London midday: Miners pace gains on China manufacturing data, broker upgrades

The FTSE 100 was up 0.6% at 7,495.25.

A survey released earlier showed the downturn in the UK manufacturing sector eased in November.

The S&P Global/CIPS manufacturing purchasing managers’ index rose to 47.2 from 44.8 in October. This marked the third monthly increase in a row and the highest level since April. However, it remained below the 50.0 mark that separates contraction from expansion.

All five of the PMI components - new orders, output, employment, suppliers' delivery times and stocks of purchases - remained at levels consistent with a deterioration in operating conditions, albeit to lesser extents than in the previous month.

Rob Dobson, director at S&P Global Market Intelligence, said: "Although the downturn in production eased sharply in November, the latest PMI report brings little festive cheer when the finer details are considered. With new order inflows and exports continuing to fall sharply, and clients destocking, a sustained meaningful growth revival still looks elusive. Manufacturers are preparing for tough times ahead, with their continued caution leading to cutbacks in staffing, inventories and purchasing.

"The underlying sector dynamics further highlight how this combination of high uncertainty and low confidence is impacting performance. The latest scaling back of production was mainly driven by weak business-to-business and capital spending, as output and new orders contracted in both the intermediate and investment goods sectors. In contrast, activity posted a solid uptick at consumer-facing manufacturers."

Investors were also digesting manufacturing figures out of China. The Caixin/S&P Global manufacturing purchasing managers' index rose to 50.7 in November from 49.5 in October.

This was above the 50.0 level that separates contraction from expansion and marked the fastest expansion in three months. However, it contrasts with the official manufacturing PMI released on Thursday, which nudged down to 49.4 from 49.5.

Meanwhile, the latest Nationwide survey was also in focus, as it showed that house prices unexpectedly rose again last month.

House prices were up 0.2% on the month following a 0.9% increase in October. This was the third monthly rise in a row and ahead of expectations for a 0.4% decline.

On the year, meanwhile, house prices were 2.2% lower in November following a 3.3% drop the month before. Analysts were expecting a 2.5% decline. Nationwide pointed out that while this was still weak, it was the strongest outturn since February.

The average price of a home now stands at £258,557.

Nationwide chief economist Robert Gardner said: "There has been a significant change in market expectations for the future path of Bank Rate in recent months which, if sustained, could provide much needed support for housing market activity.”

He noted that in mid-August, investors were expecting the Bank of England to raise rates to a peak of around 6% and lower them only modestly, to around 4% over the next five years.

However, by the end of November, this had shifted to a view that rates have now peaked at 5.25% and will be lowered to around 3.5% in the years ahead.

"These shifts are important as they have led to a decline in the longer-term interest rates (swap rates) that underpin fixed rate mortgage pricing," he said. "If sustained, this will help to ease the affordability pressures that have been stifling housing market activity in recent quarters, where the number of mortgage approvals for house purchases has been running at c.30% below pre-pandemic levels."

In equity markets, mining stocks were boosted by the upbeat Chinese data and by broker notes.

Anglo American and Antofagasta rallied after upgrades to ‘buy’ from ‘neutral’ at UBS, with Rio Tinto and Glencore were also sharply higher.

Iconic bootmaker Dr Martens racked up solid gains, having tumbled on Thursday after a profit warning.

On the downside, Tesco was hit by a downgrade to ‘underweight’ from ‘neutral’ at JPMorgan, while Pearson fell after a downgrade to ‘hold’ from ‘buy’ at Deutsche Bank.

Trainline slumped after a downgrade to ‘hold’ at Panmure Gordon.

Ceres Power slid as it said full-year revenues were set to drop on the year to around £20m to £21m, from £22m in FY2022.

Market Movers

FTSE 100 (UKX) 7,495.25 0.56%
FTSE 250 (MCX) 18,260.94 0.15%
techMARK (TASX) 4,072.59 0.09%

FTSE 100 - Risers

Anglo American (AAL) 2,285.00p 6.68%
Antofagasta (ANTO) 1,475.50p 4.76%
Rio Tinto (RIO) 5,601.00p 3.74%
Glencore (GLEN) 457.60p 3.58%
Rolls-Royce Holdings (RR.) 273.30p 1.67%
InterContinental Hotels Group (IHG) 6,210.00p 1.54%
DCC (CDI) (DCC) 5,422.00p 1.50%
Smurfit Kappa Group (CDI) (SKG) 3,052.00p 1.46%
Endeavour Mining (EDV) 1,865.00p 1.41%
Sage Group (SGE) 1,146.00p 1.37%

FTSE 100 - Fallers

Entain (ENT) 782.20p -2.57%
Ocado Group (OCDO) 588.20p -1.97%
Hargreaves Lansdown (HL.) 705.80p -1.75%
Legal & General Group (LGEN) 226.00p -1.44%
Pearson (PSON) 925.00p -1.30%
Tesco (TSCO) 282.50p -1.15%
Beazley (BEZ) 531.50p -0.84%
Sainsbury (J) (SBRY) 283.50p -0.84%
United Utilities Group (UU.) 1,082.50p -0.78%
Croda International (CRDA) 4,450.00p -0.76%

FTSE 250 - Risers

Dr. Martens (DOCS) 96.35p 6.82%
Petershill Partners (PHLL) 148.80p 4.06%
North Atlantic Smaller Companies Inv Trust (NAS) 3,940.00p 3.96%
Crest Nicholson Holdings (CRST) 192.10p 3.56%
Ferrexpo (FXPO) 75.25p 3.29%
Carnival (CCL) 1,070.50p 2.83%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,340.00p 2.18%
BlackRock World Mining Trust (BRWM) 559.00p 2.01%
W.A.G Payment Solutions (WPS) 91.80p 2.00%
Just Group (JUST) 82.10p 1.99%

FTSE 250 - Fallers

Ceres Power Holdings (CWR) 156.00p -16.93%
Trainline (TRN) 271.40p -4.84%
Hilton Food Group (HFG) 712.00p -3.39%
Bakkavor Group (BAKK) 82.00p -3.07%
Pennon Group (PNN) 688.00p -2.69%
Digital 9 Infrastructure NPV (DGI9) 31.00p -2.52%
ITV (ITV) 58.74p -2.30%
PureTech Health (PRTC) 148.40p -2.11%
Pets at Home Group (PETS) 313.60p -2.06%
Genus (GNS) 1,936.00p -2.02%