London close: Markets finish higher after encouraging manufacturing data

The FTSE 100 ended the session up 0.35% at 6,737.30, and the FTSE 250 managed gains of 0.99% to 21,732.67.

Sterling was in a mixed state, meanwhile, last gaining 0.36% on the dollar to trade at $1.3832, but slipping 0.02% against the euro to €1.1748.

“European markets are closing out in positive fashion, with the prospect of another $2trn worth of US stimulus helping to lift hopes of a rapid recovery in the months ahead,” said IG senior market analyst Joshua Mahony.

“Despite jitters around vaccination efforts in Europe, the growing levels of protection being built in the UK and US are highlighting an impending period of economic growth.

“Today’s US jobless claims have provided a somewhat disappointing assessment at a time when traders have been expecting all signals to point towards economic improvements.”

Mahony said the rise, coming off the back of a sharp surge in ADP payrolls, did highlight the fear that the decline last week was an outlier, rather than a new norm.

“All eyes turn towards tomorrow's US jobs report, with markets expecting dramatic improvements across the board.

“Vaccination efforts and a $1.9trn stimulus package should help to bolster hiring over the coming months, but whether that economic surge comes straight away is yet to be seen.”

Market participants were earlier digesting a survey showing that manufacturing growth hit a 10-year high in March thanks to the swift vaccine rollout and the planned easing of lockdown restrictions.

The IHS Markit/CIPS manufacturing purchasing managers’ index rose from 55.1 in February to 58.9 in March, its best level since February 2011.

A level below 50.0 signals contraction, while a level above indicates expansion.

March saw the fastest output growth since late last year, as inflows of new business from both domestic and overseas markets strengthened

Still, the manufacturing remained beset by severe supply chain and logistic issues, leading to delivery delays from suppliers and disruption to production and distribution schedules.

“Signs of spring have appeared in the UK manufacturing sector, with the PMI hitting its highest level in a decade,” said Rob Dobson, director at IHS Markit.

“Growth of output, order books and employment all gathered momentum and optimism about the year ahead improved further.”

Dobson said the domestic market remained the prime source of new orders, as companies reported that the vaccine roll-out and client preparations for the loosening of lockdown restrictions underpinned the expansion.

“Many expect this process to be supportive during the year ahead as well, raising business optimism and jobs growth to their highest levels for seven years.”

In equity markets, travel and leisure-related stocks were on the rise following a Financial Times report that ministers were planning a traffic light system to unlock foreign travel and amid the prospect of easing restrictions at home.

British Airways owner IAG was up 5.67%, engine maker Rolls-Royce added 3.44%, and caterer Compass Group pushed 2.29% higher.

“It seems investors are very much of the mind that it is still worth backing companies that will benefit from the reopening of the global economy, despite the negative backdrop of France closing schools in its third lockdown and Brazil still struggling to get Covid under control,” said Russ Mould, investment director at AJ Bell.

“Next’s results went down well with the market, while catering group Compass was also among the top risers as investors saw better prospects ahead as more people return to offices and education establishments in the near-term and sports and leisure-related demand starts to pick up.

“In backing these companies, investors are effectively looking past any short-term noise and potential setbacks to getting the pandemic under control, and instead looking well into the future and taking the view that earnings will not just start to recover in 2021 but also keep improving thereafter.”

Next rallied 3.15% after it lifted current year profit guidance as online sales continued to soar during the Covid lockdown, but reported a slump in annual profits, in line with expectations.

Quilter gained 4.25% after agreeing to sell its international business to life assurance company Utmost for around £483m as it looks to simplify the group and focus on its higher growth UK wealth management business.

Airtel Africa advanced 2.21% as it said Mastercard would invest $100m in its mobile money business, Airtel Mobile Commerce.

On the downside, Phoenix Group fell 2.91% as its stock went ex-dividend.

Market Movers

FTSE 100 (UKX) 6,737.30 0.35%
FTSE 250 (MCX) 21,732.67 0.99%
techMARK (TASX) 4,260.86 0.92%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 209.55p 5.67%
London Stock Exchange Group (LSEG) 7,234.00p 4.24%
Melrose Industries (MRO) 173.55p 3.98%
Fresnillo (FRES) 894.80p 3.54%
Rolls-Royce Holdings (RR.) 108.92p 3.44%
Ashtead Group (AHT) 4,473.00p 3.37%
Rentokil Initial (RTO) 501.40p 3.22%
Ferguson (FERG) 8,946.00p 3.21%
Next (NXT) 8,114.00p 3.15%
JD Sports Fashion (JD.) 850.00p 3.08%

FTSE 100 - Fallers

Phoenix Group Holdings (PHNX) 712.80p -2.91%
Evraz (EVR) 565.00p -2.25%
British American Tobacco (BATS) 2,715.50p -2.11%
Standard Chartered (STAN) 489.40p -1.86%
BP (BP.) 289.80p -1.65%
Sainsbury (J) (SBRY) 238.60p -1.61%
CRH (CDI) (CRH) 3,340.00p -1.50%
Admiral Group (ADM) 3,057.00p -1.42%
Smith & Nephew (SN.) 1,359.50p -1.34%
BHP Group (BHP) 2,068.00p -1.27%

FTSE 250 - Risers

CMC Markets (CMCX) 511.00p 5.80%
Network International Holdings (NETW) 436.40p 5.51%
Oxford Instruments (OXIG) 2,010.00p 5.19%
Provident Financial (PFG) 227.80p 4.98%
Avon Rubber (AVON) 3,316.00p 4.94%
WH Smith (SMWH) 1,883.50p 4.81%
Future (FUTR) 2,000.00p 4.49%
Watches of Switzerland Group (WOSG) 683.00p 4.39%
Quilter (QLT) 166.60p 4.25%
Frasers Group (FRAS) 480.40p 4.25%

FTSE 250 - Fallers

Ferrexpo (FXPO) 355.60p -5.07%
Royal Mail (RMG) 483.80p -3.82%
Hammerson (HMSO) 33.82p -3.34%
Syncona Limited NPV (SYNC) 246.50p -2.95%
BlackRock Smaller Companies Trust (BRSC) 1,758.00p -1.57%
Wood Group (John) (WG.) 266.80p -1.40%
Hipgnosis Songs Fund Limited NPV (SONG) 124.00p -1.20%
Mediclinic International (MDC) 282.60p -1.19%
Convatec Group (CTEC) 193.80p -1.17%
Greencore Group (CDI) (GNC) 155.40p -1.15%