London close: Markets finish higher as investors mull data, US-China tensions
London stocks finished in positive territory on Monday, although the gains were less than spectacular, as investors weighed up dire Japanese GDP data and growing tensions between the US and China, against a liquidity boost from the People's Bank of China.
The FTSE 100 ended the session up 0.61% at 6,127.44, and the FTSE 250 was ahead 0.2% at 17,771.88.
Sterling was trading mixed by the late afternoon, last strengthening 0.05% against the dollar to $1.3092, but losing 0.13% on the euro to €1.1041.
“Equity benchmarks are broadly higher even though the headlines have been a touch on the negative side,” said CMC Markets analyst David Madden.
“Concerns persist in relation to the pandemic, both in terms of the infection rate, and the fear of tougher restrictions being imposed again.”
Madden noted that US-China trade talks were due to take place at the weekend, but they were cancelled, with no replacement date set.
“This isn’t a major upset to their relations but it adds to the sour sentiment that has been building between the two countries for a while.”
Earlier in the day, traders were greeted by the news that China’s central bank had delivered a bigger-than-expected VNY 700bn ($101bn) short-term liquidity injection.
“More importantly, the rate was unchanged at 2.95%, implying that there will be no cuts to China's one and five-year loan prime rates on Thursday," said Oanda analyst Jeffrey Halley.
“The PBoC seems determined to avoid inflating bubbles in the economy but resisting the urge to follow the rest of the world and flood the financial system with liquidity.
“In the longer-term, that may be a wise policy move, especially with the economy on a recovery trajectory.”
Investors were also mulling the latest data out of Japan, which showed the economy suffered its worst contraction on record in the second quarter as the coronavirus pandemic took its toll.
GDP shrank by 7.8% on the quarter, accelerating from a 0.6% contraction in the first quarter, coming in worse than the 7.5% decline expected by economists and wiping all the growth since 2011.
On an annualised basis, the economy contracted by 27.8%.
Miguel Chanco, senior Asia economist at Pantheon Macroeconomics, said the damage was broad-based as expected, with the nationwide state of emergency that enveloped most of the second quarter "killing domestic demand and the near-global lockdown dealing a body-blow to exports".
On home shores, the latest survey from property website Rightmove showed July was the busiest month for home buying in 10 years.
“Rather than just a release of existing pent-up demand due to the suspension of the housing market during lockdown, there’s an added layer of additional demand due to people’s changed housing priorities after the experience of lockdown,” said Rightmove director and housing market analyst Miles Shipside.
“This is also keeping up the momentum of the unexpected mini-boom, which is now going longer and faster.”
In equity markets, Persimmon rose 3.12% as Davy upped its stance on shares of the housebuilder to ‘neutral’ from ‘underperform’ following its "impressive" response to the Covid-19 crisis.
It said Persimmon has driven the best operational rebound post-Covid of any builder in the sector.
Elsewhere, food producer Cranswick added 6.59% as it said its full-year results are set to be ahead of expectations after first-quarter revenues rose by almost a quarter as more Britons ate at home during lockdown.
On the downside, British Airways and Iberia owner IAG was down 5.29%, InterContinental Hotels lost 2.41%, travel company TUI was off 5.06%, Premier Inn owner Whitbread lost 2.41% and cruise operator Carnival was 4.5% weaker, as it emerged that Greece and Croatia, along with six other countries, could be next on the UK quarantine list.
The UK already added France, the Netherlands and Malta - among others - last week.
Travel plays were also hit by Germany’s decision to add Spain, excluding the Canary Islands, to its list of high-risk coronavirus areas.
Market Movers
FTSE 100 (UKX) 6,127.44 0.61%
FTSE 250 (MCX) 17,771.88 0.20%
techMARK (TASX) 3,874.67 0.44%
FTSE 100 - Risers
Persimmon (PSN) 2,613.00p 3.12%
Polymetal International (POLY) 2,034.00p 2.88%
Anglo American (AAL) 1,932.40p 2.83%
Ashtead Group (AHT) 2,764.00p 2.75%
Associated British Foods (ABF) 2,010.00p 2.55%
AstraZeneca (AZN) 8,579.00p 2.36%
Fresnillo (FRES) 1,251.50p 2.33%
Ocado Group (OCDO) 2,382.00p 2.19%
Kingfisher (KGF) 274.00p 2.16%
Hikma Pharmaceuticals (HIK) 2,366.00p 2.14%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 184.25p -5.29%
Whitbread (WTB) 2,385.00p -2.41%
InterContinental Hotels Group (IHG) 4,048.00p -2.41%
British Land Company (BLND) 359.20p -1.94%
BT Group (BT.A) 106.00p -1.90%
NATWEST GROUP PLC ORD 100P (NWG) 113.80p -1.68%
BP (BP.) 288.55p -1.40%
Standard Chartered (STAN) 416.80p -1.21%
Barclays (BARC) 108.76p -1.15%
United Utilities Group (UU.) 888.40p -1.14%
FTSE 250 - Risers
Petropavlovsk (POG) 34.00p 7.77%
Cranswick (CWK) 4,076.00p 6.59%
Rank Group (RNK) 143.80p 4.51%
AJ Bell (AJB) 447.50p 4.07%
Greencore Group (GNC) 125.20p 3.90%
Centamin (DI) (CEY) 208.60p 3.73%
FDM Group (Holdings) (FDM) 1,022.00p 3.44%
Hochschild Mining (HOC) 281.00p 3.38%
Capital & Counties Properties (CAPC) 132.70p 3.19%
Sirius Real Estate Ltd. (SRE) 76.00p 2.70%
FTSE 250 - Fallers
Cineworld Group (CINE) 46.88p -7.61%
Calisen (CLSN) 171.80p -5.08%
TUI AG Reg Shs (DI) (TUI) 299.60p -5.07%
easyJet (EZJ) 544.60p -4.59%
Carnival (CCL) 934.40p -4.50%
Bank of Georgia Group (BGEO) 795.00p -4.33%
SSP Group (SSPG) 230.40p -4.24%
Euromoney Institutional Investor (ERM) 795.00p -4.22%
OneSavings Bank (OSB) 261.80p -3.75%
Wizz Air Holdings (WIZZ) 3,452.00p -3.52%