London open: Stocks buoyed by China factory PMI, US-China trade news

Stocks are kicking-off the new quarter on the front foot, helped by stronger-than-expected economic data out of the People's Republic of China and further positive news on the state of US-China trade talks.

But ahead of another round of indicative votes in the British Parliament, later on Monday, on possible alternatives to the Prime Minister's proposed withdrawal agreement, a warning from Easyjet reminded investors of the toll that uncertainty surrounding the UK's exit from the European Union was taking on companies, as did another weak reading on German factory activity.

In a statement, Easyet said: "Macroeconomic uncertainty and many unanswered questions surrounding Brexit are together driving weaker customer demand."

As of 0835 GMT the FTSE 100 was ahead by 0.82% to 7,338.90. In parallel, front month Brent crude oil futures were adding 1.3% to $68.48 a barrel on the ICE and the pound was rising 0.08% to 1.1629.

Also out of China, ahead of vice premier Liu He's trip to Washington this week for another round of trade negotiations, Beijing said it would extend a freeze on retaliatory tariffs on US car exports and add the opioid fentanyl to a list of controlled substances.

Against that backdrop, all eyes were on a round of global manufacturing data due out at the start of the week, as investors tried to gauge whether a bottom was about to fall into place for the sector, which in turn might signal greater strength in stockmarkets around the world - or not.

On that note, readings on Chinese factory sector activity in March released overnight printed ahead of forecasts, although economists appeared somewhat unconvinced by the figures, telling clients that at least some further weakness might yet be on the cards.

Survey compiler Caixin's Chinese manufacturing Purchasing Managers' Index for March printed at 50.8, versus a reading of just 49.9 for the month before and economists' forecasts for a reading of 50.0.

Some market commentary was also highlighting the possibility that seasonal factors, tied to the timing of the Lunar New Year in 2019, might lie behind that strength.

Commenting on the Caixin PMI, Julian Evans-Pritchard at Capital Economics said: "there is now a decent chance that growth in China may bottom out slightly earlier than we had previously anticipated. That said, we still think growth could weaken again in the near-term. The recent trajectory of credit growth still points to a slowdown in the coming months."

For his part, Lee Hardman at MUFG Bank said: "If the tentative improvement is sustained going forward it will provide more support high beta emerging market and commodity-related currencies. Downward pressure on the euro-zone economy and the euro could also ease. However, the sustainability of the pick-up in activity in China remains very much in question at the current juncture."

Going the other way, IHS Markit's factory sector PMIs for Germany and France were both revised lower, with the former printing at 44.1 (consensus: 47.7), down from 47.6 in February - an 80-month low.

For later in the session, investors will be focusing on two key economic reports out of the States, those on retail sales covering the month of February at 1330 GMT, followed by the ISM's manufacturing sector index for March at 1500 GMT.

Also due out was a manufacturing sector PMI for the month of March in the UK at 0930 GMT.

In broker note action, analysts at Berenberg revised their recommendation for shares of Royal Mail from 'sell' to 'hold' and those at Morgan Stanley lowered their target on TUI from 1,250p to 1,150p, while staying at 'overweight'.

Fasten your seatbelts: Easyjet eyes potential turbulence ahead

EasyJet said uncertainty over Brexit and the economy made the budget airline more cautious on its outlook as the airline reported first-half trading in line with guidance. The FTSE 100 carrier expects to post a headline pre-tax loss of £275m for the six months to the end of March as revenue rises 7.3% to about £2.34bn. Airlines traditionally report losses for the winter months. Revenue per seat will be about 7.4% lower, which easyJet said was in line with guidance issued in January. Costs per seat rose about 1.4% as crew costs increased.

Ferrexpo announced a further delay to its annual results to give more time for an independent review of the company’s donations to the charity Blooming Land. The FTSE 250 miner said it would publish its 2018 results on or before 25 April. It had previously delayed publication from 20 March to 3 April. An independent committee is examining the company’s donations to Blooming Land, a Ukrainian charity set up to coordinate Ferrexpo’s corporate and social responsibility programme.

