London close: Shares jump at the end of the week as pound falls back
London stocks rose at the end of the week as sterling fell after the release of weak PMI data, with sentiment underpinned by renewed optimism about a China-US trade deal.
Although he warned that China was not fraid of a trade war, overnight Chinese leader Xi Jinping said his country wants to work out a preliminary trade deal on the basis of "respect and equality".
Spreadex analyst Connor Campbell was sceptical after Xi's remarks, telling clients: "A convincing case could be made for this being completely meaningless. Yet given investors are devouring every morsel of trade deal news, it was enough to send the markets back into the green."
Mid-afternoon in London, the US President appeared to echo Xi's remarks, telling broadcaster FOX that a trade deal was "very close".
Against that backdrop, the FTSE 100 finished up 1.22% at 7,326.81, while the pound was down 0.6% against the US dollar at 1.2831 and 1.1651, as data showed that business activity in the UK fell to its lowest level in November since after the referendum in July 2016, with Brexit uncertainty and the upcoming general election taking their toll.
"In London the FTSE 100 is enjoying a strong end to the week, with a number of sectors rising, helped along by a decline in the pound – Labour's manifesto will undoubtedly scare some international investors, who will be wary of investing in an economy so committed to redistribution," said IG's Chris Beauchamp.
"Even if Corbyn does not win power this time around, the Labour Party has nailed its colours to the mast of higher taxes and more spending, a real break from the post-1979 consensus. It is hard to see that changing in the future, raising the prospect of a more firmly left-wing government in the future, even if not this time."
The IHS Markit/CIPS 'flash' services business activity index fell to a 40-month low of 48.6 from 50.0 in October, missing expectations for an unchanged reading and below the 50.0 level that separates contraction from expansion.
Meanwhile, the manufacturing Purchasing Managers' Index printed at a two-month low of 48.3 this month, down from 49.6 in October and below expectations of 49.0.
The composite output index - which measures activity in both sectors - was 48.5 in November versus 50.0 the month before, also marking a 40-month low.
Chris Williamson, chief business economic at IHS Markit, said: "With an upcoming general election adding to Brexit-related uncertainty about the outlook, it’s no surprise to see UK businesses reporting falling output and orders in November. The decline signalled by the flash PMI follows stagnation in October and adds to what has been the survey’s worst spell since the recession of 2008-9.
"The weak survey data puts the economy on course for a 0.2% drop in GDP in the fourth quarter, and also pushes the PMI further into territory that would normally be associated with the Bank of England adding more stimulus to the economy."
A weaker pound tends to boost the top-flight index, as around 70% of its constituents derive most of their earnings from overseas.
In equity markets, miners racked up strong gains, with Glencore, BHP, Antofagasta and Rio Tinto all higher.
Online real estate agent Rightmove ticked higher as it announced the appointment of Andrew Fisher as non-executive chairman with effect from January 1, 2020.
On the downside, chemicals company Johnson Matthey was weaker for a second day running after saying on Thursday that half-year pre-tax profit declined 8% and net debt rose.
Housebuilder Berkeley Group retreated, with traders pointing to the Conservatives’ pledge to make foreign buyers pay 3% more in stamp duty than UK residents.
Coats Group was sharply lower after the industrial thread maker said that sales in the four moths to the end of October slowed, while Playtech fell as the gambling software development company issued a profit warning.
Market Movers
FTSE 100 (UKX) 7,326.81 1.22%
FTSE 250 (MCX) 20,485.81 0.57%
techMARK (TASX) 4,035.72 0.89%
FTSE 100 - Risers
JD Sports Fashion (JD.) 787.80p 3.82%
Centrica (CNA) 82.30p 3.76%
Glencore (GLEN) 246.90p 3.05%
Vodafone Group (VOD) 156.58p 2.99%
Carnival (CCL) 3,182.00p 2.84%
TUI AG Reg Shs (DI) (TUI) 1,071.00p 2.82%
Taylor Wimpey (TW.) 174.55p 2.80%
Hargreaves Lansdown (HL.) 1,797.50p 2.73%
Experian (EXPN) 2,506.00p 2.70%
Bunzl (BNZL) 2,017.00p 2.69%
FTSE 100 - Fallers
Fresnillo (FRES) 561.00p -6.28%
Johnson Matthey (JMAT) 2,846.00p -4.78%
Ocado Group (OCDO) 1,126.50p -2.47%
Imperial Brands (IMB) 1,690.00p -1.12%
NMC Health (NMC) 2,459.00p -0.53%
Polymetal International (POLY) 1,157.50p -0.47%
Hiscox Limited (DI) (HSX) 1,271.00p -0.31%
Just Eat (JE.) 753.00p -0.26%
Kingfisher (KGF) 197.00p -0.25%
Reckitt Benckiser Group (RB.) 5,925.00p -0.22%
FTSE 250 - Risers
Pets at Home Group (PETS) 209.00p 4.87%
Euromoney Institutional Investor (ERM) 1,278.00p 4.41%
Aston Martin Lagonda Global Holdings (AML) 493.50p 3.89%
Wood Group (John) (WG.) 359.80p 3.81%
SIG (SHI) 119.20p 3.65%
Stagecoach Group (SGC) 132.80p 2.71%
Marks & Spencer Group (MKS) 191.35p 2.70%
Telecom Plus (TEP) 1,328.00p 2.63%
Senior (SNR) 182.10p 2.59%
Ferrexpo (FXPO) 145.15p 2.58%
FTSE 250 - Fallers
Hochschild Mining (HOC) 170.10p -8.89%
Coats Group (COA) 68.30p -7.97%
Sirius Minerals (SXX) 3.28p -4.28%
HICL Infrastructure (HICL) 165.00p -3.17%
Playtech (PTEC) 400.20p -2.51%
Tullow Oil (TLW) 139.25p -2.38%
Domino's Pizza Group (DOM) 295.00p -2.38%
Centamin (DI) (CEY) 111.90p -1.89%
Bank of Georgia Group (BGEO) 1,400.00p -1.75%
Card Factory (CARD) 156.50p -1.45%