noted that they rose 2.3%, up from 1% in June, and below expectations of a 4% improvement.
“This lack of impetus is being held by a lack of confidence on the part of Chinese consumers, as well as a slowdown in the property sector.”
On London’s equity markets, investment platform Hargreaves Lansdown surged 7.18% after price target increases at both Deutsche Bank and Barclays.
On the downside, recruiter PageGroup tumbled 7.22% after it posted a rise in first-half pre-tax profit and revenue, but also struck a note of caution over its outlook.
The news hit shares in rival recruitment firm Hays, with the shares closing down 4.88%.
Shipping services company Clarkson lost 3.23% even after it reported a jump in interim profit, driven by its broking division.
Pre-tax profit rose to £42m from £27.3m, while revenue surged to £266m from £190.1m.
In the broking unit, results were boosted by strong performances in the dry cargo, sale and purchase and tanker markets as sustained volumes and rates buoyed profits.
Ongoing supply chain constraints due to the Covid-19 pandemic, including continued high levels of port congestion, reduced vessel speeds and the onset of the war in Ukraine, further disrupted seaborne trade.
Elsewhere, Phoenix Group was lower after JPMorgan Cazenove downgraded the shares to ‘neutral’ from ‘overweight’ and reduced the price target to 775p from 800p.
It said Phoenix has grown strongly in the UK pension risk transfer market, allowing it to organically grow dividend per share.
"Still, its overall cash flow growth is still relatively limited, and we believe its quality of capital is lower than peers," it added.
M&G was also on the back foot after a downgrade to ‘underweight’ from ‘neutral’ at JPMorgan, slipping 0.46% after its price target was slashed to 210p from 250p.
It pointed out that M&G did not write new pension risk transfer or annuities, adding that earnings and free cash flow growth could be constrained by the run-off of its heritage business.
"It offers a high dividend yield, but with low dividend cover and growth," JPMorgan said, adding that the stock was currently looking expensive.
Outside the FTSE 350, Joules Group rocketed 33.33% after confirming it was in talks with Next about the potential acquisition of a £15m minority stake in the lifestyle brand.
Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti and Iain Gilbert.
Market Movers
FTSE 100 (UKX) 7,482.37 0.57%
FTSE 250 (MCX) 20,118.44 0.33%
techMARK (TASX) 4,363.99 0.11%
FTSE 100 - Risers
Hargreaves Lansdown (HL.) 949.40p 7.18%
Rolls-Royce Holdings (RR.) 86.24p 4.46%
Endeavour Mining (EDV) 1,753.00p 3.79%
Abrdn (ABDN) 172.95p 3.47%
Smith (DS) (SMDS) 291.20p 3.16%
Prudential (PRU) 1,002.50p 2.95%
JD Sports Fashion (JD.) 133.55p 2.61%
Smurfit Kappa Group (CDI) (SKG) 3,100.00p 2.48%
Mondi (MNDI) 1,516.00p 2.47%
Coca-Cola HBC AG (CDI) (CCH) 1,967.50p 2.43%
FTSE 100 - Fallers
RS Group (RS1) 1,042.00p -2.35%
AstraZeneca (AZN) 10,714.00p -1.40%
Avast (AVST) 681.00p -1.05%
Centrica (CNA) 83.00p -0.95%
Pearson (PSON) 880.00p -0.72%
Dechra Pharmaceuticals (DPH) 3,554.00p -0.67%
Harbour Energy (HBR) 359.70p -0.61%
Airtel Africa (AAF) 152.10p -0.59%
Phoenix Group Holdings (PHNX) 666.40p -0.54%
M&G (MNG) 216.70p -0.46%
FTSE 250 - Risers
Apax Global Alpha Limited (APAX) 187.80p 4.33%
Carnival (CCL) 754.00p 4.29%
Aston Martin Lagonda Global Holdings (AML) 506.20p 4.03%
Synthomer (SYNT) 195.60p 3.93%
ICG Enterprise Trust (ICGT) 1,134.00p 3.85%
Ascential (ASCL) 248.80p 3.67%
4Imprint Group (FOUR) 3,310.00p 3.60%
Dunelm Group (DNLM) 843.00p 3.56%
Wizz Air Holdings (WIZZ) 2,260.00p 3.43%
Man Group (EMG) 246.90p 3.13%
FTSE 250 - Fallers
Pagegroup (PAGE) 419.00p -7.22%
Future (FUTR) 1,768.00p -5.15%
Hays (HAS) 120.80p -4.88%
Molten Ventures (GROW) 440.60p -4.18%
Auction Technology Group (ATG) 954.00p -3.85%
Clarkson (CKN) 3,440.00p -3.23%
Indivior (INDV) 309.40p -2.77%
Ferrexpo (FXPO) 145.60p -2.49%
IP Group (IPO) 81.00p -2.41%
Telecom Plus (TEP) 2,100.00p -2.33%