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London open: Stocks rise as miners rally on China data
London stocks rose in early trade on Thursday, with miners pacing the gains after encouraging Chinese services data.
At 0830 BST, the FTSE 100 was up 0.3% at 7,687.09.
Figures out earlier showed that activity in China’s services sector grew at the fastest pace in two and a half years in March.
The Caixin services purchasing managers’ index rose to 57.8 from 55.0 in February, coming in ahead of expectations for it to be unchanged. This marked the third increase in a row and the fastest rate of expansion since November 2020.
Increased activity levels were linked to sustained improvements in operating conditions and new order intakes following the recent easing of Covid measures. Caixin said new export business expanded at the quickest rate on record.
Dr. Wang Zhe, senior economist at Caixin Insight Group, said: “Services supply and demand expanded rapidly last month. The market returned to normal quickly after the most recent wave of Covid-19 infections subsided, fuelling both supply and demand. In March, the gauges for business activity and total new business continued to rise within expansionary territory, both reaching their highest level since November 2020.
“Moreover, the easing of international travel restrictions boosted services exports, with the measure for new export orders logging the highest reading since records began in September 2014.”
On home shores, data from Halifax showed that UK house prices increased for a third consecutive month in a row in March.
House prices rose by 0.8% from February, taking the average sale price to £287,880 in March.
However, this increase was slower than the 1.2% recorded in February. On an annual basis, the rate of price growth slowed to 1.6% from 2.1% recorded in the previous month and the lowest since October 2019.
Kim Kinnaird, director, Halifax Mortgages, said that overall, the latest figures “continue to suggest relative stability in the housing market at the start of 2023 and align with many other recent industry surveys and data”.
“This has been characterised by a partial recovery in activity and transactions, especially when compared to the significant drops seen at the end of last year, with latest Bank of England data showing mortgage approvals rising for the first time in six months.”
She said the main factor behind the improved picture has been an easing of mortgage rates.
Looking ahead, all eyes will be on Friday’s US non-farm payrolls report.
Richard Hunter, head of markets at Interactive Investor, said: “The expectation is for 240,000 jobs to have been added in March, following a blowout number in January and a higher than expected 311,000 number in February.
“The closure of the market on Friday means that equity traders will be unable to react to the release until next week which, coupled with the long weekend, has seen some traders squaring positions and being unwilling to open new ones given the extended break.”
In equity markets, miners rallied as copper prices rose and after the upbeat Chinese data, with Anglo American, Antofagasta, Rio and Glencore all up.
Oil giant Shell was also in the black after a first-quarter update.
Ferrexpo gained after saying it more than doubled iron ore pellet production in the first quarter, driven by an improvement in the supply of electricity to operations in Ukraine, which enabled the restart of a second pelletiser line in late February 2023.
On the downside, Barratt Developments, Reckitt, Rentokil, ConvaTec, Smiths Group, Savills, Man Group, and Howden Joinery all lost ground as they traded without entitlement to the dividend.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | +10.19% | +56.80 | 614.00 |
| 2 |  |
Admiral Group Plc | +2.81% | +60.00 | 2,192.00 |
| 3 |  |
Bt Group Plc | +2.13% | +3.10 | 148.90 |
| 4 |  |
Direct Line Insurance Group Plc | +2.09% | +3.20 | 156.25 |
| 5 |  |
Gsk Plc | +1.94% | +28.80 | 1,516.00 |
| 6 |  |
Shell Plc | +1.76% | +41.50 | 2,404.50 |
| 7 |  |
Fresnillo Plc | +1.71% | +13.20 | 786.00 |
| 8 |  |
Aviva Plc | +1.66% | +6.80 | 415.80 |
| 9 |  |
Persimmon Plc | +1.66% | +20.00 | 1,224.00 |
| 10 |  |
Whitbread Plc | +1.64% | +48.00 | 2,978.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | -2.96% | -4.85 | 159.00 |
| 2 |  |
Smiths Group Plc | -1.53% | -25.50 | 1,641.00 |
| 3 |  |
Crh Plc | -1.45% | -55.00 | 3,745.00 |
| 4 |  |
Ashtead Group Plc | -1.30% | -58.00 | 4,410.00 |
| 5 |  |
Ferguson Plc | -1.25% | -126.00 | 9,974.00 |
| 6 |  |
Burberry Group Plc | -1.01% | -25.00 | 2,460.00 |
| 7 |  |
Kingfisher Plc | -0.97% | -2.40 | 244.00 |
| 8 |  |
Rentokil Initial Plc | -0.71% | -4.20 | 589.60 |
| 9 |  |
Barratt Developments Plc | -0.66% | -3.00 | 448.90 |
| 10 |  |
Marks And Spencer Group Plc | -0.61% | -1.00 | 162.70 |
US close: Stocks mixed on weaker services, hiring data
Wall Street closed on a mixed note on Wednesday, with the tech-heavy Nasdaq suffering its third consecutive loss.
The Dow Jones Industrial Average was up 0.24% at 33,482.72, while the S&P 500 dipped 0.25% to 4,090.38, and the Nasdaq Composite slid 1.07% to 11,996.86.
Investors were mulling over fresh data that showed a slowdown in service sector growth and private sector hiring.