Rio Tinto said iron ore shipments from Pilbara in Australia would be at the low end of guidance after a cyclone damaged a port used to transport the commodity. Production from Pilbara will be about 14m tonnes lower than expected in 2019, the FTSE 100 miner said. As a result shipments of iron ore from the region will be at the low end of its guidance of 338m to 350m tonnes.

AstraZeneca announced on Monday that the US Food and Drug Administration (FDA) has granted ‘Breakthrough Therapy Designation’ (BTD) for the MEK 1/2 inhibitor and potential new medicine selumetinib, which it is developing alongside its partner Merck. The FTSE 100 pharmaceuticals giant said the designation was for the treatment of paediatric patients aged three years and older with neurofibromatosis type 1 symptomatic or progressive, inoperable plexiform neurofibromas, which it described as a rare, incurable genetic condition.

Sports Direct has prepared a template letter for other shareholders in Debenhams to use as part of boss Mike Ashley's push to install himself as chief executive of the troubled department store group. Sports Direct said on Monday that it had been contacted by "a number" of other concerned shareholders in Debenhams, concerned they will see the value of their shares wiped out by Debenhams financial restructuring plans and "expressing their support" for Ashley's appointment as CEO there.

Market Movers

FTSE 100 (UKX) 7,339.01 0.82%
FTSE 250 (MCX) 19,234.48 0.61%
techMARK (TASX) 3,540.75 0.95%

FTSE 100 - Risers

Ashtead Group (AHT) 1,916.50p 3.45%
WPP (WPP) 837.20p 3.26%
Melrose Industries (MRO) 188.15p 2.73%
Glencore (GLEN) 325.75p 2.45%
BHP Group (BHP) 1,892.00p 2.35%
Johnson Matthey (JMAT) 3,210.00p 2.16%
Rio Tinto (RIO) 4,554.50p 2.10%
Evraz (EVR) 633.20p 2.06%
Smith (DS) (SMDS) 342.80p 2.05%
AstraZeneca (AZN) 6,261.00p 2.05%

FTSE 100 - Fallers

easyJet (EZJ) 1,036.50p -7.25%
International Consolidated Airlines Group SA (CDI) (IAG) 504.04p -1.55%
TUI AG Reg Shs (DI) (TUI) 727.20p -1.14%
SSE (SSE) 1,177.00p -0.84%
Severn Trent (SVT) 1,961.50p -0.73%
Fresnillo (FRES) 865.80p -0.57%
Kingfisher (KGF) 233.70p -0.47%
Centrica (CNA) 113.78p -0.37%
Associated British Foods (ABF) 2,431.00p -0.33%
Admiral Group (ADM) 2,165.00p -0.23%

FTSE 250 - Risers

Contour Global (GLO) 179.80p 4.17%
Ferrexpo (FXPO) 257.35p 3.94%
Babcock International Group (BAB) 509.80p 3.30%
Amigo Holdings (AMGO) 186.00p 3.20%
John Laing Group (JLG) 391.80p 3.11%
Royal Mail (RMG) 245.68p 3.10%
Premier Oil (PMO) 96.67p 2.90%
Weir Group (WEIR) 1,601.00p 2.76%
Ted Baker (TED) 1,600.00p 2.70%
Investec (INVP) 454.10p 2.67%

FTSE 250 - Fallers

Stobart Group Ltd. (STOB) 146.19p -3.82%
Wizz Air Holdings (WIZZ) 2,936.98p -2.43%
TBC Bank Group (TBCG) 1,522.00p -1.42%
Telecom Plus (TEP) 1,500.00p -1.32%
Just Group (JUST) 60.50p -1.14%
Kier Group (KIE) 359.40p -1.05%
HICL Infrastructure (HICL) 154.50p -0.90%
Inmarsat (ISAT) 550.20p -0.86%
Civitas Social Housing (CSH) 95.24p -0.79%
Savills (SVS) 897.50p -0.77%