Earlier in the day, the Reserve Bank of New Zealand made an unexpected move by announcing a 50-basis point interest rate hike, double the amount analysts had been predicting.
The move contrasted sharply with the announcement made by its Australian counterpart on Tuesday, when it decided to pause interest rate raises.
In currencies, the dollar was down 0.02% on sterling to last trade at 80.22p, while it slipped 0.04% against the euro to 91.66 euro cents.
It also fell against the yen, by 0.15% to change hands at JPY 131.12.
“Today’s ADP miss means that Friday’s payrolls report will be a pivotal one for stocks,” said IG chief market analyst Chris Beauchamp.
“The worst outcome would be a weaker jobs number but rising wages, something that might reverse the growing expectation of a Fed pause in May.
“Such a development would likely put stocks at high risk of giving back their recent gains.”
Services growth, private sector hiring both slow in March
In economic news, the US service sector showed a sharp slowdown last month, according to the Institute for Supply Management‘s services purchasing managers’ index (PMI).
The index fell to 51.2 for March from a reading of 55.1 in February, which was far below economists’ expectations of 54.5.
The sub-index for business activity remained relatively stable, with a slight drop from 56.3 to 55.4.
However, the sub-index for new orders experienced a significant decrease from 62.6 to 52.2, and the sub-index for prices paid also dropped from 65.5 to 52.8.
“The bulk of the decline in the March headline is in the new orders index, down 10.4 points to 52.2, suggesting that future demand – or the expectation of future demand – already is being crushed by the banking crisis,” said Kieran Clancy, senior US economist at Pantheon Macroeconomics.
“That’s asking a lot, but the trend clearly is slowing.
“Softer wage growth, in turn, will help to bring down inflation in core services ex-housing, making it more likely that the Fed starts to cut rates later this year.”
In addition to the slowdown in the services sector, private sector hiring in the US also declined in March, according to a survey by ADP.
The report said businesses added 145,000 staff last month, a drop from the previous month’s increase of 261,000 and below economists’ expectations of a rise of 210,000.
Mid-sized companies – those with between 50 and 249 staff – generated the most jobs with 75,000, while firms with 250 to 499 employees shed 42,000 workers.
Large firms with more than 500 staff created 10,000 jobs, while companies with one to 19 employees hired 38,000 people, and businesses with 20 to 49 workers took on another 63,000.
“Our March payroll data is one of several signals that the economy is slowing,” said Nela Richardson, chief economist at ADP.
“Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down.”
The report also provided a sector-wise breakdown of the hiring trends, with the leisure and hospitality sector adding 98,000 people to payrolls, while the financial activities sector lost 51,000 jobs, and the professional and business services sector shed 46,000 roles.
However, the natural resources and mining space added 47,000 workers, and those in construction hired 53,000 people.
The manufacturing sector meanwhile had 30,000 fewer employees compared to the previous month.
Liminal rockets on takeover offer, C3.ai sinks on short seller story
In equities, shares of Johnson & Johnson climbed 4.49% after the company agreed to pay $8.9bn over the next 25 years to settle allegations that its talc-based products caused cancer.
Liminal Biosciences surged 85.64% after Structured Alpha LP, which already owns 64% of Liminal’s stock, made an unsolicited takeover offer at $7.50 per share.
On the downside, C3.ai‘s shares fell by 15.47% after short seller Kerrisdale Capital Management accused the company of accounting irregularities in a letter to its auditor Deloitte.
Thursday newspaper round-up: Net zero, Royal Mail, Home REIT
Business leaders in the north of England have written to the prime minister, chancellor and energy secretary asking for help to reach net zero. Big names including Drax, Siemens, Peel, Manchester airport, the CBI and all 11 local enterprise partnerships (LEPs) in the north signed a letter urging the government to prioritise green growth in the north – Guardian
The billionaire head of Canada’s largest grocery chain has been given a C$1.2m (US$890,000) raise, in a move likely to prompt controversy as grocery executives have faced sharp criticism for raising their prices amid record inflation. The raise for Galen Weston, chairman and president of grocer Loblaw Companies, brought his total pay last year to C$11.79m. Details of the deal were first reported by the Globe and Mail. – Guardian
Royal Mail bosses have accused striking workers of plotting to bankrupt the company and force it back into the hands of the taxpayer, amid a deepening row after talks collapsed. Directors criticised union leaders for saying they were “’becoming more comfortable’ with the risk of administration” during discussions to agree a new pay deal, according to a letter leaked to the Telegraph. – Telegraph
Home Reit, which has spent the past two-and-a-half years frantically buying hundreds of properties to let out to homelessness charities, is thinking of selling some. Such a move, it said, would help to stabilise the business, which was plunged into crisis late last year when the short-seller Viceroy Research flagged concerns, including doubts over the reliability of some tenants. – The Times
The City regulator has warned the financial firms that fund it that its annual budget will rise to more than £680 million, pushed higher in part by the extra cost of a post-Brexit revamp of its responsibilities. The Financial Conduct Authority disclosed yesterday that its so-called annual funding requirement for 2023-4 is forecast to increase by 8.5 per cent to £684.2 million. – The Times
